Royal Commision and Home Expenditure Measure (HEM) benchmark, page-17

Some interesting arguments here. Some valid, some not. As I said my figures were rubbery and the total based on a rough averaged. That said, to make some observations: First, individual cases are irrelevant when we're talking averages. Second, everyone has different household expenditure based on their income level and lifestyle. And third, the banks (should) calculate ones living expenses on the reality of the day, and not the fantasy of how one could, if pressed, reduce their costs by scrimping.
To argue that one should reduce their living expenses is also irrelevant, given its affordable. If you are the child of war era parents (Baby Boomers) you know what its like to be raised off the smell of an oily rag, so you might indulge yourself and family (grandchildren) - fare enough. Or you're in your 40s with costly teenagers. Or you're are young with babies and a battler trying to buy a home, in which case its appropriate to cut corners to get by. My point here being that everyone is different and no two circumstances are alike. Thus the laws of average comes into play and individual circumstances cannot be fixed by the lowest or highest common denominator. If I was a banker I'd say that circa $50,000 pa is a reasonable average for cost of living expenses for a family of four. Keep in mind that that only equates to $12,500 per person, per year (not counting rent or existing residential mortgage repayments, given that doesn't factor into cost of living expenses on a residential loan application).
Also, keep in mind that the budget I presented did not include car loan payments or credit card balances or a swath of other ancillary expenses incurred by many households. Its all in the averages.