Poverty in Australia

Poverty in Australia is a contentious political issue. There is little doubt there is absolute poverty in Australia especially in Aboriginal communities.

However, many on the Left of Australian politics argue that relative poverty ought to be the appropriate measure.^{[citation needed]} This looks at the percentage of the population that earns well under average annual earnings. Many on the right of Australian politics argue that this relative measure is a mistake because it hides the existence of absolute poverty in Australia by looking only at those who, for whatever reason, earn relatively little.^{[citation needed]}

Poverty in Australia during the post-war period

In the years following the end of the Second World War, and during Australia's long post-war economic boom, it was widely believed that the introduction of the welfare state together with the emergence of the affluent society had finally put an end to poverty in "the lucky country". The mid-to-late Sixties, however, saw a "rediscovery" of poverty, as it was found that many Australians had failed to share in the post-war economic boom.

A number of researchers and organisations highlighted the persistence of poverty in Australia. According to one academic in 1960, Helen Hughes, about a third of the half-a-million widows and aged and invalid pensioners in Australia were estimated by social workers to be living in poverty. In 1959, another academic by the name of James Jupp wrote about the "submerged tenth" of the Australian population left out of the country's economic prosperity, including Aborigines, shack dwellers, deserted wives, unemployed migrants, slum dwellers, pensioners, and "no-hopers". Research into the extent of poverty in Australia was also undertaken by the Victorian and Australian Councils of Social Service, while the church-based welfare agency, the Brotherhood of St. Laurence, carried out a number of studies into the needs of low-income families and pensioners.

In 1963, a Melbourne university lecturer called Ray Brown estimated that 5% of Australians lived in chronic poverty, with articles published in the radical magazine "Dissent" by David Scott, Leon Glezer, and Michael Keating came to similar conclusions. In 1966 popular awareness of poverty was further extended by the publication of John Stubb's "The Hidden People", where he estimated that half-a-million Australians lived in poverty.

Other studies on poverty carried out by the International Labour Office in Geneva also revealed high incidences of poverty in Australia. In 1973, using a national poverty line, it was estimated that 20.8% of Australians lived in poverty before benefits were taken into account, and 11.0% after benefits were taken into account. By contrast, using a standard poverty line, it was estimated that 24.3% of Australians lived in poverty before benefits, and 19.3% after benefits.

One academic whose work on poverty would galvanise both public and political opinion was that of Professor Ronald Henderson who, together with his fellow researchers from the Melbourne University Institute of Applied Economic and Social Research, carried out the "first systematic attempt to estimate the extent of poverty in Australia".

In 1966, Henderson and the Melbourne University Institute of Applied Economic and Social Research which he headed set out to measure the extent of poverty in the city of Melbourne. A poverty line was set at $33, which was close to the basic wage plus child endowment for two children. Based on this figure, 7.7% of all family units in Melbourne lived on or below the poverty line, while an additional 5.2% "hovered dangerously close to the minimum level".

A Commission of Inquiry into Poverty was set up in August 1972 by the Liberal Prime Minister William McMahon, and Henderson was appointed as Chairman of the inquiry. The Whitlam Government elected later that year expanded the size of the Commission and scope, giving it specific responsibility to focus on the extent of poverty in Australia together with the groups most at risk of experiencing poverty, the income needs of those living in poverty, and issues relating to housing and welfare services. These issues were addressed in the Commission's first main report, "Poverty in Australia", which was released in August 1975.

In this report, Henderson sought to identify the extent of poverty in Australia in terms of inadequate income relative to need, and the poverty line was defined as a percentage of average earnings, adjusted for household size. The poverty line was set at 56.5% of average earnings for a "standard" family (consisting of a male breadwinner, a woman not in paid employment, and two dependent children). According to the report, 8.2% of the population lived in poverty in 1972-73, or 6.4% when housing costs were taken into account. Before housing costs, over 10% of income units in 1972-73 were below the Commission's poverty line, while a further 8% were defined as 'rather poor', having an income of less than 20% above that line. After housing costs were taken into account, the percentage of income units living below the poverty line was about 7%.

The changing face of poverty in Australia

During the first decade of the twenty-first century, the notion that "the rich are getting richer and the poor are getting poorer" gained increasing public and media attention. Often, different conclusions have been reached depending on how poverty is measured. It is argued that Australia's middle class is shrinking,^{[citation needed]} and while the majority of those living in poverty are probably not becoming poorer in absolute terms, they have become more numerous. It has also been argued that those in the bottom 5% of income earners in Australia had, in fact, become poorer over the past decade^{[citation needed]}. Poverty in Australia today is complex and changing.

2001 poverty line

According to the Smith Family in 2001:

1. 13.0% of Australians live in poverty (2.86 million).
2. 2.9% of children live in poverty.
3. 6.8% of single parent families live in poverty.

This report highlighted the relationship between poverty and unemployment with the under-employed facing greater risks of poverty particularly with the increasing casualisation of the workforce.

According to the census figures, Australia's population during census night 2001 was 18,972,350.

2006 UN Human Poverty Index

The last report, 2006, The UN Human Poverty Index (HPI) for 2006 only has a ranking for 18 of the 21 countries with the highest Human Development Index.

In the report, Australia is ranked 14th in the OECD, with a HPI of 12.8.

The value for the 'Population below 50% of median income (%)' for Australia was 14.3% (2.84 Million).

According to the census figures, Australia's population during census night 2006 was 19,855,288

2007 child poverty

Australia's child poverty rate falls in the middle of the international rankings. In 2007, UNICEF's report on child poverty in OECD countries revealed that Australia had the 14th highest child poverty rate.

Prime Ministerial target

In 1987 there was scepticism when the former Labor Prime Minister, Bob Hawke said:

"...by 1990 no Australian child will be living in poverty".

In 2005, Bob Hawke suggested that at least 1 million Australians lived in poverty.

What is poverty?

There are two main ways of defining poverty. The World Bank considers a person to be in absolute poverty if his or her consumption or income level falls below some minimum level necessary to meet basic needs. Robert McNamara, the former President of the World Bank, described absolute or extreme poverty as "...a condition so limited by malnutrition, illiteracy, disease, squalid surroundings, high infant mortality, and low life expectancy as to be beneath any reasonable definition of human decency".

In industrial countries such as Australia however, people in poverty often don't look poor in this absolute sense. Therefore, poverty is more often measured in relative terms, where a family's income is low relative to that of other families. The minimum level of income against which income is considered is called the poverty line.

Map of world poverty by country, showing percentage of population living on less than $1.25 per day. Australia ranks very high with many OECD countries.

Researchers argue about where this line should be drawn. The Smith Family and NATSEM (The National Centre for Social and Economic Modelling) report in 2000 indicated as many as 1 in 8 Australians are experiencing poverty. The Centre for Independent Studies (CIS) argues that their research indicates the figure is 1 in 12 and even could be as low as 1 in 20.

1. The Smith family researchers "added up all the pay packets in Australia and divided them by the number of wage earners. That average is then halved to find the poverty line" (the Mean).
2. The CIS "ranks all the pay packets in descending order finds the wage in the very middle of that range and then halves that… wage to find the poverty line" (the Median). This gives very different results.

The problem of these measures is that they focus exclusively on income. But poverty is also defined through other indicators such as education, health, access to services and infrastructure, vulnerability, social exclusion, access to social capital, etc.

The most widely used indicator to take non-income factors into consideration is the Human Development Index (HDI) compiled yearly by the United Nations Development Programme (UNDP). For advanced economies, this index takes into consideration health (probability at birth of not surviving to age 60), knowledge (percentage of adults lacking functional literacy skills) and social exclusion (long-term unemployment rate). Australia ranks very high on this global index.

Poverty in Indigenous Australia

Indigenous and minority groups are sometimes referred to as the "Fourth World". They experience a lower life expectancy, higher rates of infant mortality, higher unemployment rates, a lower general standard of living (health, housing), high rates of arrest and imprisonment, plus problems of alcohol and other substance abuses.

Australian Indigenous people are no exception. In 2000, life expectancy of Indigenous Australians was some 20 years below that of other Australians. All the socioeconomic indicators such as income, employment, housing, education and health show considerable disparities between Australia's Indigenous and non-Indigenous populations. In fact, Australian Indigenous poverty ranks alongside countries as poor as Bangladesh where absolute poverty is real.

See also

• Homelessness in Australia
• Home ownership in Australia
• Median household income in Australia and New Zealand
• Poverty by country