The High Price of Dying

CPSA's report outlining the costs of basic funeral services and lowest-cost funeral services in rural, regional and metropolitan areas of New South Wales.

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  1. Introduction                                                                                                 
  2. Methodology                                                                                               
  3. Results                                                                                                        
  4. Discussion                                                                                               
  1. Low income earners and the cost of a funeral                                    
  2. The basic funeral                                                                           
  3. Funeral costs                                                                                  
  4. Competition                                                                                   
  1. Cost of cremations and graves                                                        
  2. Conclusion                                                                                       
  3. Recommendations     
  4. Appendix                                                                                         
        

Introduction

The cost of a funeral in NSW for people on low incomes [1] remains a considerable burden. Following the 2005 Parliamentary Inquiry into the Funeral Industry (the Funeral Inquiry), the NSW Government reformed the Fair Trading Act 1987 (the Act) to promote lower-cost funerals. These reforms were implemented in February 2009. The major reform was an amendment to the Act to define a ‘basic funeral service’ as a funeral which delivers all that is necessary for the cremation or burial of a body without the so called add-ons which can increase the cost of a funeral dramatically. This reform is significant as, for a number of years now, consumer groups have been arguing that all, irrespective of income, should have access to affordable funerals, given that the disposal of bodies is an essential service.

CPSA conducted a small research project to gain an indication of the impact of the amendment to the Act as well as to examine the availability of low-cost funerals in NSW. The results suggest that the impact of the reform has been minimal, especially in rural and regional areas, and supports the anecdotal evidence received by CPSA that the availability of a basic funeral, as defined by the Act, is limited. The results also support anecdotal evidence that funeral costs vary considerably across the state, with some funerals imposing a great cost on the customer.

CPSA considers a funeral to be an essential service that should be available to all regardless of income. Currently, people on low incomes have great difficulty purchasing a funeral, often going into thousands of dollars of debt as a result. The findings of this report reiterate the need for the NSW Government to mandate the provision of a basic funeral and regulate the maximum price for such a funeral.

Methodology

Research for the report was conducted over May and June 2009, three months after legislation defining a basic funeral commenced. A total of 124 undertakers across NSW were contacted by telephone. Contact details were sourced from the Yellow Pages in an effort to elicit information in a similar fashion to a layperson. All data was collected initially by telephone, and in some instances, additional information and written quotes from undertakers were sent via email correspondence.

CPSA’s researcher telephoned undertakers and stated that they had a copy of the recently published NSW Office of Fair Trading brochure which gives information about a basic funeral. They stated that they were looking to purchase a funeral for their dying grandmother.  Undertakers were asked if they offered a basic funeral, and then asked to give a break down of the costs and services that would be included. The Act defines a basic funeral as:

“…the supply of specified goods and services, including the arrangement and conduct of a funeral service to be held during ordinary business hours, limited transport of a body, and supply of the least expensive coffin that a supplier of a funeral goods and services has available.”

If an undertaker did not offer a basic funeral, a quote for their least expensive funeral was requested.

CPSA decided to contact undertakers using an alias because of our previous failed attempts as an organisation to obtain itemised quotes for essential funeral services. As we were an organisation requesting prices for funeral goods and services, most undertakers refused to provide a quote. Therefore, the only feasible way CPSA could obtain price information was to ‘cold-call’ undertakers and to claim to be arranging a funeral.

Despite every effort to make contact with as many undertakers as possible, the inability to acquire contact details or communication breakdowns (wrong numbers, no answer, or failure of undertakers to return calls), as well as refusals by many undertakers to offer an itemised quote, means that this report does not give a complete analysis of pricing of basic funerals and low-cost funerals in NSW. In addition, quotes were sourced generally on the basis of the brand name, rather than each individual outlet. Where one brand name had numerous outlets, only one quote was gathered. This was because of the impossibility of maintaining confidentiality of CPSA’s researcher in the process of gathering the information. This report therefore does not provide a complete representation of every individual undertaker in NSW. However, the assumption was made that costs for comparable funeral services should not differ greatly within the one brand name, with possible exceptions being burial and transport costs (which can differ according to area). [2]

Results were broken down in two ways:

  1. the cost of the total funeral service (both for basic funerals and the least expensive funerals); and
  2. the costs of the individual goods and services that made up the complete funeral, being:
  • professional service fee;
  •  transport;
  • storage;
  • coffin;
  • certificates/permits;
  •  cremation fee; and
  •  total price for additional incidentals

Results

One hundred and twenty four undertakers were contacted and categorised between rural and regional NSW and the Sydney Metropolitan Area (SMA). Forty two were based in the SMA, and 84 were based in rural and regional NSW. Twelve stated that they offer a basic funeral service (nine in the SMA and three in rural and regional NSW); 50 did not offer a basic funeral service, but did provide an itemised quote for their least expensive funeral service (21 in the SMA and 29 in rural and regional NSW); and 65 failed to provide either an itemised quote or any quote at all (13 in the SMA and 52 in rural and regional NSW).

Of the nine undertakers which offered a basic funeral in the SMA, the average price was $5,041 (for a cremation). Of the three undertakers which offered a basic funeral in rural and regional NSW, the average price was $3,954 (for a cremation). [3] 

The nine undertakers that offered a quote for a burial indicates a larger variable in prices for burial compared with cremation. Prices for a burial in the SMA ranged between $3,630 and $14,640.

Average, minimum, and maximum prices for funeral packages and individual funeral goods and services are found in the appendix.

Discussion

i) Low income earners and the cost of a funeral

In NSW there are approximately 887,000 people in receipt of either an Age or Disability Support Pension. Approximately 490,000 of these pensioners are receiving the full rate pension which, for the purpose of this report, is defined as a low income. The current maximum rate of the single pension is $17,446 per annum and the maximum rate of the couple pension is $26,338 per annum. CPSA regularly receives complaints about the cost of funerals from our members and constituents, the majority of whom are living on low incomes.

Frequently, funeral arrangements have not been made in advance and customers have a very limited time in which to arrange a funeral (although take-up of prepaid funerals seems to be increasing judging by anecdotal evidence). Often people arranging a funeral are doing so at an extremely difficult time and can be vulnerable and emotional. Consequently their decision about a funeral is not necessarily made in a stable state and many customers inadvertently purchase a funeral that is outside their capacity to pay. However, many customers purchase an unaffordable funeral because they have no other option, particularly in rural and regional areas. Customers may be required to pay the total amount of a funeral up-front, which is near impossible for the majority of low-income households. Most households where the main source of income is government income support have cash savings below $1000. [4] It is for these reasons that the cost of a funeral is by and large unaffordable for many, especially those on low fixed incomes.   

There is limited government financial support to assist with the cost of a funeral. Centrelink may pay a bereavement payment upon the death of a partner or a dependent, depending on circumstances. The maximum amount available is $2,394, paid in a lump sum. However, this payment is not available to a child upon the death of a parent, even if the child is responsible for arranging the funeral and in receipt of income support (unless they are in receipt of Carer Payment and cared for the parent). There is a bereavement payment for single people, which goes toward the estate. Its total is the individual’s final income support payment, which could be a maximum of $671.00. It is important to note that although a bereavement payment exists for certain income support recipients, usually this payment is whittled away by other expenses following a death. It is widely acknowledged that personal expenditure on healthcare is high in the final year of a person’s life, and many bereaved are faced with sums owing for that care. Equally, the transition from a two-person household to a single person household (and, a subsequent reduction in household income by almost 40 per cent) imposes significant financial stress on the bereaved. Therefore, seldom does the bereavement payment provide meaningful relief from funeral expenses.        

ii) The basic funeral

Only 12 of the 124 undertakers contacted stated that they offer a basic funeral. It is important to note that this figure may be higher if outlets owned and operated under one brand name were individually counted as offering a basic funeral. Even so, from CPSA’s research, the proportion of different undertaker brands contacted that offered a basic funeral was less than 10 per cent.     

For those that did offer a basic funeral, prices varied considerably. The most expensive was a basic funeral (burial), costing $14,640 in the SMA, with the average cost of a SMA basic funeral (burial) being $7,077. To put this in perspective, these quotes represent 84 per cent and 40 per cent of a single pensioner’s annual income respectively. These prices illustrate the high cost of burials even without unnecessary add-ons such as flowers and plaques. The least expensive basic funeral was a cremation offered in the SMA at $3,600, which represents 20 per cent of a single pensioner’s income. The average prices for a basic funeral (cremation) in the SMA were higher than that of rural and regional areas being $5,041 and $3,954 respectively. For a single full-rate pensioner, these amounts represent 29 per cent and 23 per cent of their annual income respectively.  

Interestingly, the cost of a basic funeral (cremation) was, on average, almost $500 more expensive than the average cost of the least expensive cremations in the SMA.

Some prices in the SMA for services that form part of a basic funeral seemed unjustifiably high. One quote included a transport fee of $1,995, for transport of the body of no more than 30 kilometres. The opposite was found in rural and regional areas, where a basic funeral (cremation) was approximately $600 less expensive than the least expensive cremation, but this may be attributed to the small sample size of basic funeral providers outside of Sydney. Nevertheless, the price variations in the SMA show that despite a basic funeral comprising only the essentials of a funeral, its price is not necessarily lower than funerals where unnecessary items are included. This may be due to a larger proportion of ‘boutique’ undertakers offering a basic funeral service, whose brand is generally more expensive than others. Given that NSW now has a clear definition of a basic funeral, the large variations in price support the need for a maximum price of a basic funeral to be set. It is likely that this would increase competition and ensure that low income earners have access to an affordable funeral. 

Many of the itemised quotes for a basic funeral received during the research process reveals a lack of understanding by many undertakers of what constitutes a basic funeral. Undertakers often included unnecessary add-ons, which by law render the funeral no longer a basic funeral, yet their service was still marketed as such. Nine of the 30 undertakers that gave an itemised quote for either their basic or least expensive funeral service included unnecessary add-ons (30 per cent) as did eight of the 32 rural and regional undertakers that provided an itemised quote (25 per cent).

CPSA also found that some undertakers subtly pressure customers to purchase unnecessary items, even though CPSA’s researcher clearly requested a basic funeral or the least expensive funeral available. Common comments during the arrangement process included: “most people prefer to have flowers on the coffin”; and “I think your grandmother would have wanted a priest at the funeral”. Some undertakers claimed to not be able to offer a basic funeral, as it is deemed too basic. One stated that as “most people want flowers we usually cannot offer a basic [funeral] service.” Others claimed to not offer a basic funeral service because their funerals “are suited to people’s needs” or they “directly cater for the family’s needs”. Similarly, another suggested that they have no set product, stating: “we don’t have a basic price. We set prices to people’s needs”. Fees tended to influence an undertaker’s basic funeral provision. One undertaker said that they did not offer the basic funeral as they had “to play around with the figures too much”. 

One undertaker offered a ‘basic funeral’ as a direct committal, where no service for the deceased would be performed. By law, a basic funeral must include a service, which can be attended by family and friends. When questioned about the legitimacy of offering a basic funeral as a direct committal, the undertaker said that their basic funeral is a “no service, no attendance” funeral.

The attitudes expressed by undertakers when obtaining the data for this report suggest that the introduction of legislation in relation to basic funerals has made little impact on the type and cost of services provided by funeral companies across NSW. Through providing a service that is ‘catering to your personal needs’ the funeral industry is able to convince customers to agree to many additional disbursements. It also shows reluctance in the industry to offer only essential services for a funeral even upon request. The packages offered during the research process suggest that often funeral prices are set according to the potential buyer rather than the goods and services available. As such, inclusion of unnecessary items in the funeral service is justified as a tailoring of the service to meet people’s alleged ‘needs’. CPSA recognises that customers are free to pay for whatever goods and services they desire for a funeral, and that obviously providers are free to offer whatever they choose. However, for those who require only the essentials for a funeral, access to such a service can be difficult to find.        

iii)  Funeral costs

For many low income earners the price of a funeral in NSW remains generally unaffordable. The average price for a cremation (for undertakers’ least expensive service) was $4,694 in rural and regional areas and $4,580 in the SMA. To put this in perspective, these prices represent more than a quarter of a full-rate single pensioner’s annual income. If a single pensioner was to pay for the most expensive ‘least expensive cremation’ that CPSA’s research found ($6,300 in the SMA and $6,500 in rural and regional areas), this would comprise over a third of their annual income. For this reason, CPSA considerers price regulation for a basic funeral essential. Despite a recommendation by the Funeral Inquiry that the Office of Fair Trading produce a Product Information Standard that includes the “cost and the make up of an essential funeral (basic funeral)”, there remains no maximum price for a basic funeral service.

There also appears to be a trend towards non-compliance with existing legislation. Undertakers are required by law to provide an itemised quote for a funeral to a potential customer. When asked to break down the costs and services that were included in the funeral price, at least ten undertakers refused to do so. This breaches legislation, as part 101D of the Funeral Goods and Services Regulation (2008) states:

(2) Before entering into an agreement for the supply of funeral goods and services to a consumer (other than an agreement for the provision of a basic funeral) the supplier of the funeral goods and services must give to the consumer a written statement listing the following:

(a) each of the funeral goods and services that are to be supplied to the consumer under the agreement and the cost of each.” [5]

Under the current legislation, it is up to the customer to shop around for a more affordable funeral. Many understandably find shopping around for a funeral following the death of someone difficult. However, this is made even more difficult when undertakers are not transparent in their pricing. Outright refusals to provide an itemised quote illustrate not only a disregard for the Funeral Goods and Services legislation aimed at helping customers, but a reluctance to be transparent about their pricing structures. It also suggests that recourse is not feared by some undertakers following a breach of their obligations under the Act.

Transparency is not the only issue facing customers. Many undertakers carry out ‘up-selling’ techniques, even after a request for a quote for the essentials of a funeral is made. This is usually done by suggesting to the customer to purchase various add-ons. Some of the add-ons our researcher encountered were:

  • priest ($110-$250);
  • printing ($68.52);
  • flowers ($100-$600);
  • clergy ($150-$275);
  • organist ($150);
  • open spray ($88);
  • notices in the newspaper ($100-$250); and
  • memorial book ($45)

One employee of an undertaker took pity on our caller and recommended that they not buy their flowers because “they are often much bigger and more expensive than a person needs and can afford”.

There were some surprising results regarding what should be generally fixed costs for certain disbursements. Compulsory medical and death certificates or permits tended to differ. An undertaker must obtain two medical certificates from a certified doctor and referee (with an estimated fee of $120) as well as a death certificate from the registrar of Births, Deaths and Marriages at a cost of $44 (non-urgent, 2009). The quoted amounts for all three certificates and permits ranged from $165.80 in regional NSW to $300 in metropolitan NSW. By way of example, on 7 May 2009 a metropolitan undertaker quoted $220 for medical certificates and $55 for a death certificate, while on 15 May 2009 a regional undertaker quoted $170 for medical certificates and $38.20 for a death certificate. Variation in medical certificate costs may be due to doctors charging individual fees, however the same cannot be said for the death certificate which is a set price.  Both of these items are disbursements and should not include a mark up.

In some instances, undertakers supplied a quote that did not include all of the necessary costs for the medical and death certificates, despite this being a requirement for the cremation or burial of a body to take place. (This requirement does not apply to the situations where a coroner is involved.) However, these certificates and permits form part of a funeral. 

Similarly, there remains no requirement for undertakers to give a breakdown of their professional service fees, nor has the NSW Government made any significant moves to facilitate greater competition in the industry. Professional service fees for a funeral varied considerably. Prices for the professional service fee ranged from $450 to $3,890. Professional service fees tend to be higher in rural and regional NSW compared with metropolitan NSW. While this may be due to higher travel costs, it may also signal a lack of competition in these areas, as generally there are few undertakers in small local communities and therefore next to no pressure to reduce fees.

iv) Competition

CPSA found many examples of a lack of competition in the industry. The Funeral Inquiry found an increased concentration of ownership in the funeral industry, and CPSA considers this to remain the case. CPSA’s research found 12 different undertakers operating from the one address in the Sydney region. Similarly, InvoCare, the largest provider of funerals in Australia, operates 74 ‘funeral locations’ and nine cemeteries and crematoria in NSW. [6] Invocare’s market share is reported to be around 40 per cent in the Sydney region. [7]  

The NSW Government’s response to the Funeral Inquiry was that the level of competition was satisfactory, and that it was not the role of government to intervene in this area. However, CPSA’s findings suggest that competition in certain areas is limited, especially in rural and regional NSW. Generally only one or two undertakers were found to service a Local Government Area (LGA) outside the major metropolitan and regional centres in NSW.

A lack of competition results in little downward pressure on funeral costs. It is reasonable to assume that lack of competition in rural and regional NSW accounts for only 3 of the 84 undertakers approached offering a basic funeral at the time of this research. Although the introduction of the basic funeral amendment is relatively recent, undertakers outside of Sydney appear not to feel compelled to offer a basic funeral presumably because there is limited pressure to do so. Therefore, customers in rural and regional NSW who already have few options when shopping around may well be forced to purchase a funeral which includes non-essential items. It stands to reason that as long as the NSW Government does not oblige undertakers to offer a basic funeral, residents outside the Sydney area will be generally disadvantaged. For this reason, provision of a basic funeral with a regulated maximum price should be obligatory for all undertakers in NSW.

v) Cost of cremation and graves

It proved difficult to obtain thorough figures for the costs of graves (or burial plots). In general, undertakers did not include the cost of graves, as cemeteries were responsible for those prices. Although CPSA did not source prices from cemeteries for this report, the prices we were able to obtain via undertakers revealed that the cost of a grave drives up the price of a funeral exponentially. CPSA’s research found that burials tended to be almost $3,000 more than cremations. In the Sydney region, the average price for a low cost burial was $7,077.

Sydney is experiencing a shortage of burial space, which is driving up burial plot prices. CPSA therefore considers it prudent that local council planning includes provision of adequate burial space for the long term. In addition, alternative burial practices must be explored to ensure that burials are sustainable for the long term. More importantly, CPSA believes that basic burial plot prices should be regulated, and a maximum price set. Similarly, cremation fees were on average around $825, forming a considerable part of the total funeral cost. Just as there should be regulated prices for a basic funeral, cremation prices should be regulated and a maximum price set. The maximum prices should be determined by an independent body like the Independent Pricing and Regulatory Tribunal (IPART) following broad consultation with stakeholders.  

Conclusion

This report suggests that NSW’s funeral legislation needs to be strengthened to ensure that low income earners have access to affordable funerals.  For the majority of low income earners, (primarily people whose main source of income is Government income support) the cost of a funeral imposes a heavy burden. This report shows that there is a general reluctance in the funeral industry to offer a funeral which excludes non-essential items and which is completely transparent about the cost of goods and services included in the funeral.  Competition outside of Sydney is low, because of smaller populations.  However, this reiterates the need for the NSW Government to enshrine in legislation that all undertakers must offer a basic funeral. In addition to that, there must be a regulated maximum price for a basic funeral.


Without significant political and policy investment to encourage greater transparency and regulation regarding provision of a basic funeral, high and disproportionate prices will continue to plague customers at one of their most vulnerable times.


Recommendations

  1. The disposal of a body is an essential community service and as such the NSW Government should ensure that legislation obliges undertakers to offer a basic funeral; and further that the Independent Pricing and Regulatory Tribunal should set the maximum price an undertaker can charge for a basic funeral.
  2. Cost of cremation be regulated, and a maximum price set for cremation by the Independent Pricing and Regulatory Tribunal. Similarly, the cost of a basic burial plot be regulated and a maximum price set by the Independent Pricing and Regulatory Tribunal. This should be in conjunction with broad consultation with stakeholders. 

Appendix

1. Sample


Sydney Metropolitan Area

Regional NSW

Total Contacted

42

84

Least Expensive Quote

21

29

Basic Funeral Quote

9

3

No Quote

13

52

2. Basic funeral provision

21.4% of metropolitan NSW undertakers and 3.57% of regional NSW undertakers, offer their customers a basic funeral.

3. Basic funeral (cremation)


Sydney Metropolitan Area

Regional NSW

Average Price ($)

5,041.00

3,954.00

Max Price ($)

5,702.00

4,400.00

Min Price ($)

3,600.00

3,507.00

4. Least expensive funeral (burial)


Sydney Metropolitan Area

Average Price ($)

7,078.00

Max Price ($)

14,640.00

Min Price ($)

3,630.00

5. Least expensive funeral (cremation)


Sydney Metropolitan Area

Regional NSW

Average Price ($)

4,581.00

4,694.00

Max Price ($)

6,305.50

6,500.00

Min Price ($)

2,511.00

2,552.00

 

 

 

 

 

 

 

6. Professional service fee

The arrangement and conduct of a funeral service, at either the premises of the supplier or at the place of burial or cremation of a body, to take place between the hours of 8 am and 5 pm on a weekday


Sydney Metropolitan Area

Regional NSW

Average Price ($)

1,717.00

1,994.00

Max Price ($)

2,750.00

3,890.00

Min Price ($)

450.00

800.00

7. Transport

The transport of the body to any of the following places as required where no individual journey is further than 30 kilometres:

the premises of a supplier of funeral goods and services

a mortuary

the place at which the body is to be buried or cremated


Sydney Metropolitan Area

Regional NSW

Average Price ($)

577.00

222.00

Max Price ($)

1,995.00

400.00

Min Price ($)

129.00

95.00

8. Storage

The storage of the body at a mortuary or holding room


Sydney Metropolitan Area

Regional NSW

Average Price ($)

287.00

223.00

Max Price ($)

352.00

330.00

Min Price ($)

165.00

90.00

9. Body preparation

The preparation at a mortuary for burial or cremation of the body, not including preparation for the viewing or embalming of the body


Sydney Metropolitan Area

Regional NSW

Average Price ($)

316.00

168.00

Max Price ($)

480.00

300.00

Min Price ($)

200.00

100.00

10. Coffin

The supply of the least expensive coffin that the supplier of funeral good or services has available


Sydney Metropolitan Area

Regional NSW

Average Price ($)

961.00

786..00

Max Price ($)

1,390.00

1,090.00

Min Price ($)

700.00

340.00

11. Compulsory certificates/permits

The collection of certificates or permits provided by a medical practitioner in relation to the body


Sydney Metropolitan Area

Regional NSW

Average Price ($)

193.00

202.00

Max Price ($)

275.00

300.00

Min Price ($)

75.00

134.00

12. Cremation fee

The burial or cremation of the body


Sydney Metropolitan Area

Regional NSW

Average Price ($)

853.00

805.00

Max Price ($)

1,025.00

974.50

Min Price ($)

750.00

620.00

 

References

 1. Definition of a low income for the purposes of this study is an individual or household whose main source of income is government income support or income of a similar level. The maximum rate of the single pension is $17,446 per annum and the maximum rate of the couple pension is $26,338 per annum.  
2. Please note that only nine undertakers in the metropolitan area and none in the regional area outlined the cost of burial. The primary reason given by undertakers was that it was difficult to give a price on burial plots (due to religious and personal preferences). In spite of this, all other costs quoted for a cremation, other than the cremation fee, would remain the same for burial.
3. Average has a large margin of error due to the small sample size (3).
4. Harmer, J. (2008) Pension Review Background Paper Department of Families, Housing, Community Services and Indigenous Affairs, Canberra, p.25
5. Fair Trading Amendment (Funeral Goods and Services) Regulation 2008 under the Fair Trading Act 1987

6. Invocare Annual Report (2008) http://www.invocare.com.au/files/6315%20INV%20AR08.pdf, Accessed 6 October 2009 p. 4
7. Investsmart http://www.investsmart.com.au/shares/asx/InvoCare-IVC.asp Accessed 6 October 2009

 

 

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