1 00:00:03,990 --> 00:00:06,479 Sean Aylmer: Welcome to the Fear and Greed business interview. I'm Sean 2 00:00:06,750 --> 00:00:08,940 Sean Aylmer: Aylmer. There are a few parts of our lives that 3 00:00:08,940 --> 00:00:11,610 Sean Aylmer: haven't been hit by the cost of living crisis. Mortgage 4 00:00:11,610 --> 00:00:15,270 Sean Aylmer: payments, rent, power bills, food, insurance, petrol, you name it, 5 00:00:15,570 --> 00:00:18,059 Sean Aylmer: it seems to be getting more expensive. And all of 6 00:00:18,059 --> 00:00:21,810 Sean Aylmer: that has a real impact on consumer confidence and spending. 7 00:00:22,110 --> 00:00:24,599 Sean Aylmer: Today, we're getting an insight into where the pressure points 8 00:00:24,600 --> 00:00:27,270 Sean Aylmer: are for consumers and the effect it's having on households. 9 00:00:27,540 --> 00:00:29,759 Sean Aylmer: Kate Browne is the Head of Research and Insights at 10 00:00:29,759 --> 00:00:32,909 Sean Aylmer: Compare Club, which is a great supporter of this podcast. 11 00:00:32,909 --> 00:00:34,229 Sean Aylmer: Kate, welcome to Fear and Greed. 12 00:00:34,469 --> 00:00:35,428 Kate Browne: Thanks for having me. 13 00:00:35,760 --> 00:00:40,769 Sean Aylmer: So you've released Compare Club's Bill Stress Index, how stressed 14 00:00:40,769 --> 00:00:41,820 Sean Aylmer: are we, Kate? 15 00:00:42,269 --> 00:00:45,540 Kate Browne: Yeah, look, Sean, we did this research last year and 16 00:00:45,540 --> 00:00:47,550 Kate Browne: it was really interesting to run it again at the 17 00:00:47,550 --> 00:00:50,759 Kate Browne: same time this year. I would say, top line, we 18 00:00:50,759 --> 00:00:53,999 Kate Browne: are coping. But we are definitely more stressed than we 19 00:00:54,000 --> 00:00:55,440 Kate Browne: were even six months ago. 20 00:00:56,220 --> 00:00:56,730 Sean Aylmer: Why? 21 00:00:57,780 --> 00:01:02,190 Kate Browne: What we're seeing is certain demographics are really under the 22 00:01:02,190 --> 00:01:05,069 Kate Browne: pump, and they are the ones where their stress levels are just 23 00:01:05,069 --> 00:01:09,209 Kate Browne: rising really sharply. It will probably be no surprise to 24 00:01:09,209 --> 00:01:13,319 Kate Browne: anyone, families are one of the most stressed groups, and 25 00:01:13,319 --> 00:01:16,979 Kate Browne: people that we're calling upper middle class salaries. So these 26 00:01:16,980 --> 00:01:24,059 Kate Browne: are people that earn, in their household, between $ 70,000 to $125,000 each. 27 00:01:24,659 --> 00:01:32,459 Kate Browne: They are sitting at... 52% of them are saying they're highly stressed. Families who are all... We're 28 00:01:32,459 --> 00:01:36,330 Kate Browne: rounding up between 35 and 44, so this is people probably with younger children. 29 00:01:36,540 --> 00:01:40,200 Kate Browne: 62% of them are stressed. The things that are stressing them out 30 00:01:40,559 --> 00:01:44,849 Kate Browne: is energy prices, mortgage, and rent for the younger families. 31 00:01:44,849 --> 00:01:48,360 Kate Browne: And for the upper middle class, energy, mortgage, and then 32 00:01:48,360 --> 00:01:50,910 Kate Browne: general insurances coming in too because we've seen some big 33 00:01:50,910 --> 00:01:51,900 Kate Browne: price rises there. 34 00:01:52,500 --> 00:01:54,780 Sean Aylmer: Yeah, so the upper middle salaries was really interesting. You 35 00:01:54,780 --> 00:01:57,239 Sean Aylmer: said 52% are highly stressed. And just the fact that 36 00:01:57,240 --> 00:02:00,869 Sean Aylmer: general insurance is an issue for them, maybe it's the 37 00:02:00,870 --> 00:02:03,720 Sean Aylmer: expensive houses or the expensive cars or something like that. 38 00:02:03,990 --> 00:02:06,270 Sean Aylmer: Were you surprised by that, the general insurance? 39 00:02:06,810 --> 00:02:09,929 Kate Browne: I was surprised it got in the mix, compared to 40 00:02:10,800 --> 00:02:13,169 Kate Browne: some of the greatest hits that people roll out, generally 41 00:02:13,169 --> 00:02:18,090 Kate Browne: around bill stress, including things like groceries or everyday expenses. 42 00:02:18,330 --> 00:02:21,060 Kate Browne: What is really interesting around insurance is we are seeing 43 00:02:21,089 --> 00:02:24,630 Kate Browne: insurance costs go up and that is across the board. 44 00:02:24,630 --> 00:02:27,000 Kate Browne: We're seeing it in car insurance. We're seeing it in 45 00:02:27,000 --> 00:02:30,780 Kate Browne: home and contents insurance. We've had some pretty major weather 46 00:02:30,780 --> 00:02:33,870 Kate Browne: events over the last few years, that's really helped inform 47 00:02:34,050 --> 00:02:37,530 Kate Browne: some of those price rises. And, potentially, these are people, 48 00:02:37,530 --> 00:02:40,199 Kate Browne: well certainly with that demographic, a lot of them do 49 00:02:40,199 --> 00:02:44,340 Kate Browne: have a mortgage, so they're, pardon my French, insured up 50 00:02:44,340 --> 00:02:46,410 Kate Browne: the wazoo, potentially. They're the ones who are going to 51 00:02:46,410 --> 00:02:49,440 Kate Browne: have home and contents, the car, maybe two cars. That 52 00:02:49,440 --> 00:02:51,150 Kate Browne: stuff's going to start biting pretty hard. 53 00:02:51,660 --> 00:02:53,788 Sean Aylmer: Nothing better than being insured up the wazoo, Kate, I'd 54 00:02:53,788 --> 00:02:54,119 Sean Aylmer: say it's perfect. Anyway- 55 00:02:54,809 --> 00:02:56,790 Kate Browne: I like to ensure that every time. 56 00:02:56,940 --> 00:02:59,189 Sean Aylmer: That's right. I do know QBE, last week, came out 57 00:02:59,190 --> 00:03:01,139 Sean Aylmer: and I think they said, in this region, Australia, New 58 00:03:01,139 --> 00:03:03,300 Sean Aylmer: Zealand, their premiums were up 12 and a quarter percent. 59 00:03:03,300 --> 00:03:06,750 Sean Aylmer: IAG were out, last month I think it was, basically 60 00:03:06,750 --> 00:03:10,950 Sean Aylmer: saying 10% plus premium increases. It's getting very expensive to 61 00:03:10,950 --> 00:03:11,760 Sean Aylmer: insure stuff. 62 00:03:12,059 --> 00:03:15,629 Kate Browne: It is. And I think something I've found really interesting 63 00:03:15,630 --> 00:03:17,760 Kate Browne: since I've been working this space is how much climate 64 00:03:17,760 --> 00:03:21,480 Kate Browne: change is informing the cost of our insurance. Even car 65 00:03:21,480 --> 00:03:23,970 Kate Browne: insurance, the sheer amount of cars that were lost during 66 00:03:23,970 --> 00:03:27,959 Kate Browne: major weather events has actually informed the kind of prices, 67 00:03:27,960 --> 00:03:31,110 Kate Browne: premiums, we're now paying on all our car insurance. And it 68 00:03:31,110 --> 00:03:35,160 Kate Browne: is rising very steeply. It's not tracking by 1% or 69 00:03:35,160 --> 00:03:38,610 Kate Browne: 2%. We're seeing some big jumps. And people are getting 70 00:03:38,610 --> 00:03:39,300 Kate Browne: quite a shock. 71 00:03:40,020 --> 00:03:45,059 Sean Aylmer: So insurance, obviously we know about petrol, and while it 72 00:03:45,059 --> 00:03:47,580 Sean Aylmer: goes up and down, it's still staying at fairly high 73 00:03:47,580 --> 00:03:52,590 Sean Aylmer: levels. Certain foods remain very expensive. Energy is a big 74 00:03:52,590 --> 00:03:54,930 Sean Aylmer: one. And then, on top of that, you have interest 75 00:03:54,930 --> 00:03:58,530 Sean Aylmer: rates and mortgage stress. I suppose this all has a 76 00:03:58,530 --> 00:04:01,590 Sean Aylmer: compounding effect when you have so many things at once. 77 00:04:02,429 --> 00:04:04,889 Kate Browne: You've just painted a really good picture there, Sean. There's 78 00:04:04,889 --> 00:04:08,249 Kate Browne: so many things. And even for people that don't have 79 00:04:08,250 --> 00:04:12,179 Kate Browne: a mortgage, rent is rising. I spoke to a friend 80 00:04:12,180 --> 00:04:17,850 Kate Browne: last night whose rent is going up 25%. Her apartment 81 00:04:17,850 --> 00:04:21,210 Kate Browne: hasn't grown an extra room or a plunge pool. We 82 00:04:21,210 --> 00:04:23,368 Kate Browne: are seeing this across the board. So even if you 83 00:04:23,370 --> 00:04:27,330 Kate Browne: don't have all those larger costs in place necessarily, you 84 00:04:27,330 --> 00:04:29,639 Kate Browne: are getting hit with all of them. Energy is really 85 00:04:29,639 --> 00:04:34,050 Kate Browne: starting to bite. And energy, just universally, is now causing 86 00:04:34,050 --> 00:04:36,930 Kate Browne: a huge stress across the board for people because those 87 00:04:36,930 --> 00:04:38,579 Kate Browne: costs have risen very sharply. 88 00:04:39,178 --> 00:04:40,859 Sean Aylmer: Stay with me, Kate, we'll be back in a minute. 89 00:04:47,190 --> 00:04:50,010 Sean Aylmer: I'm speaking to Kate Browne, Head of Research and Insights 90 00:04:50,010 --> 00:04:53,100 Sean Aylmer: at Compare Club. Now, you've got data on just how 91 00:04:53,100 --> 00:04:55,710 Sean Aylmer: much of our wages are going to household bills. What I 92 00:04:55,710 --> 00:04:57,570 Sean Aylmer: think's interesting about that, and I want you to take me 93 00:04:57,570 --> 00:04:59,940 Sean Aylmer: through that... But not that long ago, Michele Bullock, the 94 00:04:59,940 --> 00:05:02,279 Sean Aylmer: Reserve Bank Governor, said, " Look, we're not that stressed actually 95 00:05:02,279 --> 00:05:05,789 Sean Aylmer: because people have a job. And, overall, in aggregate, the 96 00:05:05,789 --> 00:05:09,029 Sean Aylmer: economy, people have work. And if that's the case, it 97 00:05:09,029 --> 00:05:12,510 Sean Aylmer: does take some stress off the table." I'm just interested 98 00:05:12,510 --> 00:05:16,049 Sean Aylmer: in how that compares because your research doesn't really say that. 99 00:05:16,710 --> 00:05:22,320 Kate Browne: No, our research has laid it out pretty clearly. 30.39% 100 00:05:22,320 --> 00:05:28,380 Kate Browne: of people saying between 50% to 75% of their wages are now 101 00:05:28,380 --> 00:05:33,839 Kate Browne: going on household bills. We have 27% saying between a 102 00:05:33,839 --> 00:05:38,339 Kate Browne: third and a half. And we have 23% saying between 103 00:05:38,339 --> 00:05:41,279 Kate Browne: a fifth and a third. This is high. When we 104 00:05:41,279 --> 00:05:45,029 Kate Browne: look at things like housing stress, the old rule would 105 00:05:45,029 --> 00:05:47,820 Kate Browne: be never more than 30% to be spent on your 106 00:05:47,820 --> 00:05:51,178 Kate Browne: housing, whether it's rent or a mortgage. Those rules are 107 00:05:51,178 --> 00:05:55,620 Kate Browne: gone. This is a huge amount. And to have over 108 00:05:55,620 --> 00:06:00,960 Kate Browne: 30% of people sitting at 50% to 75% of their wages going 109 00:06:00,960 --> 00:06:05,070 Kate Browne: on household bills is pretty critical. It's not a good look. 110 00:06:05,850 --> 00:06:07,678 Sean Aylmer: Okay. Now, looking at the research, I thought it was 111 00:06:07,680 --> 00:06:10,049 Sean Aylmer: interesting that even though we are more stressed, we're more 112 00:06:10,050 --> 00:06:13,139 Sean Aylmer: confident and proactive in the way we manage our finances. 113 00:06:13,139 --> 00:06:16,198 Sean Aylmer: It almost suggests that we're doing something about the fact 114 00:06:16,199 --> 00:06:18,930 Sean Aylmer: that we're more stressed. Fewer people are using credit to 115 00:06:18,930 --> 00:06:21,089 Sean Aylmer: pay bills as well. Did all that surprise you? 116 00:06:21,690 --> 00:06:25,140 Kate Browne: This was really surprising to me. But, also, in the 117 00:06:25,140 --> 00:06:27,300 Kate Browne: space that I work in, actually made me quite happy 118 00:06:27,300 --> 00:06:31,349 Kate Browne: because I'm always banging on about financial literacy, taking control 119 00:06:31,349 --> 00:06:34,678 Kate Browne: of your finances, being more proactive. I've worked in this 120 00:06:34,680 --> 00:06:37,080 Kate Browne: space for quite some time now and this is a 121 00:06:37,080 --> 00:06:40,860 Kate Browne: big change. My theory is a lot of people who 122 00:06:40,860 --> 00:06:42,990 Kate Browne: sat back a few years ago when times were good 123 00:06:42,990 --> 00:06:47,370 Kate Browne: and interest rates were low, they knew they could swap 124 00:06:47,370 --> 00:06:51,000 Kate Browne: or get a better deal, but it wasn't so pressing 125 00:06:51,000 --> 00:06:54,479 Kate Browne: that they do anything about it. It was quite tricky to 126 00:06:54,510 --> 00:06:57,660 Kate Browne: get people motivated to do that. Not only have we 127 00:06:57,660 --> 00:07:02,760 Kate Browne: seen people engaging less with credit products, 32% less is 128 00:07:02,760 --> 00:07:06,900 Kate Browne: massive, that confidence is really interesting. And I see that 129 00:07:06,900 --> 00:07:10,049 Kate Browne: reflected across the board. I see it reflected in the 130 00:07:10,049 --> 00:07:13,739 Kate Browne: conversations I'm hearing in my own circles. I've noticed how 131 00:07:13,740 --> 00:07:17,220 Kate Browne: much more prevalent discussions about finances are on places like 132 00:07:17,220 --> 00:07:22,379 Kate Browne: social media. On TikTok, there are so many finfluencers now 133 00:07:22,650 --> 00:07:24,809 Kate Browne: who talk about this kind of thing that I think 134 00:07:25,080 --> 00:07:28,920 Kate Browne: it's definitely become part of the national conversation. And as 135 00:07:28,920 --> 00:07:32,220 Kate Browne: a result, people are feeling more confident. I don't think 136 00:07:32,220 --> 00:07:34,710 Kate Browne: I heard a lot of people talk about refinancing, the 137 00:07:34,710 --> 00:07:36,720 Kate Browne: way that people are talking about it now, five or 138 00:07:36,720 --> 00:07:40,080 Kate Browne: six years ago. And I would say we don't have 139 00:07:40,080 --> 00:07:42,420 Kate Browne: a choice, so people have had to step up and 140 00:07:42,420 --> 00:07:43,500 Kate Browne: start learning and doing. 141 00:07:43,830 --> 00:07:46,799 Sean Aylmer: A far more interesting conversation at the barbecue, talking about 142 00:07:47,279 --> 00:07:51,780 Sean Aylmer: insurance and mortgages and things like that. I think not. 143 00:07:51,780 --> 00:07:54,210 Sean Aylmer: What about things like phone plans, those types of things, 144 00:07:54,210 --> 00:07:55,440 Sean Aylmer: do they come into the mix? 145 00:07:55,950 --> 00:08:00,269 Kate Browne: Absolutely. These things are just... We consider things like phone 146 00:08:00,270 --> 00:08:03,179 Kate Browne: plans and NBN, that's just all utilities now. You can't 147 00:08:03,179 --> 00:08:06,209 Kate Browne: really function without those things. We are seeing more people 148 00:08:06,209 --> 00:08:09,540 Kate Browne: shop around in that space as well, and particularly with 149 00:08:09,540 --> 00:08:13,290 Kate Browne: broadband. Because NBN's putting its prices up in January and 150 00:08:13,920 --> 00:08:16,409 Kate Browne: ACCC's come out and said everyone needs to shop around 151 00:08:16,410 --> 00:08:19,139 Kate Browne: which is always... I find that a bit of an 152 00:08:19,139 --> 00:08:23,100 Kate Browne: infuriating statement because if " shopping around" was that easy, everyone 153 00:08:23,100 --> 00:08:25,440 Kate Browne: would do it. But to know what to look for 154 00:08:25,440 --> 00:08:27,840 Kate Browne: and how to do it, that's the pointy bit about 155 00:08:27,840 --> 00:08:32,249 Kate Browne: all these things. So, again, those prices are creeping up 156 00:08:32,250 --> 00:08:36,599 Kate Browne: too. But we are seeing definitely much more assertive consumers 157 00:08:36,599 --> 00:08:38,550 Kate Browne: now in Australia than we would've a few years ago. 158 00:08:39,089 --> 00:08:41,850 Sean Aylmer: Okay. So we've talked around energy and utilities thus far, 159 00:08:41,850 --> 00:08:44,910 Sean Aylmer: but let's end with utilities. Because that really is where 160 00:08:44,910 --> 00:08:46,620 Sean Aylmer: the big stress point is, isn't it? 161 00:08:47,070 --> 00:08:51,208 Kate Browne: Yeah. This is what was probably the biggest change that 162 00:08:51,210 --> 00:08:54,300 Kate Browne: we've seen in a year, and indeed in six months when we 163 00:08:54,300 --> 00:08:59,069 Kate Browne: last checked in with our research panel. It is the 164 00:08:59,070 --> 00:09:03,030 Kate Browne: biggest stress across the board. It is bigger than mortgage, 165 00:09:03,030 --> 00:09:06,809 Kate Browne: rent, general insurance, health insurance, credit cards, car loans, other 166 00:09:06,809 --> 00:09:10,889 Kate Browne: loans, life insurance. This is the doozy. And those sharp 167 00:09:11,219 --> 00:09:15,570 Kate Browne: increases have really started to bite with people, coupled with, 168 00:09:16,289 --> 00:09:20,490 Kate Browne: I spoke before about extreme weather events. We're rolling into 169 00:09:21,150 --> 00:09:24,150 Kate Browne: what's predicted to be a very extreme summer. I think 170 00:09:24,150 --> 00:09:26,880 Kate Browne: a lot of people who aren't feeling stressed by energy 171 00:09:26,880 --> 00:09:29,639 Kate Browne: bills are going to be really shocked this summer when 172 00:09:29,639 --> 00:09:31,110 Kate Browne: we roll in and we're going to have a lot 173 00:09:31,110 --> 00:09:34,319 Kate Browne: of use. It is interesting that it has changed that 174 00:09:34,320 --> 00:09:36,630 Kate Browne: much. I guess the other thing is, no matter where 175 00:09:36,870 --> 00:09:40,708 Kate Browne: you're at in life, everyone has to use energy and 176 00:09:40,740 --> 00:09:44,130 Kate Browne: that is the one you can't really escape. And it's 177 00:09:44,130 --> 00:09:46,800 Kate Browne: a space where there's a lot of confusion. There's a 178 00:09:46,800 --> 00:09:49,530 Kate Browne: lot of difference between all the states about what you 179 00:09:49,530 --> 00:09:53,098 Kate Browne: can access, how you can shop around. But I think 180 00:09:53,100 --> 00:09:56,670 Kate Browne: a lot of people have seen their bills rise exponentially. 181 00:09:56,670 --> 00:10:00,120 Kate Browne: And, again, they're engaging. I was told by some of 182 00:10:00,120 --> 00:10:03,900 Kate Browne: our staff here that talk about utilities and energy, previously, 183 00:10:03,900 --> 00:10:06,120 Kate Browne: a lot of people that called in couldn't even tell 184 00:10:06,480 --> 00:10:10,049 Kate Browne: people which energy provider they were with. That's how unengaged 185 00:10:10,049 --> 00:10:13,559 Kate Browne: they were. Now, people are really looking to maximize any 186 00:10:13,559 --> 00:10:15,030 Kate Browne: benefits of swapping over. 187 00:10:15,780 --> 00:10:18,478 Sean Aylmer: Is it going to get any better anytime soon? Not 188 00:10:18,480 --> 00:10:20,669 Sean Aylmer: a lot of optimism in this particular chat, Kate. 189 00:10:21,210 --> 00:10:25,799 Kate Browne: I know, I'm always bringing the fun and the lols. Yeah, I 190 00:10:25,799 --> 00:10:29,309 Kate Browne: joke what's good in my professional life, and what's interesting 191 00:10:29,309 --> 00:10:34,228 Kate Browne: to talk about, is a disaster in my own life. People are saying, when 192 00:10:34,230 --> 00:10:36,990 Kate Browne: we put this to our panel, that they are feeling 193 00:10:36,990 --> 00:10:40,830 Kate Browne: about the same overall. Some people are much more stressed. 194 00:10:41,160 --> 00:10:43,890 Kate Browne: We're a little bit more optimistic, so perhaps I can 195 00:10:45,150 --> 00:10:48,150 Kate Browne: leave you with that. I think people have taken more 196 00:10:48,240 --> 00:10:51,870 Kate Browne: control of their finances. People are, to use that hackneyed 197 00:10:51,870 --> 00:10:54,449 Kate Browne: phrase, leaning in a little bit more. We're seeing more 198 00:10:54,450 --> 00:10:59,099 Kate Browne: people asking about refinancing, which is unprecedented. We are seeing 199 00:10:59,099 --> 00:11:02,730 Kate Browne: more people looking to switch energy providers, and getting a bit pointier about 200 00:11:02,730 --> 00:11:06,090 Kate Browne: those things. And so I think, at least when people 201 00:11:06,090 --> 00:11:08,790 Kate Browne: are taking action, it does help them feel a little 202 00:11:08,790 --> 00:11:13,110 Kate Browne: bit more in control. But the overarching vibe is we're 203 00:11:13,110 --> 00:11:14,820 Kate Browne: going to be in this for a while. This isn't 204 00:11:14,820 --> 00:11:17,670 Kate Browne: going to be a short storm. We're going to have 205 00:11:17,670 --> 00:11:19,978 Kate Browne: to hunker down and deal with this for quite a 206 00:11:19,980 --> 00:11:20,550 Kate Browne: bit longer. 207 00:11:21,059 --> 00:11:22,919 Sean Aylmer: Kate, thank you for talking to Fear and Greed. 208 00:11:23,279 --> 00:11:24,208 Kate Browne: Thanks so much. 209 00:11:24,630 --> 00:11:27,240 Sean Aylmer: That was Kate Browne, Head of Research and Insights at 210 00:11:27,240 --> 00:11:30,420 Sean Aylmer: Compare Club, which is a supporter of this podcast. This 211 00:11:30,420 --> 00:11:32,669 Sean Aylmer: is the Fear and Greed business interview. Join us every 212 00:11:32,670 --> 00:11:35,010 Sean Aylmer: morning for the full episode of Fear and Greed, Australia's 213 00:11:35,010 --> 00:11:38,160 Sean Aylmer: best business podcast. I'm Sean Aylmer. Enjoy your day.