these households contain a relatively high proportion of nontraded goods whose prices would not rise by as much as those of imports and importcompeting goods. Households reliant on benefits indexed to the consumer price index, rather than wages, would likely be better off because wages would fall in general, whereas the consumer price index would be little changed. That said, workers in lesstraded service sectors, such as education and health, would likely benefit from higher wages as demand for their services increased. Figure 4.6 Global tariff increases would see Australian average living standards fall in all deciles Percentage changes in purchasing power Commission estimates generated using the PC Global and PC National models. Data source: The average falls mask considerable variation in outcomes within deciles (figure 4.7). Nearly 80 per cent of households would face lower living standards, notwithstanding the assumption that the social support system remains intact. For some of these households the fall would be relatively small but, for nearly 30 per cent, the purchasing power of their income would be at least 4 per cent lower. To put this into context, a household that spends $2500 a fortnight on goods and services would be worse off by $100 a fortnight. The magnitude of the fall would depend on how a household’s wages, returns on savings and investments and the prices for the things they consume changed. Households that were larger consumers of imports and importcompeting goods and those with a greater reliance on income from capital would be more severely affected. For a minority of households (just over 20 per cent) the effect on living standards be positive. Households at the lower end of the income distribution would be more likely to be in this group, for the reasons outlined above in explaining why the average fall in living standards is smaller for lower income deciles. In higher deciles, the main driver for
these households contain a relatively high proportion of nontraded goods whose prices would not rise by as much as those of imports and importcompeting goods. Households reliant on benefits indexed to the consumer price index, rather than wages, would likely be better off because wages would fall in general, whereas the consumer price index would be little changed. That said, workers in lesstraded service sectors, such as education and health, would likely benefit from higher wages as demand for their services increased. Figure 4.6 Global tariff increases would see Australian average living standards fall in all deciles Percentage changes in purchasing power Data source: Commission estimates generated using the PC Global and PC National models. The average falls mask considerable variation in outcomes within deciles (figure 4.7). Nearly 80 per cent of households would face lower living standards, notwithstanding the assumption that the social support system remains intact. For some of these households the fall would be relatively small but, for nearly 30 per cent, the purchasing power of their income would be at least 4 per cent lower. To put this into context, a household that spends $2500 a fortnight on goods and services would be worse off by $100 a fortnight. The magnitude of the fall would depend on how a household’s wages, returns on savings and investments and the prices for the things they consume changed. Households that were larger consumers of imports and importcompeting goods and those with a greater reliance on income from capital would be more severely affected. For a minority of households (just over 20 per cent) the effect on living standards be positive. Households at the lower end of the income distribution would be more likely to be in this group, for the reasons outlined above in explaining why the average fall in living standards is smaller for lower income deciles. In higher deciles, the main driver for
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