POVERTY, PROPERTY AND PLACE A GEOGRAPHIC ANALYSIS OF POVERTY AFTER HOUSING COSTS IN AUSTRALIA RANDOLPH, B., LIU, E., AND BRADBURY, B. A Report for the ACOSS-UNSW Poverty and Inequality Partnership by the City Futures Research Centre and the Social Policy Research Centre at UNSW Acknowledgements The authors would like to acknowledge the following for their assistance in the research for and preparation of this report. It is much appreciated: At UNSW: Melissa Wong (SPRC) and Jin Zhu (CFRC) At ACOSS: Jacqueline Phillips, Peter Davidson, and Penny Dorsch. All errors of omission or commission are solely the authors. ISSN: 1326 7124 ISBN: 978-0-85871-015-3 Poverty, Property and Place: A geographic analysis of poverty after housing costs in Australia is published by City Futures Research Centre & the Social Policy Research Centre on behalf of the ACOSS/UNSW Poverty and Inequality Partnership. Find out more at http://povertyandinequality.acoss.org.au © Australian Council of Social Service and University of New South Wales This publication is copyright. Apart from fair dealing for the purpose of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission. Enquiries should be directed to the Publications Officer, Australian Council of Social Service. Copies are available from the address above. All images including cover © Austockphoto. All images are representative only. 2 Poverty, Property and Place ACOSS Partners B B & A MILLER FOUNDATION DAVID MORAWETZ’S SOCIAL JUSTICE FUND HART LINE AND RAETTVISA SUB-FUNDS OF 3 Glossary ABS Australian Bureau of Statistics ACOSS Australian Council of Social Service CFRC City Futures Research Centre GFC Global Financial Crisis Organisation for Economic Co-operation and OECD Development PAHC Poverty after housing costs are removed 50% of median household after (or before) housing Poverty line costs income Measure of the average depth of poverty for those Poverty gap living below the poverty line SA Statistical Area SIH Survey of Income and Housing SPRC Social Policy Research Centre UNSW University of New South Wales 4 Poverty, Property and Place Contents GLOSSARY 4 EXECUTIVE SUMMARY 7 KEY FINDINGS 8 INTRODUCTION 11 1. MEASURING POVERTY: BEFORE AND AFTER HOUSING COSTS 13 2. POVERTY AFTER HOUSING COSTS IN AUSTRALIA IN 2015-16 15 2.1 Variations in PAHC by tenure 15 2.2 Variations in PAHC across Australia 16 2.3 Regional variations in PAHC at a finer geographic level 17 3. TRENDS IN POVERTY AFTER HOUSING COSTS 29 3.1 Incomes and housing costs 29 3.2 Trends in PAHC 31 3.3 Variations across geographic regions 35 4. THE ROLE OF HOUSING TENURE IN GENERATION POVERTY 37 4.1 PAHC amongst home buyers 37 4.2 PAHC amongst private renters 38 4.3 PAHC amongst home owners 39 5. THE IMPACT OF HOUSING COSTS ON POVERTY RATES 44 6. CONCLUSIONS 57 APPENDIX 1: PREVIOUS RESEARCH 60 APPENDIX 2: AN EXPLANATORY NOTE ON 61 TERMS AND RESEARCH METHODS REFERENCES 65 5 Figures Figure 1: Poverty after housing costs by Figure 21 Percentage point change in SA2 areas, Australia, 2015-16 20 poverty before and after housing costs, 52 Perth capital city area, 2015-16 Figure 2: Poverty after housing costs by SA2 areas, Sydney metropolitan area, 21 Figure 22 Percentage point change in 2015-16 poverty before and after housing costs, 53 Hobart capital city area, 2015-16 Figure 3: Poverty after housing costs by SA2 areas, Melbourne metropolitan area, 22 Figure 23 Percentage point change in 2015-16 poverty before and after housing costs, 54 Figure 4: Poverty after housing costs by Darwin metropolitan area, 2015-16 SA2 areas, Brisbane metropolitan area, 23 2015-16 Figure 24 Percentage point change in Figure 5: Poverty after housing costs by poverty before and after housing costs, 55 SA2 areas, Adelaide metropolitan area, 24 Canberra metropolitan area, 2015-16 2015-16 Figure 6: Poverty after housing costs by SA2 areas, Perth metropolitan area, 2015- 25 16 Tables Figure 7: Poverty after housing costs by Table 1: Before and after housing poverty 14 SA2 areas, Hobart metropolitan area, 26 lines, Australia, 2015-16 2015-16 Table 2: Poverty rates before and after 16 Figure 8: Poverty after housing costs by housing costs by tenure, 2015-16 SA2 areas, Canberra metropolitan area, 27 2015-16 Table 3: Poverty after housing costs by state/territory and regions, Australia, 17 Figure 9: Poverty after housing costs by 2015-16 SA2 areas, Darwin metropolitan area, 28 2015-16 Table 4: Twenty SA2 areas with highest Figure 10: Housing costs as a proportion levels of poverty after housing costs, 16 of gross household income, Australia 31 Australia, 2015-16 1994-95 to 2017-18 Table 5: Changes to household income, housing costs and residual income after Figure 11: Comparison of poverty rates 19 measured before- and after-housing housing costs, Australia, 1995-96 to 2015- costs, Australia 1999-00 to 2015-16 (50% 32 16 of median income poverty lines, 1999- Table 6: Changes in rates of poverty after 2017) housing cost by tenure, Australia, 1995-96 34 Figure 12: Change in distribution of to 2015-16 weekly housing costs of SIH participants, 33 Table 7: Changes to level of poverty after Australia, 1995-96 to 2015-16 housing costs by state/territory, Australia, 35 Figure 13: Poverty after housing costs by 1995-96 to 2015-16 SA2 areas, home buyers, Australia, 2015- 41 16 Table 8: Changes to level of poverty after housing costs by regions, Australia, 1995- 36 Figure 14: Poverty after housing costs by 96 to 2015-16 SA2 areas, private renters, Australia, 2015- 42 16 Table 9: Percentage point changes to level of poverty after housing costs by state/ 36 Figure 15: Poverty after housing costs by territory and regions, Australia, 1995-96 SA2 areas, home owners, Australia, 2015- 43 to 2015-16 16 Table 10: Top 20 SA2s by percentage of Figure 16: Percentage point change in home buyer households in poverty after 38 poverty before and after housing costs, 47 housing costs 2015-16 Australia, 2015-16 Table 11: Top 20 SA2s by percentage of Figure 17: Percentage point change in private renter households in poverty after 39 poverty before and after housing costs, 48 housing costs 2015-16 Sydney capital city area, 2015-16 Table 12: Top 20 SA2s by percentage of Figure 18: Percentage point change in poverty before and after housing costs, 49 outright owner households in poverty 40 Melbourne capital city area, 2015-16 after housing costs 2015-16 Figure 19 Percentage point change in Table 13: Twenty SA2 areas with the largest positive percentage point change poverty before and after housing costs, 50 44 Brisbane capital city area, 2015-16 between before and after housing costs poverty, Australia, 2015-16 Figure 20 Percentage point change in Table 14: Twenty SA2 areas with the poverty before and after housing costs, 51 largest positive percentage point change 45 Adelaide capital city area, 2015-16 between before and after housing costs poverty, Australia, 2015-16 6 Poverty, Property and Place Executive Summary This report presents the facts about the geography of poverty after housing costs (PAHC) in Australia. Taking housing costs into account provides a more accurate picture of material poverty by estimating the incomes that households have left to spend on their living expenses after the cost of their housing has been met and comparing these to overall poverty standards. The analysis reveals the impact of the housing market on the ability of low-income households to maintain a decent standard of living. A key finding is that the vast majority of households living in poverty after their housing costs are accounted for live in private housing. The analysis combines data from the 2015-16 edition of the Survey of Household Expenditure, Income and Housing with data from the 2016 Census of Population and Housing to estimate the distribution of incomes and housing costs across Australian regions. Estimates were calculated at the ABS’s Statistical Area 2 level of geography (approximately 10,000 population). People can experience poverty after housing costs either because their incomes are low, or because their housing costs are high relative to these incomes. Patterns of PAHC across Australia reflect both these factors. Interactive maps of this analysis can be found online at http:// povertyandinequality.acoss.org.au/maps and it is recommended that this report is read in conjunction with these visualisations to aid interpretation. 7 Key Findings 1. Overall, 13.2% of Australian households were estimated to be experiencing after housing cost poverty in 2015-16. This compared with a figure of 8.9% for the before housing cost rate. Note that the figures for poverty in this report are based on those for 2015-16. The latest total poverty figures can be found in Poverty in Australia 2020 Part 1. 2. If we apply the 2015-16 result nationally, this indicates that 1,215,000 Australian households (3.05 million people) were living in poverty after their housing costs were taken into account at the time of the 2016 Census. 3. Rates of PAHC varied by tenure: renters in the private sector (20.5%) and public sector (48.8%) were much more likely than home buyers (9.0%) and home owners (7.7%) to experience after housing cost poverty. 4. Scaled up to national 2016 Census counts, these estimates were equivalent to 452,000, 173,000, 258,000 and 201,000 households respectively across the country. In other words, 84% of all households experiencing poverty after housing costs lived in private housing. 5. Overall, PAHC rates were marginally lower in capital regions compared with non-metropolitan regions, with the exception of South Australia.