A ‘poverty professional’ fights back!

Furthermore, when discussing the hardship estimates, PS seems eager to highlight only those findings that suit his own ideological proclivities. He is right to point out that most households on the lowest incomes report no hardship, while many with incomes above the half-median poverty line do.

Even so, the incidence of hardship among those in the bottom fifth of the distribution is almost 13 times higher than among those in the top fifth, but the more general issue relates to why there is such a low overlap between being in income poverty and reporting hardship. If the implication is that hardship is a better indicator than income, then should we not also be concerned about those with higher incomes that report hardship? We need to examine the hardship data more systematically to better understand its relationship with income poverty, and this is precisely what poverty researchers here and around the world are doing.

No such need for PS, who is already clear about what these findings imply - that hardship, like poverty, is mainly a consequence of poor money management skills.

There is no logical basis for this claim, as there are a number of alternative explanations for the “overlap” between income and hardship. Possible candidates include temporary fluctuations in income, access to wealth or other resources, unequal sharing within the household, or reporting errors and other problems with the hardship data themselves. In any case, it is more important to establish why those on low incomes do not report hardship than it is to worry about why those on higher incomes do.

Once again, PS jumps immediately to the conclusion that affirms previous CIS assertions that there is a behavioural aspect to poverty. Perhaps PS could conduct his own analysis so that we can compare notes and search for some common ground.

Moving on from these definitional issues, what has PS got to say about how to deal with the problem of poverty? Here, he starts to make a bit more sense when he argues that getting people into a full-time job is “the best guarantee against ‘poverty’”. I agree with him, as do many of the other “poverty professionals” that PS is so disparaging about (although some of us are anxious about the effects of the proposed industrial relations reforms on low wages).

The key issue, however, is how best to achieve this, although most would agree with his view that some combination of enabling and enforcement policies is needed. The question is where to draw the line between policies that support people into work, and policies that force them off welfare. When government is focused on improving its budget bottom line and delivering tax cuts to middle Australia, the prospects for policies that enable (and thus cost money) are bleaker than those that enforce (and hence save money - at least initially).

PS also sets up an artificial distinction between policies that promote growth and generate more income for everyone (itself a questionable proposition) and policies that seek to combat poverty by redistributing existing resources from some groups to others. He asserts that, as a matter of logic, these are the only two “basic strategies for combating poverty”, implying incorrectly that those who favour a relative definition of poverty will be automatically opposed to the growth strategy, because increasing everyone’s income will not improve the relative position of those in poverty. This is nonsense. I know of no one working on the issue of poverty who has seriously argued such a proposition (though some oppose economic growth on other grounds).

He is also wrong when he asserts European poverty rates are lower than those in the US because there is less inequality in Europe, but that this has come at a price in terms of lower income (through reduced growth), so in Europe “everyone is falling further behind the Americans”. If this were true, one would expect to find less poverty in America than Europe when a common (in terms of purchasing power) poverty line is used to measure how much poverty they have. The research shows exactly the opposite.

A recent UNICEF report, for example, shows that if the US poverty line is used to measure child poverty in different countries, then the children poverty rate in the US is 13.9 per cent (UNICEF, 2000). This is above the corresponding child poverty rates in ten of the 14 European countries included in the study, the exceptions being Ireland, the UK, Italy and Spain. (The Australian child poverty rate, by the way, is just above the US rate, at 16.2 per cent). So much for the claim that America provides a shining example of what PS rather charmingly refers to as the “capitalist” strategy for combating poverty.

If we could move beyond these ideologically driven confusions and pick up on some of the more sensible comments made by PS, there is still hope that we can develop better ways of reducing the poverty that all admit still exists in this country. Whatever else we take from this debate, let’s all agree to stop pursuing definitions and arguments that have patently failed to work and get down to the real business of designing an effective policy response to poverty.