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Poverty, always the poor relation

<i>Illustration: Kerrie Leishman</i>

Illustration: Kerrie Leishman

It's remarkable that, despite all the effort and expense the government goes to in measuring gross domestic product, it doesn't run to the modest extra expense of measuring poverty. But this being so, it's hardly remarkable the media and the public pay far more attention to the gyrations of GDP than to the extent of poverty.

Why the lack of official interest in such a basic measure of how we're doing as a nation? Because, in an egalitarian country such as ours, poverty isn't much of a problem?

Err, no. In the mid-2000s, Australia's rate of poverty was the fourth highest among 18 developed economies. Surely the reason couldn't be that our record is so bad that the government would prefer us not to think about it? Hmmm.

The more I think about it, the more I want to know what there is to know about poverty in Australia.

And, when some of our big charities - Anglicare, St Vincent de Paul and the Salvos - feel it worth expending some of their precious funds to commission a report on the subject, as they did this week, I'm inclined to take notice. Who knows when next the problem will be drawn to our attention?

As you've seen from the headlines, the report finds that more than 2 million Australians - one person in eight - is living in poverty. This poverty rate of almost 13 per cent has changed a bit but not a lot over the past decade. It's not shooting up, but neither is it falling.

What exactly is meant by ''living in poverty''? How is it measured?

There is more to being poor than just an absence of money. Another dimension is how isolated you are from the support of other people. But this measure - calculated from official surveys by the social policy research centre at the University of NSW - is a purely monetary one.

The next point is that poverty is measured differently in rich countries from poor countries.

In the developing world they measure ''absolute poverty'' - whether you're so poor you're at risk of death from malnutrition.

In rich countries few people, no matter how poor, are starving. So we measure ''relative poverty'' - how many people or households have incomes well below what's typical in our community. And how low is ''well below''? Usually, that's a case of drawing an arbitrary line, and drawing it so low there isn't much room for argument.

This study sets the poverty line at a level commonly used in comparisons between the rich countries. It ranks the disposable (after-tax) incomes of all households from highest to lowest, then draws the line at 50 per cent of the median (dead-middle) income.

The study finds almost 13 per cent of households fall below the line. Hold that thought.

The main way people avoid poverty is by having a job and earning income from it. So you'd expect that, unless people were on particularly low wages, or could find only part-time work, or had a lot of others depending on them, working households would avoid poverty.

The main way governments seek to avoid poverty in the community is by paying a range of social security benefits to those people who, for one reason or another, are unable to work.

Those too old to work get the age pension; those too sick get the sickness benefit; those physically or mentally unable to work get the disability support pension; those too busy minding children get the single parenting payment; those too busy caring for a relative get the carer payment. And those who just can't find a job get the dole.

The federal minimum wage - increased each year by Fair Work Australia - is comfortably above the poverty line which, in 2010, was $358 a week for single adults.

And, most people with children to support get the relatively generous family tax benefit.

So why do 13 per cent of people fall below the poverty line? The biggest single reason is that the levels of the various social benefits fall below the line. Way below in the case of the dole; a little below in the case of the single parenting payment and the age pension.

It follows that, unless they can supplement their payment with income from savings or a little part-time work, people living on social security payments are at great risk of poverty. Overall, 37 per cent of people on social payments live below the line. But the proportions vary widely according to the type of payment: 14 per cent of those on the age pension, 42 per cent of those on the disability pension, 45 per cent of those on the parenting payment and, get this, 52 per cent of those on the dole. Not surprising then, that people on social payments account for almost two-thirds of those in poverty.

The next most important factor explaining why people fall below the line is the high cost of housing.

In particular, the gap between the costs of owning and renting. It's a safe bet the majority of people in poverty are renters.

It may surprise you that the retired account for only about 15 per cent of those below the line. That's because so many own their homes outright.

When you're measuring relative poverty, it follows as a matter of arithmetic that the only way to reduce the proportion of people falling below the line is for their incomes to increase at a faster rate than incomes generally.

Julia Gillard could reduce poverty at a single (expensive) stroke: a decent, one-off increase in the indefensibly low rate of the dole.

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197 comments

  • And which political party's platform supports a realistic increase in the dole? The Greens. Both Labor and the Coalition are in a race to prove who can be toughest on "dole bludgers".

    Commenter
    Stephen
    Location
    Briz
    Date and time
    October 17, 2012, 8:51AM
    • Eh?

      the greens policies do more to destroy jobs in my region than any other party.

      The Riverina is already running a higher than average unemployment rate ( due in part to government water theft which means less is grown here ) and the greens will only make that worse for the greens truly believe food comes from either supermarkets or the restaurant at parliament house.

      The greens are the new one nation extremists- they make me laugh when they bow to general motors annual 90 million $ blackmail to build filthy guzzlers here..

      Commenter
      Alex
      Location
      Finley
      Date and time
      October 17, 2012, 9:20AM
    • The dole is not the answer to ending poverty, it acts to entrench even greater poverty on future generations. Education & jobs are what gets people out of poverty. The gov't needs to focus on helping our own poor instead of spending billions on other countries, on illegal migrants, on UN giveaways, on ineffective and wasteful programs. Gillard needs to go easy on small business as under her new Fair Work Act, 14,500 small businesses have gone to the wall in the past year alone & with them, the many jobs that people need in order to escape the poverty treadmill. Oh, and get rid of the leeches in the "poverty industry" who want to keep people poor so they themselves can have a job & make a good living.

      Commenter
      jane
      Date and time
      October 17, 2012, 9:28AM
    • "A nation's greatness is measured by how it treats its weakest members." ~ Mahatma Ghandi.

      Exactly! I read the article yesterday "Scraping by on $137 a week" about singles starving on the Newstart. How children are going hungry. The level of hardheartedness directed at these by the selfish governments, the media and peoples is disgusting.
      It's not pretty, I suspect their will be those who say "get a job" to these people. What they need to realise is that these people can't get work due to intermittent illness, mental disorders and instead of being on a disability pension they have been deemed able to work, when in fact the reality is they have a extremely diminished capacities

      Here's the link, I think it's worth while to read to get some more perspective into what is really happening to those dependent on welfare.
      http://www.smh.com.au/nsw/going-without-food-in-some-households-is-the-norm-says-study-20121016-27nhe.html

      What we have seen is Governments distancing themselves from their duty to help and protect people in this country by palming off (privatising) the responsibility for the welfare and employment services of these poor people onto for-profit contractors such as the Howardeque Neo-Liberalism policies "Jobs Network" and the cruel punishment delt out by centrelink, which was created to help not hurt these people.
      I have no issue with it if fine for those with the ability to work and good health, but the redefinition of what it means to be capable in a jobs market that is anything but flexible towards these people with minor disability's and intermittent illness. We also see employment used in a very ambiguous way to describe anyone who works one day a week. One day? And they are lumped in with the full-timers?
      This is the dirty secret.

      Commenter
      Skippy The Suburban Kangaroo
      Date and time
      October 17, 2012, 9:29AM
    • Poverty is being redefined in Australia by the Liberal States not spending, while at the same time businesses are deleveraging, and that will result in recession and unemployment.

      All Liberal States doing exactly the opposite to what the Federal government has been doing for the last 5 years.

      And the world reckons Australia is in the best shape of any country.

      Commenter
      J. Fraser
      Location
      Queensland
      Date and time
      October 17, 2012, 9:55AM
    • J Fraser,
      Geez, poverty didn't exist in Australia when the states and Feds were all ruled by Labor.

      Commenter
      Rodrigo
      Date and time
      October 17, 2012, 10:15AM
    • The idea of full employment is a fallacy. I have had considerable experience in the training industry & appox 4% to 5% of unemployed are considered unemployable (or will have significant hardship in gaining employment) for a range of different issues. You can't call these people "dole bludgers" & their require a livable level of assistance. Our level of assistance via the dole is not a livable income & needs to be raised.

      Commenter
      Bazza
      Date and time
      October 17, 2012, 10:35AM
    • By 1990 no child was living in poverty. The fact that children now are is solely due to the Howard years.
      Interesting reading this article as in a previous one Ross was stating that structurally welfare now constitutes 33% of government expenditure. I think the solution is to eliminate Howard's middle class welfare and redirect that money to the bottom 20% to bridge the gap. The government would end up with additional funds which it could allocate towards improving services and/or building infrastructure.

      Commenter
      Bennopia
      Date and time
      October 17, 2012, 10:36AM
    • @Skippy The Suburban Kangaroo I agree that society is judged by how it treats its least fortunate members. If you are on the unemployment benefit as a result of mental illness then the government should do the right thing by you by moving you to the disability pension and ensuring that you get the support services that you require in order to have a greater quality of life, which may eventually result in employment. Unfortunately it appears that there are many who have fallen by the wayside in this regard as a result of government inaction.
      With regards to mental services, all too often we hear of those who depend on them being neglected. It is time that more funds were allocated to these services. The system needs to be more equitable for and tailored to meet the needs of society's disadvantaged.

      Commenter
      Bennopia
      Date and time
      October 17, 2012, 10:41AM
    • Stephen - Of course, the Greens would support an increase in the dole. The Greens also support throwing open our borders to economic migrants masquerading as "asylum seekers". The Greens also want to handicap the Australian economy (carbon tax, excessive green and red tapes, demonising foreign investors etc) and increase the number of people on the dole as well as other welfare benefits. Of course, the Greens have no idea how to pay for this socialist nirvana they want to create. When will people accept the dole is only meant to be temporary, not your only source of income for the rest of your life (or in some cases, for generations). As for the bleeding hearts who claim some people are "unemployable", that is rubbish. They are only unemployable because they have been priced out of the market. If the market price is too low, then there can be top-ups. This way, the person has to work to claim his or her "top-up" instead of sitting on their back-sides (which do nothing for self-esteem).

      Commenter
      hbloz
      Date and time
      October 17, 2012, 11:17AM

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