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

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.)