Media Release

One million Australians living in severe poverty

ContactsAlan Duncan, Director
Kelly Pohatu, Events and Communications Officer
Published13 October 2014

A new report to be released today (Monday 13 October) has examined the depths of income poverty and associated disadvantage that exists throughout Australia’s states and territories.

Falling through the Cracks is the first in the new Focus on the States series released by theBankwest Curtin Economics Centre (BCEC), and coincides with the start of Anti-Poverty Week 2014.

Using the latest household income data, economists at the BCEC have focussed on measuring how deeply groups of Australians have fallen into disadvantaged circumstances and what factors exacerbate the incidence and depth of poverty.

BCEC Director, Professor Alan Duncan, said the report was intended to add a much needed perspective to the national debate around income poverty by examining just how deeply income poverty extends throughout Australian households.

According to latest figures, more than one million Australians are in severe income poverty – having access to household income of less than 30 per cent of the national median – which equates to around five per cent of Australia’s population.

More than 310,000 children are also living in households in severe poverty.

A lone person in severe income poverty typically has no more than $133 to live on each week after deducting housing costs – with many surviving on even less.  A couple with children in severe poverty makes do with income of $261 each week after paying for housing.

The BCEC report finds that the depth of poverty varies considerably across Australia’s states and territories, largely influenced by differences in housing costs and demographics.

Compared to national averages, Queensland and NSW are over-represented in the proportion of households in severe poverty. More than one-quarter of a million people are in severe income poverty in Queensland, and 380,000 people in NSW. Taken together, the two states constitute more than half of all households in severe poverty in Australia.

“Being single, either with or without children, plays a central role in increasing the risk of being in poverty, especially if they are below retirement age,” Professor Duncan said.

“These households are continuously over-represented throughout all poverty depth groups. Once in poverty, single person households are more susceptible to various forms of deprivation and regularly seek assistance from welfare and community organisations.”

Single parents with children and lone person households are twice as likely to be in poverty under standard measures. Over one-quarter of single parent households are in poverty and one in seven is experiencing severe poverty.

The report findings also show that high housing costs represent a significant economic and social issue for Australians, adding directly to a higher incidence of poverty and more severe financial hardship.

Those who are unable to enter the housing market are particularly vulnerable, with the overall poverty rate for renters in Australia more than twice that for mortgage holders (22.6 per cent) compared with 10 per cent) and three times the rate for owners without mortgages (at 6.8 per cent).

“One of the most striking aspects of our research is the huge increase in poverty across the life-course for single people in rented accommodation,” Professor Duncan said.

Around 2 per cent of lone renters aged less than 35 are in poverty, but the rate rises to nearly four in 10 for lone persons aged 35 to 54, and more than one in two (5 per cent) for those approaching retirement age.

Professor Duncan said local housing markets and the availability of affordable housing options to those on lower incomes had an important bearing on income disadvantage. It follows that affordable housing must be a key priority in the battle to reduce the incidence of poverty in Australia.

“Contrary to expectations, a significant proportion of households are in severe poverty despiterelying on wages and salaries as their main source of income. This highlights the existence of a sub-population of ‘working poor’,” Professor Duncan said.

“More than 40 per cent of non-elderly couple only households are in severe poverty, despite the fact that wages and salaries represent their primary source of income. For couples with children in severe poverty, one-third rely on wages and salaries as their principle source of income.”

The report also shows that a significant number of people remain in deep and persistent poverty for extended periods of time, and for whom entrenched disadvantage has become a way of life. Up to 22 per cent of households designated to be poor have been in a state of relative poverty continuously for at least a period of five years prior.

Single person households (with or without children) are over-represented in persistent poverty measures.  One in seven single parent households in poverty in 2011 have been in poverty for five or more years.

“Circumstances that give rise to persistent and deep disadvantage can be complex and the direction of causality blurred,” Professor Duncan said.

“Drivers of poverty can quickly become outcomes in themselves, exacerbating the incidence and depth of poverty an individual experiences, perpetuating the cycle of disadvantage.”

Key findings:

Depth of poverty:

  •  In 2011-12 more than one million Australians were in severe income poverty, having access to household income of less than 30 per cent of the national median. This equates to around 5 per cent of Australia’s population.
  • More than 310,000 children are living in households in severe poverty, with incomes below 30 per cent of the national median.
  • A lone person in severe income poverty typically has no more than $133 to live on each week after deducting housing costs – with many surviving on less.  A couple with children in severe poverty makes do with income of $261 each week after paying for housing.
  • Among capital cities, Sydney has the highest proportion of people in severe income poverty – 6 per cent of the city’s population. This is followed by Perth (4.9 per cent) and Melbourne (4.8 per cent).
  • Non-capital city areas in Queensland and Victoria rank first and second in the proportion of people experiencing severe income poverty in regional areas of Australia.

Being single:

  •  Over one-quarter of single parent and lone person households are in poverty, and one in seven are experiencing severe poverty.
  • Single parents and lone persons have twice the representation among poor households when compared to their occurrence in the overall population.
  • Poverty persistence is far more prevalent among single adult households.
  • Nearly 250,000 single parents have been in poverty for at least five of the last ten years, with 100,000 single parents experiencing severe poverty for three years or more in the last decade.
  • One in four elderly single male or female households have been in poverty for four or more years.

Housing:

  •  Local housing markets and the availability of affordable housing options to those on lower incomes have an important bearing on income disadvantage.
  • High rent and mortgage costs have a proportionately greater impact on those in deepest income disadvantage.
  • The overall poverty rate for renters in Australia is more than twice that for mortgage holders (22.6 per cent against 10 per cent) and three times the rate for owners without mortgages (at 6.8 per cent).
  • There is a striking increase in poverty across the life-course for those families in rented accommodation. Around 29 per cent of lone renters aged less than 35 are in poverty, but the rate rises to nearly four in 10 for lone persons aged 35 to 54, and to more than one in two (55 per cent) for those approaching retirement age.
  • Nearly one in five lone renters aged 55 to 64 are found to be in severe poverty.
  • Single elderly female households in severe poverty typically have no more than $130 per week to live on after deducting housing costs.

 Employment:

  •  Households that are able to source most of their income from wages and salaries are more likely to be out of poverty than other households – however, wages in and of themselves do not prevent income poverty entirely.
  • People working on a part-time fixed term or casual basis are far more likely to be in poverty than other workers.
  • Almost 20 per cent of single parents whose main income source are wages and salary are in poverty.
  • Jobless households characterised by no adults participating in the labour force are over-represented at various poverty depths.
  • Poverty rates are most prevalent among jobless unemployed households. These householders are seven times more likely to be in severe poverty than other households.
  • Of non-elderly couple only households in severe poverty, more than 40 per cent source their income primarily from wages and salaries. For couples with children in severe poverty, one-third rely on wages and salaries as their principle source of income.

Social Mobility and education:

  •  Almost two-thirds of Australians whose parents achieved a university qualification have also achieved a tertiary level qualification.
  • This compares starkly with those whose parents achieved year 10 or below, where 20 per cent were able to gain a tertiary qualification.
  • Social mobility in education has increased especially among the cohort of Australians born in the 1970s.
  • Those born in the 1970s whose parents were educated to Year 10 or below were 50 per cent more likely to attain tertiary education themselves than earlier cohorts.
  • However, there is also some evidence to suggest that these high rates of mobility in education have tailed off for the later cohort of Australians born in the 1980s.

The BCEC report will be launched on Monday 13 October 2014 at a joint event with CEDA to mark the start of Anti-Poverty Week 2014.