The Bare Necessities: Poverty and Deprivation in Australia Today Submission to the Senate Inquiry into Poverty and Financial Hardship Australian Council of Social Service March 2003 Australian Council of Social Service Locked Bag 4777 Strawberry Hills 2012 Ph (02) 9310 4844 Fax (02) 9310 4822 email: [email protected] www.acoss.org.au Contents Executive summary................................................................................................................................. 5 Recommendations....................................................................................................................... 18 1. A commitment to reduce poverty................................................................................................26 1.1 Anti-poverty strategies: the European experience...................................................... 26 1.2 A strategy to reduce poverty............................................................................................ 30 1.3 Structures to support anti-poverty strategies .............................................................. 31 2. What is poverty?............................................................................................................................... 33 2.1 Understanding poverty in Australia .............................................................................. 33 2.2 Poor people lack key necessities...................................................................................... 38 2.3 The lack of necessities is socially defined...................................................................... 41 2.4 The lack of necessities is caused by a limited command over resources ............... 42 2.5 Poverty and low income.................................................................................................... 43 2.6 The persistence of poverty................................................................................................ 44 2.7 Inequality and poverty...................................................................................................... 44 2.8 Poverty at the international level .................................................................................... 44 2.9 Four poverty concepts ....................................................................................................... 47 3. How can we measure poverty?..................................................................................................... 49 3.1 Income-based poverty lines.............................................................................................. 50 3.2 Budget standards................................................................................................................ 55 3.3 Living standards studies................................................................................................... 56 3.4 A possible approach to measuring and understanding poverty............................. 61 4. The extent of poverty in Australia today .................................................................................. 65 4.1 The extent of income poverty in Australia ................................................................... 65 4.2 Trends in overall income poverty levels over time..................................................... 67 4.3 International comparisons................................................................................................ 71 4.4 Groups most at risk of poverty........................................................................................ 73 5. Causes and dimensions of poverty............................................................................................. 89 5.1 The dynamics of poverty .................................................................................................. 90 5.2 A "culture of poverty"?......................................................................................................98 5.3 Structural causes of poverty in Australia....................................................................101 5.4 Joblessness and insecure employment.........................................................................104 5.5 Low wages .........................................................................................................................115 5.6 Education and skills.........................................................................................................118 5.7 Level of income support..................................................................................................124 5.8 Family pressures and family formation ......................................................................135 5.9 Ill health and disability....................................................................................................138 5.10 Unaffordable and unstable housing.............................................................................143 5.11 Indigenous disadvantage................................................................................................148 5.12 Place, capacity and access to services...........................................................................150 References .............................................................................................................................................157 Table of figures Fig. 1. Four poverty benchmarks (2002) $ per week (disposable income)..........................................8 Fig. 2. Extent of poverty in Australia in 2000 NATSEM/Smith Family estimates..........................10 Fig. 3. Henderson and alternative poverty benchmarks (dollars per week in 2002) ......................53 Fig. 4. Poverty lines compared with alternative indicators for a (2002) ..........................................54 Fig. 5. Low income Budget Standards (dollars per week in 2002).....................................................55 Fig. 6. Extent of poverty in Australia in 2000, NATSEM/Smith Family estimates.........................66 Fig. 7. Poverty gaps in 2000 (below 50% average household income)..............................................66 Fig. 8. Risk of poverty by location in 2000.............................................................................................67 Fig. 9. Indexing poverty lines: underlying principles and implications...........................................68 Fig. 10. Trends in income poverty ..........................................................................................................69 Fig. 11. Poverty in 1973 and 1996............................................................................................................70 Fig. 12. Poverty in OECD countries (mid 1990s) ..................................................................................71 Fig. 13. Child poverty in OECD countries — (mid 1990s) ..................................................................72 Fig. 14. Risk of poverty for Indigenous households compared with all households (1994).........76 Fig. 15. Deprivation among Indigenous households (1994)...............................................................76 Fig. 16. Risk and composition of income poverty by family type NATSEM study (2000) ...........77 Fig. 17. Risk and composition of hardship by family type, ABS Financial stress survey (1999)..78 Fig. 18. Composition of emergency relief applicants by family type ACOSS survey (1999).........78 Fig. 19. Risk of income poverty by age NATSEM-Smith Family study (2000) ................................80 Fig. 20. Risk and composition of hardship by age, ABS Financial stress study (1999)...................80 Fig. 21. Composition of emergency relief applicants ACOSS survey (1999)...................................81 Fig. 22. Risk and composition of poverty by main source of income (2000 .....................................82 Fig. 23. Risk and composition of poverty by main source of income (2000)....................................82 Fig. 24. Risk and composition of income poverty by employment status: NATSEM (1999).........83 Fig. 25. Risk and composition of hardship by employment status: ABS (1999) ..............................84 Fig. 26. Risk and composition of hardship by social security payment: ABS (1999) ......................85 Fig. 27. Deprivation score by DSS payment category..........................................................................86 Fig. 28. Composition of emergency relief applicants by social security: ACOSS (1999) ................86 Fig. 29. Risk and composition of income poverty by housing tenure: (1999) ..................................87 Fig. 30. Risk and composition of hardship by housing tenure: ABS (1999) .....................................88 Fig. 31. The persistence of income poverty in the OECD (mid 1990s) .............................................91 Fig. 32. Patterns of receipt of social security payments — 1996 to 1999 ...........................................94 Fig. 33. Persistent receipt of social security payments among young people..................................97 Fig. 34. Unemployment benefit replacement rates (July 2000).........................................................100 Fig. 35. Unemployment and long-term unemployment ...................................................................105 Fig. 36. Unemployment benefit recipients...........................................................................................106 Fig. 37. Child poverty and jobless families (mid 1990s)...................................................................108