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:

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):

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:

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:

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%):

Most people living in poverty are also of working age:

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.

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):

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:

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

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.

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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