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Friday, 3 June 1988
Page: 3292

(Question No. 967)

Dr Klugman asked the Minister for Social Security, upon notice, on 17 May 1988:

(1) What is the definition of the term ``poverty line'' when applied to various groups in Australia.

(2) Is he to say whether other countries define the term in absolute or relative terms.

(3) Has the Government found the definition to be the most appropriate definition to use.

Mr Howe —The answer to the honourable member's question is as follows:

(1) The ``poverty line'' most commonly referred to in Australia originates from a concept adopted by Professor Ronald Henderson in 1966. A poverty line for a ``standard family'' of a married couple and two children was derived from the sum of the basic wage in Melbourne plus the value of child endowment for two children. Professor Henderson then used a set of equivalence scales based on a 1954 New York study to derive poverty lines for different family types.

The Institute of Applied Economic and Social Research at the University of Melbourne uses a set of simplified Henderson equivalence scales to produce poverty lines for a range of family compositions updated quarterly on the basis of seasonally adjusted household disposable income per head.

(2) Various measures of poverty are used in overseas countries for a number of purposes. The available information indicates that, except for the Orshansky poverty line in the United States, poverty lines are not officially endorsed. The ``absolute'' Orshansky approach broadly defines any family which has an income of less than three times the cost of a subsistence food plan as poor.

(3) The Henderson poverty line has never been officially endorsed by any Australian Government although it has gained some acceptance in the community as a measure of poverty.