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Economists discuss why people are still living in poverty despite statistics showing increases in jobs and incomes.

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Tuesday 27 May 2003

Economists discuss why people are still living in poverty despite statistics showing increases in jobs and incomes


MARK COLVIN: The figures show that m ost Australians have enjoyed increasing prosperity during the last decade. Incomes are up; unemployment is down. But there are still many who have missed out, with some estimates suggesting that as many as four million people are living in poverty. 


A Senate Committee has been hearing evidence in Sydney today about the extent of poverty and deprivation in Australia, and about what should be done to alleviate those problems. 


This report from Economics Correspondent Ian Henderson. 


IAN HENDERSON: Just how many people there are living in poverty depends on how poverty is defined. 


But this is how the Director of the Australian Council of Social Service, Megan Mitchell, sees the size of the problem. 


MEGAN MITCHELL: By any of the commonly understand measures that are in use around the world, the extent of poverty in Australia ranges between around 1.7 million to over 4 million people, depending on what poverty line measure you use.  


IAN HENDERSON: Megan Mitchell says the group of people of particular concern, those living on less than half the average household income, is around 2.4 million or one in eight Australians. 


ACOSS will tell the Senate Committee Inquiry that the most important thing that governments can do is to lift the incomes of people living in poverty. 


MEGAN MITCHELL: The poverty gap for over 30 per cent of families is $150 less than the poverty line. So for those people in particular, they're doing very poorly.  


IAN HENDERSON: But Peter Saunders, Director of Social Policy Research at the free market-oriented Centre for Independent Studies, disagrees with ACOSS' views. He says poverty is a serious issue, but that its extent is often exaggerated. 


PETER SAUNDERS: Poverty itself is an important and serious issue that we need to do something about. But I don’t believe that the kind of numbers that are tossed around, for example, by ACOSS of 20-25 per cent of the population in poverty, are realistic. Indeed, I think it's actually deflecting from the seriousness of the issue.  


IAN HENDERSON: Peter Saunders, who presented his evidence to the Senate Committee this afternoon, agrees that different definitions of poverty are possible. 


PETER SAUNDERS: If we're talking about chronic, long-term deprivation, then my estimate would be somewhere between three and five per cent.  


IAN HENDERSON: So that's up to a million Australians? 


PETER SAUNDERS: It could be. But the point about this is that if we're looking at two, three, four per cent of the population then that is targetable it's something we can do something like.  


If you follow the ACOSS type line, which is you're talking about 20 or 25 per cent of the population in poverty i.e. 5 million Australians, then I think that what you're really talking about is a fundamental redistribution of income, which may be something that some of your listeners would be in favour of.  


But that's not tackling poverty, that's tackily a very different question of income, inequality in income distribution.  


IAN HENDERSON: So what does he say is the best way to alleviate poverty? 


PETER SAUNDERS: Where there is consensus right across the board among the people looking at this issue is that the key cause of poverty is long-term lack of work. So clearly the solution is to get people into the workforce who are long-term unemployed or long-term welfare dependant.  


The disagreements start on how you do that. Like, my own view is we need tax change, we need labour market changes and we need changes to the welfare system itself.  


IAN HENDERSON: Peter Saunders says the CIS thinks it's absurd that incomes as low as $6,000 a year are taxed.  


PETER SAUNDERS: We shouldn't be taxing people until they've passed that point of 12,500-13,000 which is the subsistence floor. At the moment we're taxing them at six. So what we're doing is that we're actually taxing people into poverty.  


We're taking low income working households, we're taking tax away from them, and then we're saying, oh heavens, they're poor, we' better give them welfare benefits, and I think that this is crazy. 


IAN HENDERSON: So we should cut back on welfare but make it easier for people to keep the income that they earn? 


PETER SAUNDERS: Absolutely.  


IAN HENDERSON: According to Peter Saunders, getting a job, any job, no matter how low paid, should be the first priority if we're interested in helping people out of poverty. 


But ACOSS' Megan Mitchell is not convinced. 


MEGAN MITCHELL: I think that is one of a suite of solutions. Obviously, jobs are really crucial pathways out of poverty. The problem is there aren’t enough jobs for the amount of people who are unemployed.  


MARK COLVIN: The Director of ACOSS, Megan Mitchell, ending that report from Economics Correspondent Ian Henderson.