UNSW Media Release
Australia’s rising cost of living is squeezing household budgets, and with high fuel prices and public transport costs increasing, many Australians face the reality that the expense of commuting to work may no longer be financially sustainable.
The Australian Commute report showed that the average daily cost for an Australian to get to and from work is $20, totalling $5020 annually. Collectively, this translates to a national expense of $43.2 billion a year. The cost of public transportation is also increasing; Opal fares rose by 3.7 per cent in October 2023, as reported by Transport for NSW.
Associate Professor Evgenia Dechter from the UNSW Business School says that the complex relationship between commuting costs and salaries is primarily based on preferences and household constraints.
“Individuals make choices based on their preferences, budgets and time constraints,” she says.
“Subject to constraints, some prioritise shorter commutes by living closer to work hubs, even if it means higher housing costs and lower quality housing. Others prioritise better living arrangements and may accept longer commutes.”
This raises the question: With rising economic pressures and commuting costs, will Australian cities transform to be more commuter-friendly, or will work arrangements undergo a fundamental shift?
The economic impact of commuting
While salaries may indirectly reflect commuting choices, A/Prof. Dechter acknowledges the growing economic pressure on workers as well as the current cost of living crisis combined with high inflation rates.
“For many households, the current economic conditions imply tighter budget constraints, putting immense pressure on workers, which may in turn affect their commuting and employment choices,” says A/Prof. Dechter.
“Traditionally, commuting costs haven’t been directly factored into salaries, but some employers are starting to explore ways to compensate for them.
“Employers offering remote work options are a positive development in mitigating commuting costs.
“Remote, hybrid and flexible work arrangements may not only alleviate the financial burden on employees but also potentially broaden the talent pool for firms struggling to find workers,” she says.
While salaries may indirectly reflect commuting choices, A/Prof. Dechter acknowledges the growing economic pressure on workers as well as the current cost of living crisis combined with high inflation rates.
“For many households, the current economic conditions imply tighter budget constraints, putting immense pressure on workers, which may in turn affect their commuting and employment choices,” says A/Prof. Dechter.
“Traditionally, commuting costs haven’t been directly factored into salaries, but some employers are starting to explore ways to compensate for them.
“Employers offering remote work options are a positive development in mitigating commuting costs.
“Remote, hybrid and flexible work arrangements may not only alleviate the financial burden on employees but also potentially broaden the talent pool for firms struggling to find workers,” she says.
City infrastructure is not designed for everyday commuting
The travel-to-work challenge is further amplified by the design of Australian cities, with urban sprawl leading to longer commutes and a need for more suitable housing options near workplaces.
“The ugly truth of the matter is the shape of our cities is far from ideal to support sustainable and efficient commuting,” says Professor Philip Oldfield, a leading expert in architecture from the Faculty of Arts, Design & Architecture at UNSW.
According to the Regional Movers Quarterly Index released in late 2023 by the Commonwealth Bank and Regional Australia Institute, this trend is reflected in a significant shift in migration patterns. The report highlights a 12.6 per cent increase in the population moving from capital cities to regional areas compared to pre-pandemic figures.
The rising cost of living may not be the only reason why it’s harder for Australians to travel to work. Prof. Oldfield says that cities are expanding outwards with residential densities decreasing.
“It’s often cheaper and easier to build housing on the edge of cities rather than trying to ‘infill’ gaps in the city. In Sydney, 21 per cent of homes built in Greater Sydney were on the city edge across the last decade. We call this urban sprawl, and it’s apparent in virtually all cities worldwide,” says Prof. Oldfield.
Using Sydney as an example, Prof. Oldfield says we don’t see enough family-friendly and three-bedroom apartments built near city centres and places of work.
“This is because developers are creating apartments for those who purchase them – which tends to be owner-investors, and not those who ‘actually’ live in them, which includes families with children. Owner-investors prefer one- and two-bedroom apartments and that’s why these get built.
“The impact of this is that families may want to stay in centrally located neighbourhoods, but because of a lack of family-friendly apartments, they either have to ‘cram in’ to two-bedroom units not suited to the family dynamic or move further afield where more ‘conventional’ and affordable detached homes are located,” says Prof. Oldfield
Prof. Oldfield explained that the knock-on effect is if they move further away, commute times increase, which can increase costs and lost time and subsequently make working at home more attractive.
The power of hybrid and flexible work
With the economic and urban landscape placing a strain on wallets, hybrid work arrangements are becoming increasingly popular.
Dr Andrew Dhaenens, an expert in workplace relationships from UNSW Business School, says that working from home and with more flexible hours is increasingly becoming more attractive.
“For those with longer commutes and caregiving responsibilities, working from home offers a significant financial benefit,” he says.
“There’s also a perception among employers that remote workers are more productive, further incentivising flexible work models.”
Dr Dhaenens says employers are becoming more accommodating to hybrid and flexible work patterns, yet employees are facing new pressures to spend more time in offices.
The Hybrid & Flexible Working Practices 2023 report showed that almost half of the employers say that they have a minimum requirement for full-time employees to be at the workplace between three and five days a week, up from 37 per cent during the same period in 2022.
Dr Dhaenens says that hybrid and flexible work is key to easing financial pressures and believes that hybrid models will likely stay the norm.
“Employees save on commuting costs, lunches out, and public transport fares, but they also gain time back from their commute to spend more time with friends and family.”
“Additionally, we know that work-life balance is key to employee wellbeing and productivity,” says Dr Dhaenens.
While some employers require employees to be in the office for a set number of days, Dr Dhaenens emphasises the negative impacts of return-to-office mandates and believes hybrid models will likely be here to stay.
“Both employers and workers are still adjusting to remote work, and new management strategies will emerge to ensure effective collaboration and communication, but an additional day in the office often comes at a direct cost to employees,” says Dr Dhaenens.
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The trouble is only people with clerical jobs can work from home, the rest of us who work as manual Labourers. Have to pay to commute or drive, We should be able to offset our travel expenses somehow.
The obvious answer is to decentralise government departments into the major regional centres outside the Sydney Basin, including major infrastructure projects like ”the second Sydney airport” that would have been much better located between Dubbo and Wellington or that region on the main north south railway because the jobs generated by development and operation would have removed population from Sydney. Remember about 40% of air freight and air passengers transfer to another metropolitan city, so freeing up landing slots at Mascot Airport.
There have been few previous attempts at decentralising government departments. Agriculture moved to Orange, Albury Wodonga survives as a Whitlam attempt and minor political moves like the APVMA from Canberra to Armidale NSW allowed NOtional$ supporters to invest wisely in this real estate.
Government jobs are weather independent and experience in Armidale NSW shows that residential education at UNE keeps the cash flowing when the livestock sales crash during droughts.
In the professional services industry (eg. agriculture, construction, infrastructure, mining) the problems have become manifest over the past 10-15 years. Assignments may be from a month or so, to several years. In this sphere individual consultants / contractors understand the pressures on wellbeing, performance and financial viability, and witnessed the increasing disregard by clients and / or client executives (of particularly major corporations) to provide appropriate consideration and remuneration.
As such, organizations, in their pursuit of profit by any means, distanced themselves from responsibility for their personnel via the outsourcing of HR to the frenzy of slick, payment per head, otherwise disinterested head-hunting predators. The rot started to set in. Head-hunters became the masters of the unconscionable contract, the benders of the Fair Trading Act and avoiders of industrial / employment and OHS law, whilst at the same time driving a wedge between the already weakened unions, the mealy-mouthed professional associations and the corporations. They made ‘Chainsaw Al’ Dunlap look like an archangel. All at a time when these industries were hugely expanding, and profits were mainly used for take-overs, share buy-backs and engorgement of ‘Darth Vader’ snr executives by feckless boards.
By way of example, the advent of the FIFO model utilized all the aforesaid ‘principles’, offered seemingly bulging paypackets to young ‘soldiers of the frontiers’ to drag the sparse labour force into what would ultimately become and eff-you nightmare of family, social and psychological breakdown for many of the innocent tyros. But it didn’t seem to matter, as by now, capital was well and truly king.
Meanwhile, back in the big smoke, infrastructure only played second fiddle to the ivory towers and monuments to capital, and governments immersed themselves in the money game and troughs. They had privatized everything, and with that had abdicated their responsibilities to communities and society, leaving them to the wiles of profiteers. Regulation gave way to treating the symptoms of an increasingly unwell populace, and feeding the requirements of capital’s conveyor belt.
Individualistic greed and expedience now reigned. Everyone was now playing capital’s game of risk-shedding. Self-serving, ever-inventive lawyers and accountants were running amok. But the risk-shedding was only within their own orbit, not for the safe and efficient function of society as a whole. It would surely end badly, because at the end of the day someone had to assume the risk. And of course that would be those at the bottom of the food chain, the ordinary wage and salary earner, and worse still those on pensions and welfare – those that can only shed their wellbeing.
For 10-15 years we have been facing crisis upon crisis bandaged-over by ad hoc measures, political rhetoric and BS. At the same time as we’ve been bled dry by the talons of unchecked capital gain for the profiteers. Through stupidity and bad politics and economics, demand has been strangled, confidence turned to pessimism, power shifted from governments to profiteers and economies stagnated. And now we have wars and interdependent supply chains smashed. The only way we can achieve the urgent turnaround needed is by very strong regulation, and clever leveraging of institutional and private capital back into our nation building, via huge multifarious PPPs and targeted talent immigration (permanent and / or temporary).
Oz, being of relatively low population, geographically isolated, huge and sparse, but for a few over-crowded capital cities, is too young and affected by cargo-cult to have well developed regional cities and infrastructure like Europe and America. Accordingly it is particularly vulnerable to the stagnations and high costs brought by the crises.
Aside from experiencing a cost-of-living crisis (much less than the rest of the world), and an urgent and expensive pivot necessary for climate change abatement, we also have an ever-increasing housing and transport infrastructure crisis, except where profiteers can achieve a gouge.
It will take decades, if not, generations to fix.
There is no obvious answer to our cost of living squeeze. But the final outcome is plain to see. The crunch is happening in the US with a dramatic car sale decline. That canary is singing at the top of its voice.
Capitalism as we have known it is being disrupted, yes daggered from within. Yet we carry on hoping it gets better. No body has a grasp of whats to come, like every revolution the outcome is unpredictable.
Every economy is on the same wave .
The constant in all of this is the continueous rise of realestate value. In my opinion, its THE most important factor in our capitalist system. The driver if you must.
Who ever manages to lance this problem will probably survive intact. The rest of us better brace for whats to come.