A new report on Australian income and spending habits has found claims that households are struggling under the burden of increased living costs have little basis in fact.

The National Centre for Social and Economic Modelling (NATSEM) says increased spending on the "lifestyle" sector - including holidays and eating out - is putting pressure on domestic budgets.

NATSEM research fellow Ben Phillips, one of the authors of the study, says Australians have been experiencing "phenomenally good" economic times.

"We've found that incomes have risen very strongly, with the average household being about $224 a week better off just over the past six years," he told ABC Radio National Breakfast.

"It's been spread to both high income earners and low income earners, so I think most people are actually doing reasonably well.

"That's not to say that there are not people out there struggling, but most are doing quite well."

The report looked at increases in after-tax household incomes, and compared that with increases in the cost of living.

"We found overall that they're ahead of that game, ahead of cost-of-living pressures, by around 20 per cent over just the past six years," Mr Phillips said.

"Certainly there are pockets out there of extreme stress, but I think we need to have some perspective that overall Australia is a very wealthy country.

"We need some perspective that things aren't that bad."

'Keeping up with the Joneses'

Mr Philips says a lot of the extra money available to households goes to discretionary expenses - described in the report as "keeping up with the Joneses".

"You're looking at quite a bit more money being spent on restaurants and holidays and airfares," he said.

"But also families are under genuine time pressures, so we are spending more money on childcare because both parents are working.

"We are also spending a lot more money on private school education as well."

He says electricity prices have risen in recent years but this does not mean people are spending more.

"Over the long haul, prices have certainly increased but we've also seen people actually using less energy which is a response to those higher prices," he said.

"We haven't seen increases in the proportion of money going to utilities since 1984.

"It's actually remained very steady, at about 4 per cent of household expenditure."

The report also identifies housing costs - both mortgage repayments and rent - as "a genuine cost-of-living pressure point".

It finds that despite reports of 'mortgage belt' pressures, those who own their houses outright or who have mortgages spend more on discretionary income compared to those who rent.

More support

Queensland Council of Social Services chief executive Mark Henley says people on low incomes, and especially the unemployed, are still struggling.

And he says there are 180,000 people in Queensland alone who are underemployed, and looking for more work to keep up with higher costs.

"There is poverty in Australia. There are a lot of people on low incomes who are struggling now more than ever," he said.

"If you want to look at people on Newstart - and we've got a growing number of people on Newstart - that hasn't increased [in real terms] since 1995.

"Those people would be finding enormous pressures with everyday living costs."

He says governments need to do more work to direct welfare to where it is most needed.

"It needs to be supporting families and individuals to get into employment and looking for career pathways and facing some of those significant increases in costs," he said.

"Everybody deserves to live in a house or [have] a home to live in, everybody deserves to have access to food and electricity.

"Sometimes people just need greater support to get access to them."