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The Costs of Remoteness

The Costs of Remoteness. Geoff Frost, Lucy Williams, Adam Malarz & Dennis Byles. 1. Trying to understand what costs vary and why. The real costs of living in different areas: Groceries, housing, petrol, clothing & other common goods & services Cost of accessing education & health services

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The Costs of Remoteness

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  1. The Costs of Remoteness Geoff Frost, Lucy Williams, Adam Malarz & Dennis Byles 1

  2. Trying to understand what costs vary and why The real costs of living in different areas: • Groceries, housing, petrol, clothing & other common goods & services • Cost of accessing education & health services • Housing Drivers & responses of consumers to price differentials 2

  3. Why do this? • Effects of space not just time • Testing accepted wisdom (freight cost?) • Well being - complements incomes and wealth work 3

  4. Prices may vary because of: • Distance/cost of transport • Competition • Population/demography • State • Income • Industry (structure) • Local produce • Tourism/seasonality 4

  5. Locations where data was collected 5

  6. Constructing indices • Overall Index • Indices for product groups • Weighting according to the ABS’s Household Expenditure Survey • Index compared to capitals 6

  7. Cost is more than just price • $ Price • Availability & choice • Quality differences 7

  8. Poor grocery availability in small towns 8

  9. Grocery prices higher in small towns 9

  10. Individual stores: prices and threshold populations 8 19 10

  11. Individual stores: major retailers have consistent price structures 8 20 11

  12. Majors & independents compete on price and service 8 21 12

  13. Some groups show similar patterns 13

  14. Others behave in different ways 14

  15. Housing costs increase with population 8 15

  16. Fuel retail prices may be affected by : • The cost of the fuel to be sold (delivered wholesale price) • The number of litres sold (turnover) • The size of the service station’s overheads • Competition from other service stations 16

  17. Location affects demand and supply 17

  18. Significant coefficients of variables affecting fuel prices 18

  19. Significant coefficients of variables affecting fuel prices 19

  20. Significant coefficients of variables affecting fuel prices 20

  21. Significant coefficients of variables affecting fuel prices 21

  22. Significant coefficients of variables affecting fuel prices 22

  23. ULP Price (June 2006) & Urban Centre Population 8 10 23

  24. ULP Price (June 2006) & Urban Centre Population 24

  25. Overall Cost of Living 25

  26. Location is a key driver of prices • Demand side factors (population, passing trade) impact heavily • The cost of transporting goods is less important than is commonly assumed • Competition (the ability of customers to access other stores) caps prices • The overall cheapest place to live may be medium to large towns and regional cities 26

  27. The Costs of Remoteness Geoff Frost, Lucy Williams, Adam Malarz & Dennis Byles 27

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