Poverty and inequality: why it matters

What does poverty mean in a place like Australia? In practice, it means that people do without what most of us take for granted.

In Australia and other developed nations, poverty is generally thought of in relative terms – some people, relative to the rest of us, live with unreasonable hardship and deprivation, and have no or very limited opportunities to participate in society and the economic successes of the nation.

The last available Hendersen Poverty Line measure (1996) showed that 11.2 per cent or one in nine Australians (around 2.2 million Australians) were living in poverty.

A 2001 NATSEM/Smith Family Report showed an increase in numbers of people living in poverty over the 90s in Australia – from 11.3 per cent to 13 per cent. This study used a measure of people on less than 50 per cent of average family income. No matter which measure is used, poverty is a problem and certain groups are particularly affected including; long-term unemployed people, students, people with disabilities, Indigenous Australians and sole parents.

The gap between rich and poor is also widening. At the same time as the poor are becoming more numerous the rich are becoming richer.

The bottom 20 per cent of households receive 3.8 per cent of the total gross income of all households, the top 20 per cent received 48.5 per cent (ABS 2000). The poorest 10 per cent of families have no assets, a net debt of $1000 and only $1000 in super.

The most impoverished are welfare recipients, and some fare far less well than others. ACOSS research shows that unemployed single adults and students for example, are on payments between 37 per cent and 18 per cent below the Hendersen poverty line.

What is it like to live in poverty?

Poverty is often a culmination of circumstances and events.

Poverty is not just about access to housing, clothing and food, but also about the inability to participate in economic and community life. Poverty means that finances are so tight, every single item needs to be strictly budgeted, and that another essential item cannot be bought. Poverty forces people out of social networks and all of the advantages and opportunities that go with them. It means that it is difficult for a child to gain a proper education, and for parents to help them, because of the constant struggle to make ends meet.

People in poverty have little or no choice about their hardship. They may find themselves in poverty through illness or injury, a death in the family, or through lack of employment skills or opportunities. In order to try to maintain what they, and the community, consider an acceptable standard of living, they may borrow or gamble, making it more and more difficult to escape the poverty cycle.

Why we cannot afford poverty

Poverty reinforces inequality of opportunity. People can’t afford basic goods like housing and this impacts on other life chances. Recent research by the National Affordable Research Consortium shows that 40 per cent of Australian households could not afford to live anywhere in Sydney, Melbourne or Adelaide. If you can’t afford to live where the jobs are you are immediately on the back foot.

Poverty affects the whole of society. Tthe inequality that poverty breeds disrupts social cohesion and the capacity of people and communities to share goals, increases resentment between groups, and results in a loss of hope and disenfranchisement.

What keeps people in Poverty?

Unemployment substantially increases in the risk of poverty. The longer a person is unemployed, the greater the risk of living in poverty.

People in poverty suffer increased levels of physical and mental illness. Poverty is associated with higher stress levels for individuals, which can contribute to smoking, substance abuse, or an unbalanced diet.

There is a strong connection between disability and poverty. This is a result of a combination of the high and continual costs of medication, equipment or aids, housing, transport, and services related to personal care or maintenance of a person’s home, along with income deprivation.

Lack of opportunity for one generation tends to translate into lack of opportunity for the next. In some families, there are no resources to support others in the family if things go wrong. In many families, children begin with little hope for the future, when they should believe they have the potential to achieve anything.

There is also increasing evidence that poverty is focused in certain geographical locations. These tend to be on the urban fringe, in large housing estates, and regional and rural areas. Economic re-structuring in industries that traditionally accessed semi-skilled and unskilled labour has contributed to this picture.

It is not only the complexity of poverty that keeps people there, but also the failure of society and governments to work out solutions. The National Coalition Against Poverty is calling on the Federal Government to convene a Royal Commission into Poverty. This would focus on specific national and targeted strategies and policy opportunities.

Addressing poverty needs a multi-pronged attack and the involvement of all parts of the community, business and government.

Specific action is also needed to progressively increase social security payments to a more adequate level; boost investment in effective employment assistance; and bolster essential social support infrastructure.

Adequate income is crucial, but there are other services and supports that will reduce poverty. These include policies to increase availability of low cost housing, essential services like health care, community care, child care and employment assistance, and community development and prevention initiatives. Whether directly facilitated by government or community, these measures can provide people with better opportunities, and a higher capacity to take advantage of those opportunities.

As Sir William Deane said when he was Governor General "The ultimate test of our worth as a nation is how we treat the most vulnerable and disadvantaged of our people". In such uncertain and changing times working together to build an Australia which is truly inclusive must be a priority for us all.