16 Oct 2012

Relative Or Not, Poverty Matters

By Ben Eltham
ACOSS figures show that too many Australians are struggling to make ends meet. We’re a rich country but tackling poverty looks less important for Labor than balancing the budget, writes Ben Eltham
According to Tony Abbott and the book of Matthew, "the poor will always be with us". It certainly seems that way in the wake of the Australian Council of Social Service report on poverty in Australia, which has again highlighted the scale of need (pdf) in some sections of the Australian community.

Australia is a rich country. On most measures, we rank in the very top handful of nations in the world in terms of wealth per person. The figure for the average weekly earnings for a full-time Australian worker working a normal 38-hour week was $1352.70 this year, according to the Australian Bureau of Statistics. While this is admittedly flawed figure — representing the mean, not the median, and therefore skewed by the earnings of the very wealthy — it's a good indication of just how comfortable an "average" wage earner is in Australia in 2012.

But if we move down the scale and look at people earning substantially less than this figure, real pockets of deprivation begin to emerge. The ACOSS report uses as its measure of poverty the figure of 50 per cent of median earnings. The cut off for a couple with two children in 2009-10 was $752 a week — not exactly a fortune, in anyone's language.

The debate about poverty is unfortunately bedeviled by commentators questioning the relative nature of the measure, as Bernard Keane did yesterday. "There will always be a substantial proportion of the population identified as 'living in poverty' if you define poverty in relation to median income," Keane wrote.

Keane then went on to cite an important recent paper by respected social researcher Peter Saunders on material deprivation in Australia — a paper that found similar levels of need to this week's ACOSS report. Saunders and his co-author Melissa Wong found that 15 per cent of all Australian households suffer from what the researchers call "multiple deprivation" — that is, they lacked three or more of the 24 goods or services that a survey identified most people considered "essential".

Another report that came out this week confirmed this. Anglicare's "State of the Family" report for 2012 surveyed people accessing emergency relief services across the Anglicare Australia network. Unsurprisingly, many of these families were doing it tough. The Anglicare survey found:

65 per cent of households with children said they regularly could not provide enough variety of food for their children, 38 per cent said their children were regularly not eating enough and 29 per cent of cases they said children were regularly going hungry.

In 7 per cent of households children did not eat for a whole day either weekly or some weeks.

This is not some abstract measure of relative poverty. This is a report telling us that kids are going hungry.

The argument about relative poverty is a distraction,. Most aspects of economic life are relative. It may be that a poor Australian today earns more than a wealthy Somalian, and more than a rich Australian 50 years ago. But that's irrelevant, because poor people have to live and work in the here and now. And that means the essential goods and services they need are, by definition, priced in today's dollars.

Housing is the best example. Australia has an undeniable crisis in affordable housing, and that crisis hits the poorest disproportionately. In her media release accompanying the poverty report, ACOSS director Cassandra Goldie argued that "to tackle poverty we also need urgent action to ease housing cost pressures, particularly for low income people who are renting privately".

"People on social security and those in very low paid work receive Rent Assistance to help with housing costs, but at a maximum of $70 a week this is less than a third of typical rents for flats in capital cities and mining towns," Goldie pointed out.

According to the Bureau of Statistics' excellent "Life on Struggle Street" publication this year, Australians with low incomes were spending on average about the same amount per week on their housing as the broader population (around about $130 a week in 2009-10).

But this figure ate up more than a quarter of their weekly earnings, compared to only 16 per cent for households at large. Poor households spent 57 per cent of their income on housing, food and transport. If you're spending more than half your income just to eat, sleep and travel to work, there's precious little ability to save for the future, or meet unexpected disasters. For the poorest, paying to fix a broken refrigerator or for a new set of school uniforms can be beyond their reach. As a result, the ABS report found that "around a quarter (24 per cent) of low economic resource households reported spending more money than they received most weeks, twice the rate of other households (12 per cent)."

Poverty is a complex social problem that cannot easily be addressed, even in a rich country like Australia. But some policy measures are no-brainers. Kicking single mums off welfare, for instance. The government's changes to parenting allowance for sole parents will mean approximately 100,000 sole parents will be transferred off their current benefit and onto the much lower Newstart allowance. The government will save around $685 million, but at the likely cost of further increases in children living in poverty.

The level of Newstart payments is already a national disgrace. Newstart is indexed at a lower rate than pensions, for instance, which means that those looking for work are punished in comparison to those who receive a pension — and keep getting punished, as the cost of living inevitably rises over time. There is no good justification for the disastrously low level of Newstart, which is now so low it essentially guarantees that a person receiving it will soon slip into poverty. The rate of Newstart hasn't been increased in real terms since 1995. In that time, household essentials like rents and energy have increased at well above the broader rate of inflation.

Raising the rate of Newstart is actually pretty cheap, even for a government desperate to deliver a budget surplus. ACOSS has estimated it would cost around $600 million a year — small change in a federal budget well in excess of $300 billion. But to do that requires a government to prioritise poverty and disadvantage. Labor has done some good things on this front in office: most notably, by permanently raising the rate of the pension, and by managing the economy through the worst of the global financial crisis.

But at the moment, poverty simply isn't as important for Labor. Demonstrating its economic credentials by paying homage to our national obsession with balanced government budgets is what counts. The cost of that obsession is the hunger of children.

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Evan
Posted Tuesday, October 16, 2012 - 14:26

And Centrelink taxes the earnings of those on the dole (after the first small amount) at about double the rate the ATO taxes companies. This seems unconcscionable.

On housing. I think we need to create a pool of housing outside the market. (The market is the problem - you can't make a killing selling your house and expect your kids to be able to afford housing.) This can be resourced by dead people (who are outside the market) by those dying childless leaving their homes to a trust that rents them out for the cost of maintenance plus a margin to buy more stock.

Bennite
Posted Tuesday, October 16, 2012 - 14:56

So many Labor MPs are millionaires, please mention this. It will make their lack of interest in poverty so much easier to understand. Labor are a joke. Admit it.

compass1312
Posted Tuesday, October 16, 2012 - 16:08

@Bennite
It's not only Labor, it's politicians and bureaucrats in their entirety. The current crop don't give a shit, 'cos if they did, something would be happening.

Howard and his cronies were the worst in living history, Uncle Kev knew it, and tried to do something about it until he was chopped.

This person we have purportedly leading us now cannot, and will not survive the next election. That's if she makes it that far...

This user is a New Matilda supporter. Annie Nielsen
Posted Tuesday, October 16, 2012 - 16:50

AnnieN
The Greens don't fit this classification. They are not millionaires and they 'do give a shit'. They don't have the numbers to bring about significant change.
Also Labor wouldn't have to be so harsh if they didn't have the Libs breathing down their necks saying that they can't manage the economy. Due to this they have to bring in a surplus to show they can manage the economy. Despite this I don't agree with them cutting support parents benefit and putting them on Newstart and I think Newstart shouldn't be so low. Instead the government should close the Howard/Costello multibillion dollar superannuation tax concessions to the rich. They could then use these funds for increased welfare and other public services like education and health.

This user is a New Matilda supporter. David_H
Posted Tuesday, October 16, 2012 - 17:19

While the arguments about the poor and how they are always with us are important there is a wider matter of the general shift away from egalitarianism which exacerbates the pernicious effects of wealth inequality. I think a focus on government welfare as the solution permits this social shift in a general sense by legitimising unfettered capitalism provided it notionally pays some tax, which, as Kerry Packer succinctly symbolised, remains by and large discretionary for the rich.

The general slide into greater inequality is the bigger problem and as bad as the problems of relative poverty are, unless we move back to more equal distributions of wealth then the poor will not only always be with us but their numbers will continue to increase.

Bennite
Posted Tuesday, October 16, 2012 - 18:25

"It’s not only Labor, it’s politicians and bureaucrats in their entirety. The current crop don’t give a shit, ‘cos if they did, something would be happening."

Compass 1312, when you say it is not only Labor, it's all politicians, what you seem to be saying is that all politicians are the same. There is therefore one party in Australia. There is no Liberal, no Labor Party - there is the "neo liberal free market party." A one party state.
Hence you appear to agree with my argument that Labor are indeed a joke. They used to be there to represent the underdog while the Liberals represented the rich and the wannabe rich. Now Labor represents the same thing as the Liberals. They don't represent the poor in real terms, only by default. That is if you don't like us, the others are far worse.
Example - as Ben said, kicking single mothers on to a woefully inadequate dole. And why is the dole inadequate? Because Labor hoaxes such as Shorten parrot extreme right Reagan Thatcher Howard views that having a decent level of social security somehow discourages people from working. In other words poor people are lazy scroungers who would rather get a hand out than do a meaningful day's work. This mantra comes from a Labor Govt!!!. Not a Liberal Govt. Labor expressing a contempt for the poor, the people who the party was once built on. All the millionaires in Labor showing their class antagonism to the lower classes. What a joke Labor is.
As for Kevin Rudd, the millionaire Labor battler just what did he do? I remember in 2007 he didn't raise the pension straight away. The reason? Oh it was going to be inflationary. In other words let's fight inflation first, a Liberal party dogma, and Rudd uses pensioners to do it. In 2008 he opened our real estate market to foreign investors pricing poorer Australians out of a home and keeping MP's property portfolios in decent shape. Rather than let prices fall to help affordability after the GFC, Kevin propped up the prices by letting in foreign cash.
When you say bureaucrats are partly to blame, that is true. But what did John Howard do in 1996? He got the broom out, got rid of Labor sympathisers running Departments and put his own people in. What did Rudd do? He left Howard's bureaucrats in and actually promoted some of them!!!
Compare Rudd and Gillard to Whitlam and it's a poor show that makes older Labor supporters weep. In three years Whitlam brought in Medicare (Medibank), free higher education, the Trade Practices Act, a capital gains tax, vastly improved social security, a nationally owned Western Australian gas and minerals industry, a national insurance scheme to fight greedy insurance companies just off the top of my head.
These days Labor Ministers when they retire all get plush jobs with the greedy insurance companies and the big end of town. They dont try and take them on when in office. Noi, that would upset the markets and that is who they serve, not the people.
There is a reason Labor has no members any more - because it doesn't represent the interests of the poorest in society and doesn't fight the fights that upset the "right sort of people". Indeed the idea of climbing the ladder in Labor these days is for people from the wrong side of the tracks to hang out and become one of the people from the right side of the track. Example - the very right wing Bob Carr.
Shorten and his attack on single mothers says it all about Labor. They are too gutless to tax wealth and therefore will never solve poverty. Taxing work, that is taxing income is gutless, taxing the workers doesn't work. Taxing wealth, a good deal of it which is inherited or made through speculation, as the Liberal Democrats are proposing in the UK, is a true way to fight poverty. Labor are too gutless to do it here. Don't worry - Swan and Shorten will give you plenty of hand wringing about it. And that will be that.

This user is a New Matilda supporter. beanie
Posted Tuesday, October 16, 2012 - 20:15

in discussions about poverty (in fact in discussions about everything these days) we are always talking about families in poverty, children in poverty etc. you know, there is this amazing thing called contraception, which everyone seems to have forgetten about in our rampantly pronatalist era. if people were encouraged, through policy and education, to have less or no children, there would be far fewer children in poverty. everyone talks about how we are going to deal with a bigger population, but no-one talks raises the issue of whether we should be curbing our population.

i am not a parent and people who are not parents are, in discourse and policy, becoming largely invisible and ignored: as is demonstrated in the above table which cites one of the family types as 'lone parent' - it would seem from the context of the table that you actually meant 'single person? is it now assumed that everybody IS a parent?

if you cannot afford to have children, there is an easy way not to.

fightmumma
Posted Tuesday, October 16, 2012 - 20:16

Well...basically - there's no one worth voting for...how can we expect a bunch of economists and lawyers to know how to build a healthy egalitarian society? What a joke it all is...I vote for Marcel Marceau...mime...there's no difference so why not vote for a master?!

fightmumma
Posted Tuesday, October 16, 2012 - 20:19

beanie - actually I saw a stat somewhere that did include single people, and they also were a demographic with a portion in poverty, I think especially in the aged bracket too.

Elbert
Posted Friday, October 19, 2012 - 09:26

Beanie - you are a voice in the wilderness. The problem with birth control is that word - 'control'. It requires some degree of self control. Some people are single parents because of the death of a spouse, that's tragic and deserving of support. Many couples simply get sick of each other and separate instead of bothering to work things out. They can do this because they know the state will support them. And there are some who deliberately become single parents - knowing the state will support them in their selfish desire for a child, uncaring that he or she will be disadvantaged for their life.
As for going hungry, flour is available for around a dollar a kilo. The price of yeast is negligible, as is a teaspoon of sugar and salt. Home cooked bread is healthier than commercial. Cheese is available at around $7 a kilo. Fruit and vegetables in season are not that expensive. Eggs are reasonably priced, as is cooking oil. For the price of one hamburger, a sensible housewife can make a loaf of bread and serve it with egg and cheese to her spouse and two offspring.
People are poor and hungry because they eat pre-packed, processed, commercially prepared food bought from fast food outlets, instead of making themselves a sandwich and eating it in the park. In all things, expectations are too high. The will or the ability to make, repair, cook and do things for oneself has disappeared, and most people are dependent slaves of the 'service industry'.
This is compounded by Credit. Budgeting is not taught, apparently, otherwise no one would deliberately get into debt. Poverty can be alleviated, but it requires the active participation of the poor, as well as carefully thought out assistance from other taxpayers.

This user is a New Matilda supporter. beanie
Posted Friday, October 19, 2012 - 22:20

Elbert, i totally agree with you. yes we need good policy and support around alleviating poverty but there has to be personal responsibility; in many other areas too, not just in budegting. Sadly it seems that we have created a culture where personal responsibility, which leads to empowerment and independence, is not taught or valued. i hope we can change this.

fightmumma
Posted Saturday, October 20, 2012 - 12:23

beanie - actually I think the politicians and economists have created exactly the type of society they wanted - where certain powerful players hold all the decision-making powers. Where the relationships and processes that are needed for decision-making only occur in certain contexts that the average citizen does not have access to. Where consistently decisions that affect the average citizen are made in situations outside that which we can contribute to meaningful interaction where we can advocate for and communicate our needs, interests and the impacts of policies. This entire process, relationships and power-ownership - actually DISempowers citizens, makes them passive and simple receptors of the actions and values of others.

What is the point in encouraging people to actualise their selfdetermination and responsibilties when constantly their choices lead to nothing but unemployment, student tax debt, lower incomes or worse working conditions or greater job insecurity and thus insecurity in life - access to basic human rights like a home, education or health care? (All of which require a certain relationship with our capitalist society and the marketplace).

We need to at least be realistic about how much our self-responsibility actually has any power in this world - and I reckon we actually only have this in name/label, not that much in reality. In reality only the people at the reins of the 'free' market have any power - and its hand is anything BUT invisible, it is actor-driven, by the human agency and will of certain people, countries and organisations - not for the wellbeing of any average citizen or society, but for their own selves.

LuckonTierra
Posted Thursday, July 4, 2013 - 16:18

Poverty has always been a major problem. And the mere issue poses a lot of threats to the society. - YORHealth