Stats and stones: Vinnies’ report from the trenches on the poverty wars

Toronto 1984. Pope John Paul II sums up his social teaching as follows:

“The needs of the poor take priority over the desires of the rich, the rights of workers over the maximization of profits …”

When the St Vincent de Paul Society was founded, in Paris in 1833 by Frederic Ozanam, a university student, it was in response to the needs of the poor. In 1848 he wrote, "I ask ... that we should take responsibility for the people who have too many needs and not enough rights …”

Twelve years before the Communist Manifesto of 1848, Ozanam was deploring the increasing gap at the heart of society. “The question agitating the world today is … a social question. It is the struggle between those who have nothing and those who have too much, it is a clash between wealth and poverty, which is shaking the ground at our feet.”

In May this year we released an Issues Paper (pdf file 232KB), The Reality of Income Inequality in Australia. We reported ABS findings that income inequality was widening significantly. The Centre for Independent Studies decided (pdf file 303KB) that this could not be. Unable, however, to question the ABS data on income inequality, they opted for the tactic of calling us names (such as “1970s student bed-sit revolutionaries”).

Despite the astonishing claim by a columnist in The Australian (June 18, 2005) that we are “out of touch with poverty” our 40,000 members visited 1.8 million Australians last year and provided financial assistance to the tune of $30.8 million. As we visited these households our members consistently noted that people were slipping away from the rest of society. We are not only talking here of people in receipt of income support as their sole form of income, but also families whose members are engaged in work at the lower end of the highly casualised labour market.

There are also, of course, the thousands of Australians who are assisted in our various establishments and special works. Interestingly, many of these people are actively omitted from the data presented by the CIS. It is no wonder that the CIS claims that income inequality is unimportant as a social issue. These people do not exist for the CIS.

We were accused in The Australian of being unfaithful to the Church’s teachings on social justice.

In addition to the aforementioned words of Pope John Paul II, however, we find the following:

… there are collective and qualitative needs which cannot be satisfied by market mechanisms. There are important human needs which escape its logic. There are goods which by their very nature cannot and must not be bought or sold. Centesimus annus 1991

Paul VI in Populorum Progressio (1967) similarly noted:

God intended the earth and everything in it for the use of all human beings and peoples. Thus, under the leadership of justice and in the company of charity, created goods should flow fairly to all. All other rights, whatever they may be, including the rights of property and free trade, are to be subordinated to this principle ... Redirecting these rights back to their original purpose must be regarded as an important and urgent social duty.

Pope Paul VI also quoted St Ambrose approvingly:

You are not making a gift of what is yours to the poor man, but you are giving him back what is his. You have been appropriating things that are meant to be for the common use of everyone. The earth belongs to everyone, not to the rich.

These teachings are faithful to their scriptural roots, planted in the soil of justice:

Woe betide those who enact unjust laws and draft oppressive legislation, depriving the poor of justice, robbing the weakest of my people of their rights, plundering the widow and despoiling the fatherless! (Isaiah 10:1-3)

He has filled the hungry with good things and sent the rich away empty. (Luke 1:53)

Vinnies is a charity. We will always be there, alongside the many wonderful charitable organisations, large and small, to assist the people who have been left out or pushed out of the economic prosperity that Australia has enjoyed.

Charity, however, is no substitute for justice. The scriptures, the Church’s teaching and the tradition of the St Vincent de Paul Society are all unequivocal in their call for us to pursue justice.

In view of this imperative we produced our latest Issues Paper. This is what we stated:

In terms of private incomes (a measure cited by the PM about which we have reservations since it ignores those with no private incomes) it is hardly a moderate increase in inequality when the lowest 10 per cent get an increase of $26 and the highest 10 per cent get an increase of $762. On this measure, high incomes rose more than the bottom incomes by almost 3,000 per cent. On any reading, it is a mathematical illusion to suggest that the bottom 10 per cent are the winners.

The ABS Survey of Income and Housing demonstrates that between 1994-5 and 2002-3, low incomes (real mean weekly income of $269) experienced a 12 per cent rise ($32.28); middle incomes (real mean weekly income of $449) experienced a 14 per cent rise ($62.86); and high incomes (real mean weekly income of $975) experienced a 16 per cent rise ($156.00).

Contrary to the claim that the movements in inequality are not statistically significant, the ABS commentary states, “The statistically significant movements are the increase in the P90/P10 [the ratio between the top and bottom 10 per cent of incomes] and the decline in the share of the total income going to persons with low income”.

The Gini coefficient is used to measure income inequality. At zero, everyone has the same income. At 1.0 one person has all the income while everyone else has nothing. Australia’s Gini coefficient deteriorated from 0.296 in 1996-7 to 0.309 in 2002-3. When we presented this datum we were accused by the CIS of wanting to highlight the deterioration by choosing the lowest point (1996-7) rather than full data set available in the ABS publication.

The picture is actually quite interesting if one does look at the Gini coefficients for 1994-5 and 1995-6. What they show is that inequality was in decline prior to the election of the current Federal Government in 1996 but that this trend was subsequently reversed. Since we are not politically affiliated we had no wish to highlight this point. We simply wished to draw public attention to the fact of growing income inequality and how it impacts on the people we assist. We are happy, however, to acknowledge this political dimension at the behest of the CIS.

As for the claim that social dislocation and crime have not resulted from the failure to address the causes of poverty and inequality we direct any sceptics to the work of Professor Vinson who was commissioned by Jesuit Social Services to analyse the multiple layers of disadvantage in the postcodes where this is most concentrated.

The ABS (No. 6523) reports 1.79 million (23.4 per cent) households as having a gross income of less than $400 per week. Using the only ABS multiplier provided for gross income, 4.52 million people (23.4 per cent of the total 19.3 million) live in households where the gross income of the household is less than $400 per week.

The CIS challenges the use of this ABS multiplier and proposes the alternative of using household composition data which is based on equivalised disposable household income quintiles. This is a dubious technique, to say the least. It involves transposing the household characteristics from one measure over to another, qualitatively different measure. Worse, the quintiles they use are themselves derived from household characteristics - they then use these quintiles to derive back the household characteristics to use in their analysis!

CIS further challenges ABS statistics regarding the income levels of those who are on lowest rungs. Their solution? To exclude them from the count - to turf them out! Quite telling. Having done that, they make no adjustment to the overall distribution of income, but keep all the adjustment in the lowest quintile, a distortion very convenient to their argument.

The claim by the CIS that Australia is one of the most generous countries in the world in terms of its social expenditure provisions is based on OECD data that is very interesting but is ten years old. Latest OECD figures (2001) on social expenditure as a percentage of GDP, place Australia 7th from the bottom of 29 OECD countries, ahead of only Canada, the Slovak Republic, Japan, USA, Ireland, and Mexico.

Citing the $87 billion a year spent on income support, as the CIS and others do, implies that this sum is a generous hand-out to those at the bottom. But we know from the NATSEM estimates that a massive 60 per cent of the population are net-gainers from welfare expenditure in its entirety. Yes, some of these are poor, but the very large majority are not. This is hardly evidence that the poor are doing fine. We have never, in any case, reduced the problem of income inequality to one of welfare expenditure. We are deeply concerned with the growth in the number of the working poor and of the access for all Australians to education, housing, health, transport and childcare.

If one starts from a position of income inequality, any addition in inequality is an extension to the trend. Only a reduction of inequality in absolute terms can start to reverse this trend.

As evidenced in the table below, people in all quintiles except the highest have seen their share of total income decrease since 1995/96, those in the lowest quintile having suffered most.

Changing income shares –Equivalised Household Disposable 1996-2003 

(Source: Income Distribution Survey, ABS 6523.0.)

The St Vincent de Paul Society in Australia is intent on drawing attention to the fact that we do have a national problem with poverty and inequality. In an increasingly user-pays society the impact of cost shifting from the public purse to the private pocket is borne disproportionately by the poor. This seriously limits their ability to participate socially and economically. It closes the door on any opportunities they might have had to improve their situation or the chances for their children.

As our National President, John Meahan, stated to the Senate Poverty Inquiry in 2003: “The poor are silenced but we will not be silenced.” Why? Because the people we visit each year expect us to tell the leaders of this country what we see with our own eyes.

We do not stop at highlighting the problem, however. We also advocate a solution. We have consistently advocated for a bipartisan national strategy to address poverty and inequality in Australia, involving all levels of government, the community sector, the business community, unions and all key stakeholders. This has been dismissed by the CIS as an ideological fixation on centralised planning. If anything, we actually don’t go as far as Pope John Paul II in Laborum exercens, where he made the recommendation that "society make provision for overall planning" in the economic domain, not as a form of centralised planning but as a means of ensuring that while private enterprise flourishes, social justice for the marginalised is attained and protected.

The ABS data we have presented on income inequality are available for all to see. These numbers are not left-wing. Neither are they right-wing. In fact they don’t have any wings. But they do have legs and that’s why there will always be some who are threatened by the truth they point to.