Poverty is rising again in Australia and expert cites welfare changes as likely cause

Extract from The Guardian

Welfare

Moving people off higher pensions on to Newstart a possible reason for uptick in poverty, author of annual Hilda survey says

Luke Henriques-Gomes

@lukehgomes

Tue 30 Jul 2019 04.00 AEST Last modified on Tue 30 Jul 2019 04.04 AEST

Poverty rates are increasing, possibly because of the ‘tightening of the screws’ of the welfare system, the author of the Hilda survey says. Photograph: Matt King/Getty Images

Poverty in Australia is increasing again after several years of decline, a respected University of Melbourne study has found, with changes to welfare policies cited as a possible contributor.
The annual Household, Income and Labour Dynamics in Australia (Hilda) survey, released on Tuesday, found the proportion of people living below the relative poverty line – 50% of the median income – increased in 2017, from 9.6% to 10.4%. Poverty rates also rose using the lower “anchored” measure in both 2016 and 2017.
Researchers said the trend was likely caused by the “tightening of the screws” of the welfare system, which has seen many Australians moved off higher pension benefits and onto the Newstart allowance.

“We have seen an uptick in measures of poverty in the last couple of years on the back of fairly substantial declines over this century,” said the report’s co-author, Prof Roger Wilkins.
“We’d be a bit concerned about whether that was the start of a trend upwards, or whether it’s just a short-term upward movement.”

The survey, which tracks 17,000 households and has been running since 2001, found poverty had increased in 2017 among all family types except couples with children.

Child poverty rates among single-parent families hit 19.2% in 2017, the highest rate since the global financial crisis.
Poverty rates were even higher among single elderly people, and in excess of 30% for elderly single women, although the report did not take into account owner-occupied housing and was therefore likely to “overstate the extent of their relative deprivation”.

The report did not investigate potential causes, but Wilkins said changes to the welfare system introduced by the Coalition and previous Labor government were a likely cause for the increase in poverty rates.
“Obviously, there’s a lot of attention on the lack of a real increase in the Newstart allowance,” he said.
“But that’s probably not the biggest factor. It would be things like progressively [moving] more people onto Newstart from higher benefits like parenting payment single and the disability support pension.”
The report’s findings are still likely to further fuel calls for an increase to the $277.85 a week Newstart payment, which is significantly lower than parenting and disability payments. The relative poverty line is about $430 a week for a single person.

Overall, the report notes that “even among those in relative income poverty, average living standards have increased over the full 17-year period” since 2001.

Growth in household incomes has been stagnant since 2009, particularly for men. The median household income in 2017 of $80,095 was lower in real terms than in 2013, 2012, or 2009.
While there had been “little net change in income inequality” over the 17 years of the survey, there has also been a persistent decline in income mobility in the short and medium term, particularly among those in the top and bottom quintiles.
These two groups were “not moving up or down the distribution,” Wilkins said.
“That seems to have been sustained over much of this period that we’re examining,” he said. “So [it means] the poor tend to stay poor and the rich tend to stay richer.”

The employment rate among women hit 71.4% in 2017, its highest point in the history of the survey, but Wilkins said the proportion of women working full time was still lower than it was in 2008.
At the same time, parents are spending about 150% more on childcare than they did in 2002. While much of the increase was due to an increasing use of child care services, hourly costs had also increased by 51% since 2002-03.
Wilkins also drew attention to what the report said was the “relatively little net change since 2009” in the number of retired Australians relying on the aged pension.
“I would have presumed to think that as the superannuation system matures that over time more people would be relying on income from superannuation and reliance on the age pension will be diminishing,” he said.

“There has basically been no reduction in reliance amongst people aged 65 and over.”