A Snapshot On Poverty In Australia

This article is Part two of a series on poverty in Australia. Read part one here.

On 16 October, 2018, the Australian Council of Social Service (ACOSS), in partnership with the University of New South Wales, released its 2018 Poverty in Australia report. This biennial document reports findings related to income and wealth inequality, poverty levels, under- and unemployment statistics and the growing divide between rich and poor in Australia.

The old adage ‘the rich are getting richer and the poor are getting poorer’ seems to be accurate according to the report. One of the reasons is income inequality. The top one percent of Australians earn 26 times what the lowest five percent do. That difference has been increasing in recent years. The lowest five percent are made up mostly of people reliant on Centrelink benefits, mainly aged pensioners, Newstart beneficiaries and sole parents who are mostly women. Some of the reasons why this gap has increased include tax cuts that benefit the wealthy, unequal growth in wages and income from investments, forcing sole parents and people with disabilities to move from pensions to Newstart, and cuts to family payments.

Another reason for the increasing gap between the rich and the poor is wealth inequality. Wealth is based on past income, and by generating investment returns it boosts and sustains income. While the top 20 percent have wealth in investment properties, shares and superannuation, as well as high paying jobs, most of the lowest 40 percent have neither secure jobs or housing. The average wealth in the highest 20 percent is almost 100 times that of the lowest 20 percent, they own 62 percent of all wealth in total and a staggering 80 percent of wealth in investment properties. Between 2003 and 2016 to top 20 percent increased their average wealth by 53 percent and the top five percent increased its wealth by 60 percent. The lowest 20 percent, however, decreased their average wealth by nine percent in the same time frame. Wealth grew most for those aged 65+ and least for those aged less that 35, mostly due to property ownership.

The consequences of poverty are many and varied.

Homelessness is a very real concern for many at the bottom of the Australian ladder. The fastest growing group is now aging women who have had a legacy of underpaid, casual and part time work, home duties while raising children and little savings or superannuation. While homelessness across the board increased by 14 percent between 2011 and 2016, the number of single women aged 65+ finding themselves homeless increased by 51 percent.

Article 25 of the Universal Declaration of Human Rights states:

‘Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.’

It would certainly seem that Australia’s social security system is woefully lacking in fulfilling this human right. Housing alone can be almost impossible to pay for on a single government benefit. Add to that feeding, clothing and paying the bills for oneself or a family, the standard of living for the lowest sections of society are well below the rest of the community. Children going to school without breakfast is all too common in certain postcodes. Rental properties offer little security for the poor with short leases common. There is also no opportunity to save to buy a house. The cost of living keeps rising with food, rent, petrol and power expenses increasing steadily. Centrelink’s base rate for the Newstart benefit, meanwhile, has not been raised in real terms for twenty four years. A recent 50c per day increase to Newstart has been criticised as negligible for recipients. The yearly total of $182 would not even cover an average household’s quarterly electricity bill – and recipients would have to save for the entire year to do so.

Educational inequality is closely entwined with wealth and income inequality. Standardised testing has demonstrated that those children at the bottom of the socioeconomic ladder in Australia were falling further and faster behind. Academic performance of the lowest 10 percent of students fell by almost 50 percent in comparison to the top 10 percent. Indigenous and newly arrived migrant children are over represented in these educational comparison statistics. They are also overrepresented in poverty statistics. When education is compromised at an early age, it is far more difficult to catch up, enter the workforce and participate socially and economically in society.

A third consequence of poverty is related to health. Poor nutrition can lead to a variety of health and dental problems. It can also influence education as the ability to learn is compromised by lack of attention and fatigue. Inadequate medical care and poor hygiene contribute to lower rates of employment as well as higher mortality rates. With less employment opportunities, the likelihood of being able to escape poverty is diminished. It is a vicious cycle.

Mental health can also be negatively affected by poverty. A recent survey suggested that the jobactive process for Newstart recipients was producing anxiety rather than jobs. Excessive face to face interviews that were little more than attendance checks, threats of payments being cancelled, no choice over employment providers and rigorous application requirements meant that participants were increasingly anxious, which in turn affects their ability to find and keep work.

Why does poverty and inequality matter? The report offered this conclusion:

‘Excessive inequality in any society is harmful. When people with low incomes and wealth are left behind, they struggle to reach a socially acceptable living standard and to participate in society. This causes divisions in our society. Too much inequality is also bad for the economy. When resources and power are concentrated in fewer hands, or people are too impoverished to participate effectively in the paid workforce, or acquire the skills to do so, economic growth is diminished.’

Is there a Christian or Biblical response to poverty? How does God view the poor? These questions will be explored in Part three of this series.

Dr Katherine Grocott