Poverty in Australia is increasing as wages stagnate

Australia’s poverty rate is on the rise, new data shows, with community groups saying this is a result of the government’s failure to properly index Newstart.

The latest Household, Income and Labour Dynamics in Australia (HILDA) survey found the proportion of people below the relative poverty line – 50 per cent of the median income – rose from 9.6 per cent in 2016 to 10.4 per cent in 2017.

Report co-author Professor Roger Wilkins said the poverty rate has generally been declining since the survey began in 2001, which made the sudden rise a cause for concern.

“We certainly hope it is a temporary blip, but it certainly does sound an alarm bell as to whether that does reflect a more sustained trend, which only time will tell,” Wilkins said.

The survey showed about 10 per cent of Australian households were reliant on welfare – defined as getting more than half their income from government support – which was a figure similar to previous years.

The research, which surveys 17,000 households, also found stagnation in the median income rate.

Wilkins said the income of people in the middle has basically remained unchanged since 2012.

“That was on the back of very substantial rises, particularly in the mid 2005 to 2009 range [when] we saw very large increases in household incomes,” Wilkins said.

“But since 2012, there’s been basically no growth.”

Wilkins suggested that tougher welfare eligibility requirements, which have forced many people from the Parenting Payment and the Disability Support Pension onto the lower Newstart payment, were a likely cause for the growing poverty rate.

Australian Council of Social Service principal advisor Dr Peter Davidson agreed, adding that another likely reason was the failure of successive governments to properly index Newstart.

“Newstart Allowance for single people is $190 a week less than the pension and unlike pensions, it is not indexed to wage movements so the gap grows each year,” Davidson told Pro Bono News.

“A failure to increase Newstart, and tax cuts skewed to high-earners, are likely to further increase poverty and inequality.”  

The Senate last week voted to hold an inquiry into the rate of Newstart, but the government remains opposed to raising the payment in real terms for the first time since 1994.

Davidson said another worrying development from the HILDA survey was low income mobility.

He said while people liked to think of Australia as a country where everyone can improve their incomes over time, this data showed one third of people in the lowest 20 per cent were still there one year later.

“To make matters worse, around one third of teenage children of families in the lowest 20 per cent are still in the lowest 20 per cent as adults 15 years later,” he said.

“At the other end of the income scale, almost one third of teenagers in high-income families are still in the top 20 per cent 15 years later.”

The full HILDA report can be seen here.