Consumers spend more on services 

AUSTRALIANS may soon spend more on services than goods - a "by-product" of our rising standard of living, says CommSec chief economist Craig James.

Changing consumer behaviour shows spending on fitness classes, hairdressers, insurance premiums and airfares may soon overtake our budgets for clothing, cars and furniture, partly due cheaper goods resulting from a strong Australian currency, he said.

"For instance Australians are spending more of their budgets on public transport and airfares than buying a car. Less is being spent at cafes and restaurants and on household goods and cars. And more is being spent on education services and health services," he said.

"The rise and rise of services is a by-product of Australia's rising standard of living. Australians don't like to admit it, but our standard of living is one of the highest in the world."

A "paucity of data" on services spending was a reason why economists had under-estimated last week's strongest economic growth figures in five years, up 1.3 per cent in the March quarter to an annualised growth rate of 4.3 per cent. South Australia's economy grew at 1.7 per cent for the quarter and 2.3 per cent for the year, in seasonally adjusted terms.
While the mining sector was a strong contributor to GDP growth, so too was the hidden increase in services spending, Mr James said.
"Most statistics are still focused on our spending of physical goods like clothing, cars, furniture and televisions. But we are close to the point where spending on services will overtake the spending on goods," Mr James said.
"Clearly this deficiency of data needs to be corrected."
Independent economic researcher the Grattan Institute released its Game-changers: Economic reform priorities for Australia report last week calling for the need to broaden the GST to cover education, health and food and capture increased services spending.
Revenue raised from the broader GST would reduce corporate and income taxes while compensating those on welfare, chief executive John Daley said in the report's analysis.

Source : http://www.adelaidenow.com.au/business/consumers-spend-more-on-services/story-e6frede3-1226390397777