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One in eight people living in poverty in Australia: new report

13 October 2012

The Australian Council of Social Service has today released a new report showing poverty in Australia remains a persistent problem with an estimated 2,265,000 people or 12.8% of all people living below the internationally accepted poverty line used to measure financial hardship in wealthy countries.

The report provides the most comprehensive picture of poverty in the nation since 2006 and shows that people who are unemployed, children (especially in lone parent families), and people whose main source of income is social security payments, are the groups most at risk of poverty.

"This report reveals that despite years of unprecedented growth and wealth creation, we have made little ground in combatting the scourge of poverty with 1 in 8 people overall and 1 in 6 children living below the poverty line," said ACOSS CEO, Dr Cassandra Goldie.

"In a wealthy country like Australia, this is simply inexcusable.

"Over a third (37%) of people whose main income is social security is living below the poverty line, including 52% of people in households on Newstart Allowance. The low level of this payment means that when unemployment goes up as it did last month, more people are thrown into poverty. The Newstart Allowance has not been increased in real terms since 1994 so households relying on it have been falling further behind community living standards and into poverty.

"Two thirds of people on Newstart have been unemployed for more than a year and they clearly need more help than they are getting now from employment services. The Government only funds Job Services Australia providers an average of $500 to $1,100 a year to invest in training and work experience for this group.

"The report also shows that there are almost 600,000 children living in families below the poverty line. About half of those children are in sole parent families, and one quarter of people in sole parent families are living below the poverty line.

"This makes the Federal Government's recent cuts to payments for sole parents all the more disturbing. Under the changes passed in the Senate last week over 100,000 sole parents on the Parenting Payment will be between $60 and $100 a week poorer from January 2013 when those with children over eight years of age are dropped to the lower Newstart Allowance.

"On the other hand the $32 per week increase in pensions (above inflation) in 2009 appears to have reduced poverty among older people (which is 13.2% for people over 64), though the single pension rate was still slightly below the poverty line. Unfortunately the increase to the Age and Disability Support Pensions was not extended to sole parents on the Parenting Payment and people on Newstart Allowance, which is an alarming $74pw below the poverty line.

"We urge the Commonwealth and state governments to take steps in their next Budgets to reduce poverty, by increasing income support for those in the deepest poverty, strengthening employment services for long-term unemployed people, and easing the high cost of housing for people on low incomes who rent privately.

"High priority should be given in the next Federal Budget to raising the Newstart Allowance by $50 per week for single people and sole parents, and the cuts to income support for sole parents should be reversed or at least delayed.

"Paid work is a key pathway out of poverty, and we need to see more investment in wage subsidies and training for people who are long term unemployed to make a difference to their job prospects. This should be implemented to stop recent increases in unemployment from becoming entrenched.

"To tackle poverty we also need urgent action to ease housing cost pressures, particularly for low income people who are renting privately. People on social security and those in very low paid work receive Rent Assistance to help with housing costs, but at a maximum of $70 a week this is less than a third of typical rents for flats in capital cities and mining towns.

"At the start of Anti-Poverty Week, ACOSS is calling on the Federal Government to finally commit to a national development goal to reduce poverty in Australia. Prominent Australians such as Professor Fiona Stanley, Ms Janet Holmes a Court, philanthropist David Morawetz, The Reverend Tim Costello, and many others are joining us in this call. We need an agreed measure of poverty, such as the Australian National Development Index, and we need to annually measure our progress towards reducing poverty.

"It is simply unacceptable that so many people are still going without the basics and the sorts of opportunities the rest of us take for granted. A wealthy country such as ours can and should do better to ensure that everyone is afforded an adequate standard of living. It is a fundamental human right," Dr Goldie said.

Media Contact: Fernando de Freitas 0419 626 155

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Key findings:

  • 2,265,000 people (12.8%) were living below the poverty line
  • 575,000 children or 17.3% were living below the poverty line
  • 63% of people in unemployed households were below the poverty line
  • 25% of people in lone parent households were below the 50% poverty line
  • 37% of people in households whose main income was social security were living below the poverty line
  • Among people in households where the main income earner received the following payments, the following proportions lived below the poverty line, after taking account of housing costs:
    • Newstart Allowance, 52%
    • Parenting Payment, 45%
    • Disability Support Pension, 42%
    • Carer Payment 24%
    • Age Pension, 14%
  • 62% of people below the poverty line came from households with social security as their main source of income, but a sizeable minority (29%) were in households with wages as the main income source. This 29% figure is due to the higher number of wage-earning households overall. It is likely that most of these people live in households where people receive part time earnings only, or are raising children on a low wage
  • 14% of women were below the poverty line compared to 12% of men
  • 54% of people living in households below the poverty line were female compared to 46% male
  • 26% of adults living in households below the 50% poverty line came from a non English-speaking country
  • The level of poverty was higher (13.1%) outside capital cities than in capital cities (12.6%)
  • The proportion of people in poverty rose by approximately a third of a percentage point from 2003 to 2010 but it is difficult to compare poverty levels over the long term due to changes in the various ABS surveys.

About the research

This research was conducted for us by Social Policy Research Centre at the University of New South Wales. The data source is the Australian Bureau of Statistics (ABS) Income and Expenditure surveys for 2009-10 and previous years. The poverty line is calculated as a proportion of the disposable income of a ‘middle income' (median) household. The report uses the austere 50% measure, but also makes a comparison at the higher 60% measure used in Britain, Ireland and the European Union. The research takes into account people's housing costs as well as their incomes by deducting average housing costs (rents, mortgage payments and rates) from the relevant poverty line and deducting each household's housing costs from their incomes.