Lexi Webster
Despite being one of the wealthiest countries in the world, poverty is a significant issue in Australia. The country does not have an official poverty line, but according to various reports and studies, the poverty rate in Australia is estimated to be between 11.5% and 14.5%, with approximately 3.3 million people living below the poverty line. This includes a substantial number of children, with estimates ranging from 16.6% to 17.3% of children under the age of 15 living in poverty. The main factors contributing to poverty in Australia include insufficient income support, unaffordable housing, and high living costs, which have been exacerbated by the COVID-19 pandemic and the recent increase in the cost of living.
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What You'll Learn
Defining poverty in Australia
Poverty in Australia is a complex issue that has been widely studied and discussed. While the country ranks very highly on global indices such as the Human Development Index (HDI) and the Human Poverty Index (HPI-2), there is still a significant number of Australians experiencing poverty.
One of the primary methods of measuring poverty is by establishing a poverty line and determining how many people fall below it. Poverty lines can be set as either absolute or relative, but Australia does not have an official poverty line of either type. The most commonly used poverty lines in Australia are set at 50% and 60% of the median household income, with some organisations also taking into account housing costs. Using these poverty lines, reports from the Australian Council of Social Service (ACOSS) and the Organisation for Economic Co-operation and Development (OECD) have found that the overall poverty rate in Australia ranged from 11.5% to 14.5% between 1999 and 2017.
In 2019-2020, ACOSS reported that 3.3 million people (13.4%) were living below the internationally accepted relative poverty threshold of 50% of a country's median income. This report also estimated that 761,000 children (16.6%) under the age of 15 were living in relative poverty. The COVID-19 restrictions in 2020 saw the poverty rate soar to 14.6% in the March quarter, but it fell to 12% in the June quarter due to boosted income support payments.
Indigenous Australians have higher poverty rates than the general population. In 2016, 31% of Aboriginal and Torres Strait Islander Australians lived in households with incomes below the poverty line. In very remote areas, the Indigenous poverty rate was 53% in 2016.
Housing status also plays a significant role in determining poverty rates. Reports have found that the majority (56%) of people below the poverty line are renting, while only 17% are homeowners without a mortgage. For older people, housing status is the main factor determining their poverty status, with 41% of renters aged 65 and over living in poverty compared to just 10% of all people in that age group. Sole parent families also have high poverty rates, at 35%, with children in these families more than three times as likely to live in poverty as children in couple families.
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Poverty rates among children
Australia does not have an official poverty line, but the ACOSS/UNSW report series, "Poverty in Australia", uses two poverty lines. One is set at 50% of the median household income, and the other at 60%. According to the 50% metric, there are 3.3 million people (13.4%) living in poverty in Australia, including 761,000 children (16.6%). This equates to one in six children.
The rate of child poverty in Australia is higher than the overall average rate of 13.4%. The rate of poverty among young people (aged 15-24) is also above average at 14% (419,000 young people). The poverty rate for children under 15 is 17.3%, according to ACOSS. Sole parent families have the highest poverty rates, at 35%, and children in these families have a poverty rate of 44%.
The high rate of child poverty in Australia has been attributed to several factors. Firstly, the unavailability of affordable housing for low-income adults. It was found that 39% of families with children under 15 faced unaffordable mortgages. Secondly, the low level of income support and family payments has been identified as a cause. Minimum full-time wages are generally above the poverty line, but this does not apply when a single wage supports a couple or family with children. Thirdly, the rate of poverty among households mainly relying on wages rose from 5% in 2009 to 7% in 2019, reflecting weak wage growth. Finally, the Australian government's response to the 2012-14 recession has been criticised, as unlike similar countries, it did not take the opportunity to tackle child poverty.
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Housing conditions and poverty
Housing costs and incomes vary across Australia, and housing affordability differs within and between states and territories. In 2019-20, housing costs as a proportion of income were highest in New South Wales (14.7%) and lowest in Western Australia (12.1%). For private renters, housing costs were highest in New South Wales (22.2%) and lowest in Western Australia (17.4%). The cost of private rental accommodation has increased substantially in recent years, especially after the COVID-19 pandemic. Over the 12 months to September 2023, median advertised rents increased by 10.0% in capital cities, with strong increases in Perth (13.2%) and Melbourne (12.0%).
High housing costs can leave people in poverty with insufficient money for essentials such as food, transport, and education. High property prices and rental stress can lead to rent arrears, resulting in eviction and homelessness. In 2016, the Census concluded that 116,427 people were homeless, up from 102,439 in 2011. The homeless rate in 2016 was 50 persons per 10,000, up from 48 in 2011 and 45 in 2006. In addition, 96,963 people were living in marginal housing and were on the cusp of homelessness, with 80,877 living in severely overcrowded conditions.
The lack of affordable housing options can further entrench people in poverty. The National Centre for Social and Economic Modelling (NATSEM) suggests that the high poverty rate among children may be due to the unavailability of affordable housing for low-income adults. They found that 39% of families with children under 15 faced unaffordable mortgages, indicating that rising mortgage prices may contribute to the high child poverty rate.
The relationship between housing and poverty in Australia is complex, and policy changes are necessary to address the issue. Recognising housing as a basic human right and working towards alleviating poverty through institutional partnerships are essential steps towards improving housing conditions and reducing poverty in Australia.
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Economic conditions and social security
Australia does not have an official poverty line, but the ACOSS/UNSW report series, "Poverty in Australia", uses two poverty lines: 50% and 60% of the median household income. According to the latest available data from the Australian Bureau of Statistics (ABS), the poverty line is $489 a week for a single adult and $1,027 a week for a couple with two children.
In 2022, a UNSW Sydney and ACOSS partnership research report revealed that one in eight people in Australia, including one in six children, was living in poverty. This amounts to about 3.3 million people, with 761,000 being children. The report also found that people in poverty were falling further behind the rest of society, with their average weekly incomes dropping to $304 below the poverty line. The poverty gap increased steadily from $168 a week in 1999 to $323 in March 2020 and fell to $310 in June 2020 due to the additional Covid-19 income support.
The overall poverty rate in Australia fluctuated between 11.5% and 14.5% from 1999 to 2017. It declined substantially from 13.1% in 1999 to 11.5% in 2003, then rose sharply during the boom years to 14.4% in 2007. Following the Global Financial Crisis in 2007-08 and a pension increase in 2009, it fell to 12.6%, then rose modestly to 13.1% in 2017. The main influences on these fluctuations have been changes to economic conditions and Australia's social security system. For example, in 2009, an increase of $32 a week was granted to the single rate of pensions (excluding the Parenting Payment). However, Parenting Payment, upon which many sole parent families rely, was excluded from this increase. This was made worse by the transfer of 80,000 sole parents from Parenting Payment to the lower Newstart Allowance (now JobSeeker) in 2013.
COVID income supports, especially the Coronavirus Supplement, were well-targeted to reduce poverty among key high-risk groups, including people in households whose main income earner was unemployed, people of working age and their families, and renters. They were less effective in reducing poverty among single people with and without children and households whose main income earners were women.
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Income support and COVID-19
Australia's welfare system has been impacted by the COVID-19 pandemic, with the Australian government providing income support to those who lost work during the pandemic. The pandemic has had extensive consequences for the Australian labour market and economy, with some industries being particularly affected, such as the recreation and hospitality industries.
During the early months of the pandemic, income support receipt rose steeply, with the number of people receiving mainstream employment services doubling. However, by September 2022, reliance on income support had returned to pre-pandemic trends. The Australian government provides funding for employment services to help those receiving income support find and keep jobs.
The federal government spent more than A$9 billion to support around 2 million people since June 2021. However, as vaccination rates increased, the government decided to cut off emergency funding for those who lost work during the pandemic. The decision meant that once a state reached 70% vaccination, federal income support payments would begin to be phased out, and once 80% vaccination was reached, emergency payments would end.
The Australian social security system, administered by Services Australia, provides targeted payments and assistance to people who cannot fully support themselves. The main income support payments available are the JobSeeker Payment and Youth Allowance.
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Frequently asked questions
Yes, poverty exists in Australia, even though it is a wealthy country. According to a 2022 study, 3.3 million people in Australia, or 13.4% of the population, live below the poverty line. This includes 761,000 children, or 16.6% of all children in the country.
There are several factors that contribute to poverty in Australia. One significant factor is the rising cost of housing, which has made it difficult for many families to afford a safe home. Other factors include unemployment, low wages, and high living expenses, such as food and utilities. Single adults and sole parent families are also more likely to experience poverty due to the challenges of supporting themselves and their children on a single income.
Poverty in Australia is primarily measured using two international poverty lines: one set at 50% of the median household income and the other at 60%. These lines are used to determine how many people are living below the poverty line, with housing costs also taken into account. However, it's important to note that Australia does not have an official poverty line, and the definition of poverty can vary depending on cultural and economic contexts.
