Australia’s Concerning Poverty Rates - OECD Report

A new global report reveals that relative poverty in Australia (14.4 per cent of the population) is higher than the OECD average (11.3 per cent).

And the report argues that income inequality and social divisions could worsen and become entrenched unless governments act quickly to boost support for the most vulnerable in society.

The report said that even if they still were high, poverty rates in Australia for youth and particularly those over the age of 65 declined, while child poverty increased.

It found that 10 per cent of Australians report that they cannot afford to buy enough food.

“This share has increased somewhat over the past years, but remains lower than the OECD average of 13.2 per cent,” the report said.

However the report said that the annual disposable household income in Australia is considerably higher than the OECD average. Income inequality, as measured by the Gini coefficient (0.334), is also higher  than the OECD average (0.313).

“The strong increase in real public social spending between 2007/08 and 2012 is mainly explained by pensions, leaving many families with children behind. Yet, public social spending is somewhat below the OECD average,” the report said.

The OECD report reveals that Australia's poverty rate is higher than the OECD average.

Other social indicators from the OECD report are that:

• Australians have a life expectancy of 82 years, nearly two years above the OECD average of 80.1.

• Australian women’s effective age of labour market exit, at 62.9, is slightly below the OECD average of 63.1. Australian women can expect to live 24.2 years in retirement. This is nearly five years more than their male counterparts. With an effective age of labour market exit at 64.9, they can expect to live 19.3 years in retirement.

• The fertility rate in Australia fell from 1.96 children per woman before the economic crisis to 1.88. This rate is above the OECD average but lower than the demographic replacement rate of 2.1.

• More than one quarter of Australians are foreign born, the 3rd highest in the OECD after Luxembourg and Switzerland, and more than double the OECD average of 12.6 per cent. From 2008 to 2010, only Luxembourg had a higher net migration rate.

The OECD also found that Australians' donations to charities decreased

Some 67 per cent  of Australians donated money to a charity in 2012. This is well above the OECD average of 44 per cent. However, Australians reduced donations to charities, reduced time spent on volunteering and helped strangers less over the period 2007-12.

The report found that Australians are more tolerant of migrants, ethnic minorities, gays and lesbians compared with most of the other OECD countries, even if their perception of tolerance declined slightly from 2007 to 2012.

The report,  called Society at a Glance 2014, says that despite a gradually improving global economy, medium-term fiscal consolidation in many countries will pose challenges for tackling the social fallout from the crisis.

Globally it found that public spending on disability, family and unemployment benefits rose during the early phases of the crisis but these areas are now under pressure. Coverage has also been a challenge: while social protection programmes helped soften the blow for many people, others were left with little or no support, notably in southern Europe.

“Governments need to consider any further expenditure cuts very carefully,” the OECD said.

“These may add to the hardship of the most vulnerable and could create problems for future social cohesion. While the long-term commitment to restore public finances should be maintained in order to create confidence, it cannot happen at the cost of raising inequalities and social gaps.”

“The economic recovery alone will not be enough to heal the social divisions and help the hardest hit bounce back,” OECD Secretary-General Angel Gurría said.

“Governments need to put in place more effective social policies to help their citizens deal with future crises. They also need to avoid complacency and persevere in their reform efforts as the recovery takes hold.

“Governments should target social spending and investment on the most needy. Across-the-board cuts in social transfers should be avoided. This is particularly true for housing and child or family benefits as these often provide vital support to poor working families and lone parents.  

“Cutting such social investment expenditure today might cause long-term harm to children’s development and people’s employment chances and well-being in the future.”  

Society at a Glance gives an overview of social trends and policy developments in OECD countries and selected non-member countries using indicators taken from the OECD and other sources.