Poverty in Australia refers to the incidence of relative poverty in Australia and its measurement. Relative income poverty is measured as the percentage of the population that earns less than the median wage of the working population.
In 2020, the Australian Council of Social Service released a report stating that relative poverty was growing in Australia, with an estimated 3.2 million people, or 13.6% of the population, living below the internationally accepted relative poverty threshold of 50% of a country's median income. The report also estimated that 774,000 children (17.7%) under the age of 15 were living in relative poverty. [1] [2]
The primary method of measuring poverty is to establish a poverty line and determine how many people fall below it. Poverty lines can be set as either absolute or relative. Australia does not have an official poverty line, whether absolute or relative. The ACOSS/UNSW report series, entitled Poverty in Australia [3] uses two poverty lines and also accounts for people's housing costs. One poverty line, used by The Organisation for Economic Co-operation and Development (OECD) and in this study, is set at 50% of the median household income, while the other is set at 60% of the median income. [3]
First introduced in 1990, the “dollar-a-day” poverty line measured absolute poverty according to the standards of the world's poorest countries. The World Bank defined the new international poverty line as $1.27 a day for 2005 (equivalent to $1.00 a day in 1996 US prices) [4] but it was later updated to $1.25 and $2.50 per day. [5] Absolute poverty, extreme poverty, or abject poverty is "a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education, and information. It depends not only on income but also on access to services." [6]
The term 'absolute poverty', when used in this fashion, is usually synonymous with 'extreme poverty': Robert McNamara, the former President of the World Bank, described absolute or extreme poverty as, "...a condition so limited by malnutrition, illiteracy, disease, squalid surroundings, high infant mortality, and low life expectancy as to be beneath any reasonable definition of human decency". [7] [notes 1] [8] Australia is one of the world's wealthier nations. In his article published in Analysis & Policy Observatory, Robert Tanton notes that "While this amount is appropriate for third world countries, in Australia, the amount required to meet these basic needs will naturally be much higher because prices of these basic necessities are higher."[ citation needed ] [9]
However, as the amount of wealth required for survival is not the same in all places and time periods, particularly in highly developed countries where few people would fall below the World Bank's poverty lines, countries often develop their own national poverty lines.[ citation needed ]
Poverty can also be measured in relative terms, where the poverty line is set as some proportion of the average income or wealth of the society.
There are many different ways to calculate relative poverty, resulting in different levels of poverty, and researchers often argue about where the line should be drawn. For example, the Smith Family and NATSEM (The National Centre for Social and Economic Modelling) report in 2000 indicated as many as 1 in 8 Australians are experiencing poverty. The Centre for Independent Studies (CIS) argues that their research indicates the figure is at least 1 in 12 and could even be as low as 1 in 20. This is because their poverty lines were determined in different ways:
The problem with these measures is that they focus exclusively on income. But poverty is also defined through other indicators such as education, health, access to services and infrastructure, vulnerability, social exclusion, access to social capital, etc.
The most widely used indicator to take non-income factors into consideration is the Human Development Index (HDI) compiled yearly by the United Nations Development Program (UNDP), which combines measures for income, health, and education. For advanced economies, the Human Poverty Index (HPI-2) was developed, which takes into consideration the higher levels of income, health, and education in these countries. Australia ranks very high on these global indexes.
A relative poverty line was calculated in Australia for the Henderson poverty inquiry in 1973. It was $62.70 a week, which was the disposable income required to support the basic needs of a family of two adults and two dependent children at the time. This poverty line has been updated regularly by the Melbourne Institute according to increases in average incomes; for a single unemployed person, it was $445.40 per week (including housing costs) in March 2020. [12] In Australia, the OECD poverty would equate to a "disposable income of less than $358 per week for a single adult (higher for larger households to take account of their greater costs). [3] as of recent times, the amount of money a family with 2 adults and 2 dependent children needs to survive has jumped to $1145.61 per week due to inflation and increased grocery prices.
This section's factual accuracy may be compromised due to out-of-date information.(February 2012) |
According to ACOSS in 2022: [13]
This report highlighted the relationship between poverty and unemployment with the underemployed facing greater risks of poverty particularly with the increasing casualization of the workforce.
Australia's child poverty rate falls in the middle of the international rankings. In 2007, UNICEF's report on child poverty in OECD countries revealed that Australia had the 14th highest child poverty rate. [14]
The child poverty rate is estimated at 0.13 (under 17 years of age) according to OECD statistics (using the median income) from 2013 - 2017. [15] According to ACOSS, children under the age of 15 have a poverty rate of 17.3%, and young people aged 15 to 24 have a rate of 13.9%. [16] They suggest the high poverty rate is related to the high poverty rate among single adults (estimated 25%). [17] This is high compared to the total national poverty rate of 12.8% according to OECD statistics. [15] National Centre For Social And Economic Modeling (NATSEM) suggests another reason for high child poverty rates could be the unavailability of affordable housing for low-income adults. They found that 39% of families with children under the age of 15 were presented with unaffordable mortgages, which suggests rising mortgage prices in Australia may be increasing the child poverty rate. [18]
According to statistics by the OECD (using median household income), the poverty rates of citizens over 66 are more than double the national average at 0.257. [15] To look at Australia's elderly poverty rate comparatively, it ranks #4 among the OECD nations, 8 times the lowest ranking of 0.031 for France, the Netherlands, and Denmark. The rate is more comparable to that of other liberal economies, with the US at 0.229 and the UK at 0.142. [15] Although these elderly poverty rates are low, some sources indicate this may be because home ownership is high in Australia among the elderly. For example, Australian Bureau of Statistics’ 2009-10 Survey of Income and Housing indicates that 33% of households own their homes without a mortgage, whereas 36% own a home with a mortgage (that's 21% of homeowners with a mortgage). [19] This is relevant when compared with the Home-ownership in the United States, where the Washington Post estimates 66% of US homeowners have some type of mortgage. [20] Australia's high home ownership rates and low mortgage rates may be a factor in determining the wealth of citizens over 66 years of age, not reflected in the elderly poverty rate.
In 2016, 31% of Aboriginal and Torres Strait Islander Australians lived in households whose income was below the poverty line (using the "50% of the median equivalized disposable household income before housing" poverty line). [21] Nationally, Indigenous poverty rates in Australia declined slowly over the decade 2006–2016, falling from 34% in 2006 to 33% in 2011 and 31% in 2016. However, there is substantial geographical variation in Indigenous poverty rates and trends, with poverty rates being lowest in more urban areas. In very remote areas, where poverty rates increased between 2006 and 2016, the Indigenous poverty rate was 53% in 2016.[ citation needed ]
In the years following the end of the Second World War, and during Australia's long post-war economic boom, it was widely believed that the introduction of the welfare state together with the emergence of the affluent society had finally put an end to poverty in "the lucky country". The mid-to-late Sixties, however, saw a "rediscovery" of poverty, as it was found that many Australians had failed to share in the post-war economic boom. [22]
A number of researchers and organisations highlighted the persistence of poverty in Australia. According to one academic in 1960, Helen Hughes, about a third of the half a million widows and aged and invalid pensioners in Australia were estimated by social workers to be living in poverty. In 1959, another academic by the name of James Jupp wrote about the "submerged tenth" of the Australian population left out of the country's economic prosperity, including Aborigines, shack dwellers, deserted wives, unemployed migrants, slum dwellers, pensioners, and "no-hopers". Research into the extent of poverty in Australia was also undertaken by the Victorian and Australian Councils of Social Service, while the church-based welfare agency, the Brotherhood of St. Laurence, carried out a number of studies into the needs of low-income families and pensioners. [22]
In 1963, a Melbourne university lecturer called Ray Brown estimated that 5% of Australians lived in chronic poverty, with articles published in the radical magazine "Dissent" by David Scott, Leon Glezer, and Michael Keating coming to similar conclusions. In 1966 popular awareness of poverty was further extended by the publication of John Stubb's "The Hidden People", where he estimated that half a million Australians lived in poverty. [22]
Housing conditions also remained underdeveloped for many Australians. A census carried out in 1954 revealed that 49,148 families were living in huts and sheds, while by the end of 1972, more than 1.5 million people in the major cities were living in flats and houses that were not connected to a complete sewerage reticulation system. [23] In 1971, the Institute of Applied Economic Research estimated that at least 1 million Australians lived in poverty. [24] A report by Justice John A. Nimmo from the start of the Seventies estimated that there were about a million Australians living below a "miserably poor poverty line." [25]
Other studies on poverty carried out by the International Labour Office in Geneva also revealed high incidences[ spelling? ] of poverty in Australia. In 1973, using a national poverty line, it was estimated that 20.8% of Australians lived in poverty before benefits were taken into account, and 11.0% after benefits were taken into account. By contrast, using a standard poverty line, it was estimated that 24.3% of Australians lived in poverty before benefits, and 19.3% after benefits. [26]
In 1966, the Melbourne University Institute of Applied Economic and Social Research, headed by Professor Ronald Henderson, set out to measure the extent of poverty in the city of Melbourne. A poverty line was set at $33, which was close to the basic wage plus child endowment for two children. Based on this figure, 7.7% of all family units in Melbourne lived on or below the poverty line, while an additional 5.2% "hovered dangerously close to the minimum level". [22] This has been cited as the "first systematic attempt to estimate the extent of poverty in Australia". [27]
A Commission of Inquiry into Poverty was set up in August 1972 by the Liberal Prime Minister William McMahon, and Henderson was appointed as Chairman of the inquiry, which came to be known as the "Henderson Commission". The Whitlam Government elected later that year expanded the size of the Commission and scope, giving it specific responsibility to focus on the extent of poverty in Australia together with the groups most at risk of experiencing poverty, the income needs of those living in poverty, and issues relating to housing and welfare services. These issues were addressed in the commission's first main report, "Poverty in Australia", which was released in April 1975. [27]
In this report, the Commission sought to identify the extent of poverty in Australia in terms of inadequate income relative to need, and the poverty line was defined as a percentage of average earnings, adjusted for household size. The poverty line was set at 56.5% of average earnings for a "standard" family (consisting of a male breadwinner, a woman not in paid employment, and two dependent children). According to the report, 8.2% of the population lived in poverty in 1972–73, or 6.4% when housing costs were taken into account. [28] Before housing costs, over 10% of income units in 1972–73 were below the commission's poverty line, while a further 8% were defined as 'rather poor', having an income of less than 20% above that line. After housing costs were taken into account, the percentage of income units living below the poverty line was about 7%. [27]
The Commission also estimated that more than 50% of Aboriginal Australians had living standards below the poverty line and less than 20% above it. The infant mortality rates among Aboriginal Australians in the period 1973–77 were 63 deaths per thousand live births in the Northern Territory and 71 per thousand in Queensland. This compared with a rate of 62 per thousand in South America, 59 per thousand in Africa, 41 per thousand in Central America, 68 per thousand in Asia, and 15 per thousand among non-Aboriginal Australians. [23]
Australia's Human Poverty Index was given as 12.1 in the UN's final calculation of the index, which was published in 2007. The rating was the 13th lowest of the 19 OECD countries for which the index was calculated. [29]
Reports released by the Australian Council of Social Service in 2016 and 2020 stated that poverty was growing in Australia, respectively estimating that 2.9 million people (13.3% of total) and 3.2 million people (13.6% of total) had an income below 50% of the national median. The reports also respectively estimated that there were 731,000 (17.5%) and 774,000 (17.7%) children under the age of 15 that were in poverty. [30] [1] [2]
General:
Poverty is a state or condition in which an individual lacks the financial resources and essentials for a basic standard of living. Poverty can have diverse environmental, legal, social, economic, and political causes and effects. When evaluating poverty in statistics or economics there are two main measures: absolute poverty which compares income against the amount needed to meet basic personal needs, such as food, clothing, and shelter; secondly, relative poverty measures when a person cannot meet a minimum level of living standards, compared to others in the same time and place. The definition of relative poverty varies from one country to another, or from one society to another.
The poverty threshold, poverty limit, poverty line, or breadline is the minimum level of income deemed adequate in a particular country. The poverty line is usually calculated by estimating the total cost of one year's worth of necessities for the average adult. The cost of housing, such as the rent for an apartment, usually makes up the largest proportion of this estimate, so economists track the real estate market and other housing cost indicators as a major influence on the poverty line. Individual factors are often used to account for various circumstances, such as whether one is a parent, elderly, a child, married, etc. The poverty threshold may be adjusted annually. In practice, like the definition of poverty, the official or common understanding of the poverty line is significantly higher in developed countries than in developing countries.
In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes economic inequality which is a concern in almost all countries around the world.
The basic needs approach is one of the major approaches to the measurement of absolute poverty in developing countries globally. It works to define the absolute minimum resources necessary for long-term physical well-being, usually in terms of consumption goods. The poverty line is then defined as the amount of income required to satisfy the needs of the people. The "basic needs" approach was introduced by the International Labour Organization's World Employment Conference in 1976. "Perhaps the high point of the WEP was the World Employment Conference of 1976, which proposed the satisfaction of basic human needs as the overriding objective of national and international development policy. The basic needs approach to development was endorsed by governments and workers' and employers' organizations from all over the world. It influenced the programmes and policies of major multilateral and bilateral development agencies, and was the precursor to the human development approach."
Child poverty refers to the state of children living in poverty and applies to children from poor families and orphans being raised with limited or no state resources. UNICEF estimates that 356 million children live in extreme poverty. It is estimated that 1 billion children lack at least one essential necessity such as housing, regular food, or clean water. Children are more than twice as likely to live in poverty as adults and the poorest children are twice as likely to die before the age of 5 compared to their wealthier peers.
Affordable housing is housing which is deemed affordable to those with a household income at or below the median, as rated by the national government or a local government by a recognized housing affordability index. Most of the literature on affordable housing refers to mortgages and a number of forms that exist along a continuum – from emergency homeless shelters, to transitional housing, to non-market rental, to formal and informal rental, indigenous housing, and ending with affordable home ownership. Demand for affordable housing is generally associated with a decrease in housing affordability, such as rent increases, in addition to increased homelessness.
Poverty in India remains a major challenge despite overall reductions in the last several decades as its economy grows. According to an International Monetary Fund paper, extreme poverty, defined by the World Bank as living on US$1.9 or less in purchasing power parity (PPP) terms, in India was as low as 0.8% in 2019, and the country managed to keep it at that level in 2020 despite the unprecedented COVID-19 outbreak. According to the World Bank, India experienced a significant decline in the prevalence of extreme poverty from 22.5% in 2011 to 10.2% in 2019. A working paper of the bank said rural poverty declined from 26.3% in 2011 to 11.6% in 2019. The decline in urban areas was from 14.2% to 6.3% in the same period. The poverty level in rural and urban areas went down by 14.7 and 7.9 percentage points, respectively. According to United Nations Development Programme administrator Achim Steiner, India lifted 271 million people out of extreme poverty in a 10-year time period from 2005–2006 to 2015–2016. A 2020 study from the World Economic Forum found "Some 220 million Indians sustained on an expenditure level of less than Rs 32 / day—the poverty line for rural India—by the last headcount of the poor in India in 2013."
Poverty in the United Kingdom is the condition experienced by the portion of the population of the United Kingdom that lacks adequate financial resources for a certain standard of living, as defined under the various measures of poverty.
Poverty is measured in different ways by different bodies, both governmental and nongovernmental. Measurements can be absolute, which references a single standard, or relative, which is dependent on context. Poverty is widely understood to be multidimensional, comprising social, natural and economic factors situated within wider socio-political processes.
Poverty in France has fallen by 60% over thirty years. Although it affected 15% of the population in 1970, in 2001 only 6.1% were below the poverty line.
Poverty in Canada refers to the state or condition in which a person or household lacks essential resources—financial or otherwise—to maintain a modest standard of living in their community.
Median household disposable income in the UK was £29,400 in the financial year ending (FYE) 2019, up 1.4% (£400) compared with growth over recent years; median income grew by an average of 0.7% per year between FYE 2017 and FYE 2019, compared with 2.8% between FYE 2013 and FYE 2017.
Poverty in South America is prevalent in most of its countries. Those that have the highest rates of poverty per population are Suriname, Bolivia and Venezuela. Recent political shifts in the region have led to improvements in some of these countries. In general, most South American economies have attempted to tackle poverty with stronger economic regulations, foreign direct investments and implementation of microeconomic policies to reduce poverty.
Israel's standard of living is significantly higher than all of the other countries in the region and equal to Western European countries, and is comparable to that of other highly developed countries. Israel was ranked 19th out of 189 countries on the 2019 UN Human Development Index, indicating "very high" development. It is considered a high-income country by the World Bank. Israel also has a very high life expectancy at birth. It is ranked 4th in UN’s Global happiness index and second in index of young people.
In the United States, poverty has both social and political implications. In 2020, there were 37.9 million people in poverty. Some of the many causes include income, inequality, inflation, unemployment, debt traps and poor education. The majority of adults living in poverty are employed and have at least a high school education. Although the US is a relatively wealthy country by international standards, it has a persistently high poverty rate compared to other developed countries due in part to a less generous welfare system.
Poverty in New Zealand deals with the incidence of relative poverty in New Zealand and its measurement. Between 1982 and 2011, New Zealand's gross domestic product grew by 35%. Almost half of that increase went to a small group who were already the richest in the country. During this period, the average income of the top 10% of earners in New Zealand almost doubled going from $56,300 to $100,200. The average income of the poorest tenth increased by only 13% from $9,700 to $11,000. Figures from 2016 show that about 15% of the population lives in poverty, compared to 9% in the 1980s, and 22% in 2004.
In Japan, relative poverty is defined as a state at which the income of a household is at or below half of the median household income. According to OECD figures, the mean household net-adjusted disposable income for Japan is US$23,458, higher than the OECD member state average of US$22,387. Unlike several other modern countries, Japan has no official poverty line, making it difficult to get accurate figures on those suffering impoverished conditions. It was estimated in 2006, using the Employment Status Survey, that 8.2% of regular employees made little enough to be considered working poor. In October 2009, Japan's Labor Ministry released a report which stated that almost one in six Japanese, which would be 22 million people, lived in poverty.
Poverty in South Korea has been in drastic decline since the mid-20th century, particularly the absolute poverty rate. Relative poverty was also in decline until the late 1990s, rose in the aftermath of the Asian Financial Crisis, and has been in decline since the 2010s. While only about 2% of South Koreans are affected by absolute poverty today, about 14-15% of these 2% are elderly and are affected by relative poverty. Elderly relative poverty has been in consistent decline since 2011, according to the OECD.
Economic inequality in New Zealand is one of the social issues present in the country.
Child poverty in Canada declined since 2015, with the number of children who were living in poverty decreasing 71% by 2020.
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