Australian poverty stuck above OECD average

By Leith van Onselen

The Australian Council of Social Services (ACOSS) has released its fifth edition of Poverty in Australia, which finds that Australia has failed to reduce the level of overall poverty in across the nation over the 10 years to 2014, with 13.3% of the population (2.99 million people) living below the poverty line in 2013-14:

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Alarmingly, there has been a 2 percentage point rise in the number of children living in poverty in the period, now 17.4% (731,300 children):

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By family type, lone parents experience the highest poverty rates at 33.2% and this has been a consistent trend throughout the decade. The rate of poverty for lone parents has increased since 2012, a year in which 80,000 sole parents were moved from pension to (much lower) allowance payments:

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Despite Australia’s strong economic performance, our 2014 poverty rate ranks 14th highest out of 36 OECD countries – well below that in the United States which is second-highest at 17.5% but way above that in Denmark, which is second-lowest at 5.4%. Our poverty rate is also above the OECD average:

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The majority of people below the poverty line relied on social security as their main source of income (57.3%), but a significant proportion received wages as their main income (32%):

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Most people living in poverty are also of working age:

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Those relying on Newstart and the Parenting Payment are struggling the most, with 55% and 51% of recipients respectively falling below the poverty line.

For example, once rental assistance is taken into account, a single person with no children receiving Newstart in 2013-14 fell $109.55 per week below the poverty line, whereas Youth Allowance recipients were even further below: for a single person with no children it fell $158.63 per week below the poverty line.

Not surprisingly, unemployed households experienced poverty at the highest rate of all the population groups analysed at 63.2%, a 2% increase since 2012.

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The vast majority of people below the poverty line were also in rental housing in 2014, whereas homeowners were far less affected (especially those that owned their homes outright):

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Older Australians have bucked the broader trends, experiencing a significant fall in the incidence of poverty over the past decade, due largely to increases in the Aged Pension in 2009:

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Not surprisingly, the Aged Pension is also far more generous than other forms of welfare:

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The gaps are set to worsen, too, with the indexation of the Aged Pension far more generous than the other forms of welfare:

The Newstart Allowance has not increased in real terms (above the Consumer Price Index – CPI) since 1994. This means that people who are unemployed have not shared in increases in living standards received by the rest of the community for more than 20 years…

The figure below compares the single maximum rate of Newstart Allowance and the Pension payment with wages (average weekly ordinary time earnings, or AWOTE). The figure shows that the gap between the Newstart Allowance and Pension payment (as well as average wages) has increased over time, as the Pension was indexed to wages allowing it to rise with community living standards, while the Newstart Allowance was indexed to CPI only.

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Responding to the ACOSS report, the Turnbull Government argued that the answer is to get people off welfare, not boost welfare payments. From The Guardian:

The assistant minister for social services, Zed Seselja, said the government was very committed to finding ways to encourage people to look after themselves and get people off welfare if they didn’t need to be on it.

“Our opponents on the left have pushed, I think, a welfare mentality in this country,” Seselja told Sky News on Sunday. “We simply can’t go on assuming huge numbers of Australians welfare will just become the norm.”

He said the government is committed to an “investment-led approach” which could result in more training, more mentoring and more opportunities for internships.

But ACOSS’ chief executive gave the comments short thrift:

“We frame it as if it’s the fault of the individual, you’re either lazy, not working hard enough, not retraining hard enough, but the basic numbers are there,” she told ABC television.

“One job available for every five people conservatively is the estimate looking for paid work”…

She said the cuts stripping another $60 a week from single parent families and the proposal to withhold Newstart support for young people for up to four weeks would likely lead to increased poverty.

I’m siding with Goldie on this one. The Government’s “investment-led approach” to welfare won’t magically boost the number of jobs available to the unemployed, which is what is needed if those on welfare are “to look after themselves”.

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Comments

  1. This is a national tragedy, and completely avoidable.

    If only interest rates were lower. Shame on the RBA! Lower teh rates to fix thing, you bastards!

  2. I was concerned by the report yesterday but I was completely reassured when I saw the interview with Minister Alan Tudge this morning. The Govt had a good record of creating jobs he said, ignoring the fact that with high rates of migration, there needed to be a lot of jobs created. So hungry kids can take solace in the government’s job creation record. Even though Minister Sludge failed to mention the 800,000 people out of work, the barely improving rate of unemployment and the high rate of underemployment. The other factor reassuring the undernourished children of Australia said Minister Drudge was the government’s welfare reforms. He did not say how this would help hungry kiddies but he said the government was reforming welfare. So that generalisation without any detail is also how the government is dealing with this scandal. Any notion of supplementing welfare payments or some of food stamps system to assist did not feature in the Minister’s answer. That of course would involve expenditure of funds which have already been allocating for income tax cuts for above average income earners. Alan’s surname is capable of much alteration but my favourite is Minister Fudge. Appropriate given his completely inadequate response which he provided for the needy children of Australia, this morning. Obviously he was wheeled out at as a relatively junior operative because he is working his way up the ladder. However awkward it was to appear on TV and imply that the Government had no actual real response to this pronlem, the outing will be a positive feature on his service record when it comes to consider future promotions.

  3. Not my ideal solution however: I think govt should remove the minimum wage and remove newstart and replace it with a ….. JOB.
    Govt should create jobs that welfare recipients can do instead.

    Instead of trying to force employers to pay a minimum of $18 per hour, govt should instead pay $20 per hour for its jobs.

    If, as neoliberal voters and politicians claim, there are plenty of jobs to go around, then govt should have no trouble at all creating the jobs as I suggest.

    Obvious jobs to create would be walking the streets picking up rubbish. A person in a wheelchair can pickup rubbish from their chair. Then there is a job of pushing the wheelchair person and another job of driving the wheelchair person (and the pusher) to and from the streets. There is a job of cleaning the car that was used, etc, etc.

    • Many parents with ordinary jobs struggle to get their children to and from daycare and school. Each child could be visited by two McWorkers in the morning. The parents go off the work and the McWorkers supervise the children getting ready and then walk them to school and lockup the house. Obviously govt could create 2 or 3 McJobs per child as they could send one male and one female McWorker to each house, and another McWorker to supervise the first two.

      • Not work for the dole. The McJobs would pay $20 per hour and would be available for any citizen to take. You could do an extra 5 hours of work and get an extra $100. There would not be any dole. But there would be a guaranteed job for any citizen no matter how poorly educated, how poorly skilled, or how disabled, or if they lacked 4 years experience doing the exact same thing.

    • Older people, some children and some tourists have trouble catching buses and getting and and off the buses.
      A useful McJob would be to work at bus stops selling tickets and telling people which bus to catch. Inside the bus another McJob could be helping people up the stairs and to get seated. The McWorker could also help people figure out which stop to get off at, and could even check for valid tickets.
      On railway stations obvious McJobs could be created. McWorkers could sell tickets, sweep and clean, and keep an eye out for suspicious activity, call the police, etc.

      • PlanetraderMEMBER

        Claw

        When we were in the States several years ago they had people doing this. I spoke to one lady who was a food technologist who had lost her job 6 months earlier and this was all she had found. And I think this is where the figures will get worse as robotics/automation increases it will remove any of the jobs that bottom 32% of wage earners in poverty usually have – so then they will switch from wages to welfare. Not a pleasant thought about our future.

      • You are a Chinese communist! They do that in China. Except they use technology to sell you the ticket as you get on and off the bus.

    • If the pension age is to be raised from 65 to 67 (which I disagree with) then a good starting point would be for govt to offer a McJob to all 65-67 year olds.

      • Its already been raised as far as I know, there was talk of raising it further too 70.

        From the Human Services website
        To be eligible for Age Pension you must be 65 years of age or older.

        From 1 July 2017, the qualifying age for Age Pension will increase from 65 years to 65 years and 6 months.

        The qualifying age will then increase by 6 months every 2 years, reaching 67 years by 1 July 2023.

        If you were born between you qualify for Age Pension at age
        1 July 1952 to 31 December 1953 65 years and 6 months
        1 January 1954 to 30 June 1955 66 years
        1 July 1955 to 31 December 1956 66 years and 6 months
        From 1 January 1957 67 years

    • Cut hours.
      Overtime at 36 for wage earners

      Ah! The old Hitler Nazi policy.
      You vill do az ve say.

      I prefer the soviet policy of offering low-paid employment as I describe in my other comments. Offering a fallback job is surely less offensive than limiting working hours for those productive neoliberal business citizens. Think of the market, think of liberty, think of freedom!

      • LOL! Straight to Hitler, ey?

        My model works with our current industrial relations laws, for the most part mirrors what happened in the 80s when 40hrs became 37.5 and ensures the market will figure out the best approach.

        Labour is in oversupply. There are only two ways to pressure supply:

        1) Remove minimum wage

        2) Restrict hours.

      • LOL! Straight to Hitler, ey?
        You made a moronic comment about soviets, so I made one about Hitler.

        The problem is that the market value of certain people’s labour is less than the market value of decent shelter, food, etc that those people require to live a decent life.
        I seriously support a citizens income funded by unearned increment on natural resources. eg land and resource rents are divided evenly between citizens. However for discussion here I suggest McJobs are an alternative.

      • Here’s the narrative you’ll come up against:

        “So you’re going to tax me enough to pay someone $20/hr? Hmmm… How’s about I just work less?”

      • “So you’re going to tax me enough to pay someone $20/hr? Hmmm… How’s about I just work less?”

        Is that a bad thing ?

    • The UK level of poverty is 10.5%….Australia is at 12.8%.

      Perhaps with some effort we could be dragged up to the UK level.

  4. ErmingtonPlumbing

    All this brainwashed, indoctrinated, intellectually courpt moralizing gives me the Shits.

    We are a Nation of only 24 million people, sitting on a resource rich 7,692,024 km2 island.
    There are no excuses that justify the existance of ANY poverty in this Country.
    To argue otherwise just makes you a selfish prick.

    • That is good labor policy, the last mine I heard of that Labor had an interest in was the fully funded expedition to find Lasseter’s reef.
      How about if the party bought a few mines and businesses for the brothers,
      How about “Union Plumbing”, have to be a goer

      • ErmingtonPlumbing

        Well, even though I have worked for myself since 2007 ( 3 years in the pilbara as well in that time) I am still a fully financial member of the NSW CEPU Plumbing division,… member # M0202461.
        Kinda silly I know, as they clearly do nothing for me,.. being Self Employed,… But its a Principal thingy.

        You know, like spending more, buying the Dairy Farmers milk at woolies or choosing the more inconvenient Plumbers Co-Op (over Reece) as my plumbing supplier.

        Is that something you can relate to Wiley?

      • YEs Sir, but the future is in socialised work, A plumbers union.
        Seems now there is a Uber type platform for tradesmen.
        Luckily, by design, I have a construction sector to myself. but for all the others, its going to be dog eat cat.
        Especially when new construction stops and tradesmen have to be diagnostic technicians.
        of that 40% job loss outlined by the CSIRO probably 15% will be manual tradesmen.

  5. I found the number at the poverty line for a family with kids to be quite high (it was slightly under $900 per week).If I think about my family, yes $900 per week would make things difficult, but I don’t think we would be living in poverty if we were on that amount – particularly if you could rent a place for $350 per week (which is doable even in some of the lower Sydney suburbs). The single person number at about $430 rang true though.

    • An interesting experiment might be to try living off $900/wk for a month and see how it goes.

      That said, their definition of “poverty line” seems fixed – 50% of median income – rather than relative to a measured level of expenses ?

      • I did think about it. My family spends about $1300 per week, so would need to reduce by $400. That said, our rent is $580 per week, so there is $230 gone given my $350 p/w rent assumption. So we are now only needing to reduce by $170 p/w. So foxtel would be gone ($20), reduce spending on some food (not eat out weekly, cut bought coffee, not get steak) this calculated at $60 per week, get rid of daycare (in my situation we actually don’t “need” it) thats $50 p/w and don’t do any extras (holidays on a plane, only play one sport, etc.) that’s the last $40. Yes its very tight, but I think it is doable

      • I suspect it might be a case of it’s one thing to think about it, and another to do it.

        For example, what are the consequences of living somewhere where rents are that low ? Do you need to travel more to work (greater fuel or public transport costs, time) ? Do you now not have time to pick up or drop off the kids and have to use childcare (or worse, childcare in extended hours) because your commute is an hour longer each day ? Do you not have time to cook and have to start relying on more expensive preprepared food ?

        Or another perennial problem faced by the poor – lack of a money buffer for emergencies ? Eg: cheap shitty car breaks down, can’t afford to get it fixed immediately (or ever) and have to start using public transport pushing an hour commute each way out to two hours. Or there isn’t a public transport option (eg: shift worker) and you lose your job ?

    • I agree that $900 per week is doable. Rent a house in Whalan for $350 and that leaves $550 per week for everything else. If on welfare then do not need to pay transport costs to work. Grow some vegetables. Try to share a bomb car with nearby friends or relatives, otherwise you need what $1200 per year minimum without even driving anywhere.
      Grow some vegetables in the yard. Shop at Aldi and 2nd-hand shops. No steaks, no lamb, no salmon. Chicken yes. No KFC or Maccas except on special occasions. It’s doable.
      In fact many households in Whalan are doing something just like that.

      • Oh yeah, living below the poverty line. What a lark.
        Been living off $900 a week or less for more than ten years now and with three children. Thought we were doing okay about two years ago but it’s getting tougher and tougher as food, rents, travel and childcare fees go up yet payments and income stay the same.
        You know nothing, Claw. What do you mean, if you are on welfare you don’t work and therefore don’t have travel costs? Of course you can be working and receiving payments if you are casual. My husband has three casual jobs and was on the dole as well. We went off it due to ‘work for the dole’ ridiculousness. We would have had to put our children in to more childcare in order for him to fulfil the requirements. So now when he has no work we just live off my payment and FTB. I get $240 a week parenting payment.
        We live in Kyneton, Victoria, an hour north of Melbourne. He works in Melbourne 2 to 4 days a week, it is never the same week to week. I study three days a week. This is the closest campus for my studies other than Ballarat and we only have one car so easier to go to the city by public transport ($16 a day on a concession). Our rent is $320 a week (we should be paying close to $400 if other rentals in the area are anything to go by, we can not afford to move now), childcare can be up to $200 a week even though we have the highest Childcare Benefit you can get and then some due to my studying. Food is around $200 a week, bills around $120. We don’t go out much but still have a good life. Our kids are happy and healthy but they can’t really do any activities out of school as they are too expensive or the kids are in after school care.
        I am sick of it. It has been shit for me for ten years and that is why I am studying. My husband is a qualified teacher but there are just no permanent full time jobs. I am a dressmaker and you can just start laughing now if you like. Who needs a dressmaker these days? I am retraining but may have to quit because the price of childcare is still too high. I can only get in one day a week when it should be three. But hey, at least I save on public transport. We are highly educated and intelligent people. I read MB for God’s sake, although maybe that is not the best indicator? Anyway drsmithy is absolutely right, every circumstance he has asked about, we live it. Although we do have a reliable car and a savings buffer. The main problem is we are doing so much, getting so busy, paying more to be busy and yet getting paid less. Every year. Three years ago we earned a combined $40,000. Now it is back down to $32,000. When we put in our estimate for FTB at the beginning of each financial year it is less than the year before and we have to provide evidence as to why it is not going up! How would that make you feel, Claw? You know nothing.

      • redhed,
        If you read Macrobusiness you would know that most of the comment-posters are very rich and out of touch with poorer people. You should have noticed I have tried my best to educate them on the reality. How did I do?
        Shop at Aldi and 2nd-hand shops. No steaks, no lamb, no salmon. Chicken yes. No KFC or Maccas except on special occasions. Would that be accurate for you redhed?

        I try to tell them there is a severe housing shortage causing excessive commutes and excessive rents with poorer people suffering the most. Would you disagree with me redhed? Commuting for you is quick and cheap?
        I tell them rents are high. They tell me rents are low and haven’t risen in 20 years. They tell me there is an oversupply of housing and renters are subsidised by landlords. Is that right? Do you feel subsidised at your $320 a week?

        Anyway redhed, welcome to the comments section. Please post regularly. Here, what I know is not as important as what I can explain. Perhaps you can succeed where I have failed.

  6. Poverty rising, unemployment rising, hours being cut, more homeless but hey my house and investment properties are rising in value! Puck u I got mine!

  7. Single parents : Don’t forget that in addition to the parenting payment (or Newstart) recipients are eligible for up to $11,000 (tax free) per year per child Family A and B benefits – this on top of rent assistance, healthcare etc may be a considerable boost.

    • Recall the Joe Hockey radio gig were an angry young woman called complaining about potential cuts or restrictions to payments, the audience up in arms.

      Hockey gets her details, comes back a couple of days later to reveal the young woman, single parent two kids received a total of $55,000 (tax free) assistance in form of pension, benefits, rent, study assist, childcare etc from the taxpayers of Australia.

      • Good point. We also have a higher than average median wage, so if 50% of median wage is the universal “poverty” benchmark, this means that relative rates of poverty can’t be properly compared between OECD countries. For arguments sake, if our median wage was $200K, ACOSS would define those earning less than $100K as “poor”. The genuinely poor countries around the globe would no doubt find the poverty definition for Australia insulting. Final point; the info in the report indicates that the incidence of “poverty” has been improving over the past three to five years – let’s see how many headlines cover that point.

  8. I’m all for a jobs guarantee including for the partially disabled and no dole.
    There is much meaningful work that could be done to support those less blessed/lucky/able, including a concept like “Housing first” https://en.wikipedia.org/wiki/Housing_First
    Having chronically homeless people has all sorts of expenses scattered across a myriad of areas including the high cost of keeping people in gaol and housing the sick elderly homeless in hospitals and associated infrastructure for longer and/or more frequently than would otherwise be the case.
    There are many things that could be done to build a better society, some of which would result in a better economy as well.

  9. Politicians don’t think it’s a tragedy that more of our youth are impoverished.
    They justify their inaction quite easily.
    So…..
    Kick the bastards out.
    Don’t vote for ALP,LNP, greens.
    Vote to put our kids first.
    Stop immigration until we address this population madness.
    Put Aussies first.
    Address the biggest financial expense people have – rent.
    Reducing rents lowers financial hardship on people.
    How do you fix it?
    A) Lower immigration to stop over-inflated rents.
    B) Lower immigration to increase the chances of our young kids getting jobs.
    C) Lower immigration to reduce demand and reduce runaway cost of living prices.

    • Address the biggest financial expense people have – rent.
      Reducing rents lowers financial hardship on people.
      How do you fix it?

      Hugh Pavletich posted that rents in Christchurch had fallen 8%. He didn’t quote them as a % of a typical wage though.
      I wonder what they did in Christchurch to improve the rent situation.

  10. All they need to do is include the family home under DSS as an asset, then increase the pension for those still getting it.
    fk these self absorbed millionaries who receive a pension,… & pay no tax.
    They should also bring in a “min tax threshhold” of say 10% for any income over the pension level also. Far too many elderly pay no tax

    • The government today won’t admit it, but they will do it soon enough. There is no other way forward. Then watch the howls of bullshit from the boomer population.

  11. Anyone remember Hawkie and the no child in poverty thingie?

    I was only a kiddie at the time but I remember him saying it and thinking ‘wow is that possible?’ I also remember him being crucified for it a few later when his deadline came and went and there were still kids, not surprisingly, living in poverty (can’t remember if the rate had gone up). Part of popcod’s growing up and realising politicians are full of it.

    • Interesting. If he did not want kids to live in poverty, he should have made public transport free during the off peak and give out free food or money to everyone with an income of less than A$50k today (whatever the equivalent would be in his day) – paid for by a land tax, water tax, petrol tax, parking tax, and perhaps GST at 20-30%.

  12. That is what Gillard and Abbott achieved by printing 457 visas like crazy and dumbing down Aussie degrees so that just about any foreign “student” can come here an get a “degree”.

  13. A bit sad no one has cottoned onto the statistical basis of the report. This so called poverty line is merely a set % of average income. That the number of those under the line is growing is merely a result of the population as a whole growing and, possibly, increased inequality of income, of which a gini coefficient is a far more accurate indicator. Thus the whole report is worthless blather, other than as a tangential reference to changes in income distribution. As a person who has lived in India, China, Mexico and Brazil, sadly I am well aware of absolute poverty, rather than relative poverty. A more honest attempt at this would attempt to measure the income required to adequately feed, house and educate a single person, a couple and a couple with two children, capital city by capital city and then use movements in this to appropriately adjust new start, pensions, etc.

    • ceteris paribus

      OK, Oveja, I am but a humble end-user of this research product. ACOSS is the peak policy body on the issue of poverty and economic exclusion. The Report’s partner is the NSW Uni Social Policy Social Reserch Centre. You say that their poverty measures and research methodology generate “worthless blather”.
      Perhaps you, the university and the peak policy body should put your heads together and agree upon a common position on “measures and methodology” that do not result in blather- to inform the lay community. It is an important issue.
      I am confident the bodies involved will consult with you, if requested. I will await the result of your deliberations.

      • I agree it is a very serious topic and am happy to help as basing policy on poor data means not all those who need help get it, or not in the right quantity