It is anti-poverty week from 12 to 18 October. In Australian there is a system of welfare support for people whose circumstances may otherwise see them living in poverty. Australians who find themselves out of work can apply for the Newstart Allowance and the Age Pension provides support to people beyond working age.
Despite the policy intentions of this ‘safety net’ it was reported this week that 2.5 million Australians are living in poverty.
The Henderson poverty line is a threshold for measuring a person or families circumstances and relative poverty. Anyone below the Henderson line is considered to be in poverty. The latest poverty line values for people out of work or over 65 years (March 2014) is set at $584.07 per week for a couple and $556.56 for a lone parent with one dependant.
For a parent with one child receiving the maximum possible welfare support and no further income they scrape over the poverty line by $3.18 per week. But a single adult of working age falls $196.02 short.
Welfare benefits have not always fallen so close or below the poverty line. Figure 1 shows the decrease in unemployment benefits over time in relation to the poverty line as a percentage.
Figure 1: Unemployment benefit relative to the poverty line (%)
Source: Calculations by The Australia Institute based on Melbourne Institute of Applied Economic and Social Research, Poverty Lines: Australia (various issues), and Australian Government (2014) Guide to Social Security Law.
For pensioners the current situation is not yet as dire. For a couple welfare payments see them $87.33 over the poverty line and $56.56 for an individual. This situation is unlikely to continue for much longer.
The government has announced that as of September 2017, the age pension would be indexed only against the Consumer Price Index (CPI) and would no longer be indexed against the higher of that or the Pensioner and Beneficiary Living Cost Index or Male Total Average Weekly Earnings.
Newstart Allowace is indexed to the CPI and payments have fallen below the poverty line. Before long pensioners can expect to also find themselves below the poverty line.