The poor in Australia: who are they and how many are there?

The Poor in Australia: Who Are They and How Many Are There?

E-Brief: Online Only 22 August 2002

Dale Daniels, Analysis and Policy
Social Policy Group

Background

This brief is intended to provide easy access to recent material on the extent of poverty in Australia, the characteristics of those in poverty and some recent international comparative studies. The Australian material usually draws on data that is only a few years old. The international studies tend to use data that is somewhat more dated owing to the difficulties of getting comparable data from many countries.

Poverty Lines

In Australia there is no official measurement of the extent of poverty. Estimates are made from time to time by researchers in various organisations that study social policy issues. Generally poverty measurement is concerned with income poverty. A judgement is made about what amount of income is needed by families of differing compositions and Australian Bureau of Statistics survey data is used to estimate how many income units or individuals fall above or below that income level. Clearly the derivation of that income level or poverty line is quite crucial in this method of estimating the extent of poverty.

Henderson poverty line and alternatives

Until recently the most common method for arriving at a poverty line was that developed by Professor Ronald Henderson in the early 1970's. It was used by the Commission of Inquiry into Poverty and has been widely used since then. Updates of the Henderson poverty line are available here.

More recently alternative poverty lines have become quite widely used due to concerns amongst poverty researchers about the way that the Henderson poverty line has been updated over time. In international comparative studies, poverty lines are usually set at some proportion of median or average income. This practise is now fairly common in Australian poverty research.

Absolute and relative poverty

It should be noted that estimates of poverty are generally estimates of relative poverty. They estimate how many families have low incomes relative to other families. The alternative, absolute poverty, would be measured by estimating the numbers of families who cannot provide the basic necessities such as housing, food or clothing.

Poverty Gaps

Poverty line based research is not the only type of poverty research that occurs. Poverty gaps are estimated to indicate the amount of money needed to bring those below the poverty line above it. This gives an added dimension to estimating the extent of poverty.

Poverty in Australia Recent Debate

Starting in 2000 the Smith Family began to publish reports on poverty in Australia on a regular basis. The second of these reports prompted an extensive debate about the extent of poverty and how it is measured. The reports and some key contributions to the debate are listed below.

Ann Harding and Agnieszka Szukalska, Financial Disadvantage in Australia - 1999: The Unlucky Australians?, a report commissioned from NATSEM by The Smith Family, 14 November 2000.

The report uses the half-average income poverty line and covers:

trends in poverty since 1982 by family type
poverty by educational attainment and labour force status
poverty by family type and age
poverty and housing
the poverty gap

Part B covers methodological issues and compares alternative poverty lines.

Ann Harding, Rachel Lloyd and Harry Greenwell, Financial Disadvantage in Australia 1990 to 2000: the Persistence of Poverty in a Decade of Growth, a report commissioned from NATSEM by the Smith Family, 28 November 2001.

The report uses a half average income poverty line and covers:

trends in poverty since from 1990 to 2000 by family type
poverty by educational attainment and labour force status
poverty by family type and age
poverty and housing
poverty by State
the poverty gap

Parts B and C cover methodological issues and compare alternative poverty lines.

Kayoko Tsumori, Peter Saunders and Helen Hughes, Poor Arguments: A Response to the Smith Family Report on Poverty in Australia, Centre for Independent Studies Issues Analysis no. 21, 16 January 2002.

Peter Saunders, Poor Statistics: Getting the Facts Right about Poverty in Australia, Centre for Independent Studies Issue Analysis no. 23, 3 April 2002.

These two papers provide a critique of the Smith Family report by the Centre for Independent Studies (CIS). Peter Saunders is the Director of Social Policy Research at the CIS. (There are two researchers in this field with the same name. One is Peter Saunders who heads the Social Policy Research Centre at the Uni of NSW and the other is the author of this paper). His team questions the choice of poverty line used and the trends in poverty suggested by the Smith Family Report.

Peter Saunders, Getting Poverty Back onto the Policy Agenda, Smith Family Research and Social Policy Briefing Paper no. 10, March 2002.

Peter Saunders Director of the Social Policy Research Centre (SPRC) at the University of NSW, wrote this critique of the CIS position.

Ann Harding, Research Highlights a Nation Growing Apart, Australian, 25 February 2002.

Ann Harding Director of NATSEM puts the poverty estimates in a broader context and comments on the CIS criticisms.

Child Poverty in Australia

Ann Harding and Agnieszka Szukalska, Social Policy Matters: The Changing Face of Child Poverty in Australia, 1982 to 1997 98, paper presented at the 7th Australian Institute of Family Studies Conference 26th July 2000.

This paper provides the most recent look at child poverty. Trends from 1982 to 1997-98 are estimated.

R G Gregory, Children and the Changing Labour Market: Joblessness in Families with Dependent Children, Centre for Economic Policy Research Discussion Paper no. 406, August 1999.

This paper looks at the link between unemployment and child poverty.

Regional Poverty in Australia

R Lloyd, A Harding, and H Greenwell, Worlds Apart: Postcodes with the Highest and Lowest Poverty Rates in Today's Australia, paper prepared for the National Social Policy Conference, Sydney, July 2001.

This paper provides a regional perspective on poverty.

Ann Harding, Rachel Lloyd, Otto Hellwig and Geoff Bailey, Building the Profile: Report of the Population Research Phase of the Australian Capital Territory Poverty Project, a report commissioned from NATSEM by the ACT Poverty Task Group, 13 December 2000.

This paper looks at poverty in the ACT in 1999.

Indigenous Poverty in Australia

B Hunter, Three Nations, Not One: Indigenous and Other Australian Poverty, Working Paper no. 1, Centre for Aboriginal Economic Policy Research (CAEPR), 1999.

This paper measures the extent of poverty amongst indigenous people and explores measurement issues, as well as examining the indigenous experience of poverty and strategies for tackling indigenous poverty.

International Comparisons of Poverty Rates

Luxembourg Income Study (LIS) Key Figures

The LIS website contains useful basic comparative data on poverty in the countries included in the study. Relative Poverty Rates for the total population, children and the elderly are included.

A table showing poverty rates for children by family type is also provided.

Stephanie Moller, David Bradley, Evelyne Huber, Francois Nielsen, and John D Stephens, The State and Poverty Alleviation in Advanced Capitalist Democracies, Luxembourg Income Study Working Paper no. 278, August 2001.

This paper analyses the impact of the state on the incidence of poverty in the working-age population of fourteen advanced capitalist democracies between 1970 and 1997.

Bruce Bradbury and Markus Jantti, Child Poverty Across Industrialized Nations, UNICEF Innocenti Occasional Papers, Economic and Social Policy Series no. 71, 1999.

This paper estimates of patterns of child poverty for twenty-five nations using data from the Luxembourg Income Study. An analysis of the sources of variation in child poverty across the nations studied is also provided.

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The poor in Australia: who are they and how many are there?