Australians have the highest median wealth per adult in the world ($233,504). We have the second highest average wealth ($428,250). We are a mere 0.36% of the world’s adult population but we account for 3.78% of the world’s top 1% wealthiest. The only nation with a more lopsided share of the top 1% is Switzerland.
So why is it that an estimated 2,265,000 people or 12.8% of all people are living below the internationally accepted poverty line used to measure financial hardship in wealthy countries?
Australia’s household wealth per adult grew by 2.6 per cent in 2012. Wages in 2013 grew by 2.6%. On the other hand, since the mid 1990s, Newstart has gone from just below 50% of the median household income to now around 30% – which is an alarming $74pw below the poverty line .
Over a third (37%) of people whose main income is social security are living below the poverty line, including 52% of people in households on Newstart Allowance. The low level of this payment means that when unemployment goes up, more people are thrown into poverty. The Newstart Allowance has not been increased in real terms since 1994 so households relying on it have been falling further behind community living standards and into poverty.
There are almost 600,000 children living in families below the poverty line. About half of those children are in sole parent families, and one quarter of people in sole parent families are living below the poverty line.
In October 2012, the Australian Council of Social Service released a report urging the Commonwealth and state governments to take steps in their next Budgets to reduce poverty, by increasing income support for those in the deepest poverty, strengthening employment services for long-term unemployed people, and easing the high cost of housing for people on low incomes who rent 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. 62% of Newstart recipients pay over 30% of their income in housing costs, placing them under “housing stress”.
“High priority should be given in the next Federal Budget to raising the Newstart Allowance by $50 per week for single people and sole parents, and the cuts to income support for sole parents should be reversed or at least delayed.”
There is a $149 per week gap between Newstart Allowance and pensions. In 1980, the Age and Disability Support Pensions and the Allowance payments such as Newstart and Widow Allowance were the same, at $58 a week. The Harmer Pension review of 2009 resulted in an increase to pensions but not to Newstart. Pensions increased by $32 a week. The Henry Taxation Review recommended that the same increase be given to Allowance recipients, which would equate to $50 a week in 2012.
Pensions are indexed in a different manner to Newstart. Pensions are indexed to Male Total Average Weekly Earnings (MTAWE), the Consumer Price Index (CPI), or the Pensioner and Beneficiary Cost of Living Index – whichever is greater. Newstart is only indexed to the CPI. In September 2011, the MTAWE increase was 4% while the CPI increase was 2.5%, which resulted in an increase of $10 for pensions and $6 for Newstart.
Newstart and other payments are indexed twice yearly with the CPI, meaning that they are linked to increases in prices, rather than wages. That means they fall behind increases in community living standards. While the CPI rose by 17% between 2005 and 2011, average wages rose by 23%.
Newstart is less than half of the minimum wage in Australia. While minimum wage is $606, Newstart is $246 – 40% of minimum wage. Even taking account of income tax, a single unemployed person would double their disposable income if they got a job at the minimum wage. So there is scope to increase it without eroding work incentives.
As Dr David Morawetz, Director Social Justice Fund, says
“In Australia, we might not have the level of abject poverty that one sees in developing countries, and we have only a fraction of the world’s 1.3 billion poor. But in a country as wealthy and as lucky as ours, it is a travesty that there are still so many people living in poverty. We can do better.
Poverty is bad for our social relationships, and for our sense of community. It is bad for business. Most of all, it is bad for those who are experiencing it: for their sense of self-worth, for their physical well-being, and perhaps most importantly for their children, for our future generations. We all need to do something about it.”
David Thompson, from Jobs Australia adds
A lack of money inspires not just shame, anxiety, and occasionally stoic resignation, but also a powerful sense that things could be different. The basic decencies of respectful encounters with institutions, which can cost nothing, matter a lot. Many people living in poverty have immense reserves of energy and drive to make a decent living for themselves, and a future for their children, if only they are given the right chances.
Dr John Falzon, CEO, St Vincent de Paul Society National Council said
Our problem in Australia is not the “idleness of the poor.” Our problem is inequality. This is a social question, not a question of behaviour. We do irreparable harm when we turn it into a question of individual behaviour, blaming people for their own poverty. It is a matter of deep shame for a wealthy nation like ours that our unemployment benefits, for example, have been kept deliberately low as a means of humiliating the very people they were originally designed to assist.
Charities like the St Vincent de Paul Society will always be there for the people who are waging a daily battle from below the poverty line, but the message we are hearing is that people do not want charity. They want justice. And we support them in this struggle for their rights.
We support helping people into the paid workforce. The time has come, however, to abandon the foolish notion that forcing them into deeper poverty improves their chances of employment. You don’t build people up by putting them down. You don’t help them get work by forcing them into poverty.
We stand with all who are trying to create a good society; a society that does not accept the scourge of rising inequality and exclusion from the essentials of life; a society that does not humiliate people. New passions are springing up. They point to glaring contradictions. They also offer the promise that another kind of society is possible, and can be created collectively under the guiding stars of struggle and hope.
Even the Business Council of Australia (BCA) argues the Newstart payment ‘itself now presents a barrier to employment and risks entrenching poverty.’
It is difficult to be accurate about what a $50/week increase in Newstart would cost but it has been estimated it will cost taxpayers anywhere between $8 billion and $15 billion over the forward estimates.
While Tony Abbott and Joe Hockey tell us that spending $22 billion on Tony’s paid parental leave scheme, or $12 billion on US made jets that experts say are dodgy and will be obsolete before we ever see them, or over $10 billion on Operation Sovereign Borders, or over $3 billion in handouts to polluters, or countless billions on roads, are all good investments, I would ask them to consider the proven productivity gains from lifting people out of poverty. I would also ask them to consider the health benefits and consequent savings. I would ask them to consider the benefits of needs based education funding so children born into poverty have some chance of achieving their potential.
If we can’t appeal to your humanity, surely you can understand that economically it makes much more sense to increase the purchasing power of the masses, which will drive demand, which will create jobs, which will increase production, which will increase profits. Every cent that goes to a poor person will be recycled into the economy. Increased profits to billionaires go to off-shore tax havens.
I haven’t seen a film for 8-9 years. / It’s $12 – / I just can’t. / I have no social life/unless it’s free./I can’t afford to go to a café / and drink coffee – / I just can’t. / I tried putting $3 a day into my budget. I felt a little more human, / existing within society… / I had to stop doing it,/I couldn’t live anymore./Like being invited out to dinner / or a friend saying, / ‘do you want to catch up for a meal?’ I just can’t, no. / I miss it. Tracey
I’m desperate for money./ If there were any jobs…/ …I’d be started at 9 o’clock this morning./ I have to tell everyone I’m a dole bludger and / I don’t have any money./ Nobody wants to know a dole bludger. / My family thinks I’m still working./ I got sacked four years ago. / I didn’t tell them I’m a dole bludger. / Mum would get upset,/ she wants my future to be secure. /To be able to tell my family that I’ve got a job…./ a proper job…. / Nobody wants to know a / dole bludger. Bettina