EXECUTIVE SUMMARY – Extract
The analysis of poverty in this report begins with the poverty line used in most international poverty research: 50% of median household disposable income. Before taking account of housing costs, this is a very frugal $433 a week for a single adult living alone in 2015-16. For a couple with two children it is $909 a week.
After taking account of housing costs, more than one in eight people (13.2%) live below the poverty line in Australia. Disturbingly, the poverty rate among children is much higher, at more
than one in six (17.3%). All told, there are 3.05 million people in poverty, including 739,000 children.
Another measure of poverty used in this report is the ‘poverty gap’. This measures the average depth of poverty for those below the poverty line (the average gap between their incomes and the poverty line). This averages $135 per week, indicating that many people in poverty are living well below the poverty line.
From an international perspective, we remain in the top half of the Organisation for Economic Co-operation and Development (OECD) countries with our poverty rate 14th highest out of 36 OECD countries.
Most people below the poverty line (53%) rely on social security as their main source of income.
Social security policies clearly have an impact on poverty, for better or for worse. Most major income support payments are below the poverty line, so to escape poverty, people need to supplement their social security payments with private income or move out of the social security system altogether (if able to do so). Escaping poverty is easier if the payment sits close to the poverty line (e.g. the pension for home owners without children). For example, while one in eight people (12%) in households whose reference person receives the Age Pension are below the poverty line, the remainder have sufficient superannuation or other income in addition to the pension to avoid poverty.
A majority of those living in households whose reference person receives Youth Allowance (64%), Newstart Allowance (55%), or Parenting Payment (52%) fall below the poverty line. The lowest income support payments are Youth Allowance (for single people up to 24 years old living away from the parental home) at $285 per week (including Rent Assistance) and Newstart Allowance, at $328. The low level of Youth Allowance reflects a policy view that young people can rely on financial support from their parents, though many paid at this rate have been assessed as financially independent…
How poverty is defined and measured in this report [Extract from Part 1: Overview of poverty rates and profiles]
For the purpose of this report, people are in poverty when their household’s disposable (after-tax) income falls below a level considered inadequate to achieve an acceptable standard of living. Rather than measure living standards directly (for example, by asking people whether they have to go without socially perceived necessities), we set a benchmark for the adequacy of household incomes by comparing them with middle or median incomes and calculate how many people fall below a benchmark set at one-half of the median. This benchmark is widely used in national and international poverty studies and is referred to as the ‘international poverty line’.
In wealthy countries this internationally accepted benchmark (or ‘poverty line’) for a single adult living alone is a fraction of the median disposable household income of all people. To calculate the median, the household incomes of all people are adjusted for family size using an ‘equivalence scale’, then ranked in order of adjusted income and the income of the middle-ranked person is chosen.8 Commonly chosen poverty line thresholds are then set at either 50% or 60% of this median income. Both are used here, but we focus on results derived from the lower 50% poverty line, which is more commonly used in international poverty research, including by the OECD.
Poverty lines for other types of household (such as a sole parent with two children) are then derived from this poverty line by applying the same ‘equivalence scale’ to estimate how much they need to achieve the same standard of living as the single person…
SOURCE: Davidson, P., Saunders, P., Bradbury, B. and Wong, M. (2018), Poverty in Australia, 2018. ACOSS/UNSW Poverty and Inequality Partnership Report No. 2, Sydney: ACOSS.
Produced by the librarians at the Brotherhood of St Laurence in Melbourne, Australia