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ECONOMICS

Economic stimulus to fight poverty

  • 25 February 2020
On Friday 21 February, part one of Poverty in Australia 2020, a joint study by the Australian Council of Social Services (ACOSS) and University of New South Wales (UNSW) was released. After taking account of housing costs, it is estimated that 3.24 million people, equating to more than one in eight people, are estimated to be living below the poverty line in Australia. For children, it is estimated to be one in six. The subsequent parts of the report detailing the profiles of those in poverty and trends in poverty among these groups will be released during this year.

The data, from 2017-18, defines the poverty line (50 per cent of median income, before deducting housing costs) for a single adult as $457 per week, also stipulating figures for couples, sole parents with two children and couples with two children. The report also highlighted that in Australia, there is no plan in place to reduce poverty, nor is there an agreed definition on what poverty is at the national level.

According to the study, in March 2018, Newstart and Youth Allowance (for students and the unemployed up to the age of twenty-one) were respectively $117 per week and $186 per week below the poverty line. Thanks to the increase in 2009, those receiving the age pension, disability support pension and carer payment were found to be relatively better off at $10 per week below the poverty line.

The Australian poverty figures sit above the OECD average level and are high despite being among the wealthier OECD nations.

The study found that the twenty-five-year freeze on Newstart Allowance (after inflation) along with the transfer of many sole parents to Newstart from 2007 increased poverty and the depth of poverty among the population receiving those payments. The payment has remained the same despite considerable rises in the cost of living, including housing costs by an average of four per cent per year between 2007 and 2017.

The transfer of sole parents to Newstart Allowance from 2007, meaning they did not benefit from the 2009 increase in the pensions, was found to be a contributor to the increase in child poverty. Further, family tax benefits for low income families were indexed to consumer prices rather than the movement in wages, effectively countering the Hawke government’s policy to reduce child poverty. In fact, the consistently noted problem with Newstart, Youth and Austudy allowances has been
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