Friday, 24 April 2015

Committee For Economic Development Of Australia: more than a million Aussies living in poverty is a national disgrace

The number of Australians living in entrenched disadvantage is a disgrace and without a radical policy shake-up Australia will never reduce this number or the cost to taxpayers, CEDA Chief Executive Professor the Hon. Stephen Martin has said….
Professor Martin said the past 20 years had essentially been a massive failure by successive governments to address entrenched disadvantage and policies have been economically short-sighted…..
“We need to tear up the rule book and have a radical overhaul of how we tackle entrenched poverty. Labour market programs – essentially using a big stick to tell people they’ve got to get a job or face even further financial disadvantage – should not be the primary policy instrument for this group of people.
“It is absolutely clear that labour market policies have not worked because they fail to tackle the heart of the problem and yet it seems they are the only approach successive governments are willing to focus on.
“The main problem often isn’t that people don’t have a job, but the consequence of a range of other issues including education levels, mental health, social exclusion or discrimination. [Committee For Economic Development Of Australia (CEDA) media release 21 April 2015]

Excerpts from the Overview in the Committee For Economic Development Of Australia (CEDA) report, Addressing entrenched disadvantage in Australia April 2015:

How serious is disadvantage?

There are many ways to measure and define disadvantage, including the poverty line, the deprivation and the social exclusion approaches. Each method has its own shortcomings and strengths, with this study focusing on the deprivation and social exclusion approaches, as they are more representative of experienced disadvantage.

Using the 50 per cent of median income poverty line approach, and after taking into account housing costs, the Australian Council of Social Service (ACOSS) found that the threshold for poverty in 2011–12 was a disposable income of less than $400 per week for a single adult and $841 for a couple with two children. This implies that 13.9 per cent of the population (or 2.55 million Australians) had an income below that necessary to acquire a socially accepted standard of living.

An alternative to using poverty lines is to attempt to describe whether households have access to goods and services deemed necessary as defined by a survey of community attitudes (the deprivation approach). An example is the Social Policy Research Centre (SPRC) surveys conducted in 2006 and 2010 using a list of 25 items identified as essential for all Australians.

In Chapter 1 of this report, Professor Peter Saunders finds that deprivation (using the SPRC surveys) is highest among sole-parent households, and deprivation was pronounced in items that provide protection against future risks related to poor health and unforeseen circumstances (for example, dental treatment or emergency funds). He also finds that only about 40 per cent of those below the poverty line are considered deprived.

A third methodology, the social exclusion/inclusion approach, is generally seen as multidimensional, with concepts based on the capability and deprivation approaches. It captures social inclusion as having the resources; having opportunities and capabilities to work, learn and engage; and having a voice in society.

One such example is the Social Exclusion Monitor (SEM) by the Melbourne Institute and the Brotherhood of St Laurence.10 The SEM captures social exclusion through 30 indicators of disadvantage in seven life domains:

1. Material resources;
2. Employment;
3. Education and skills;
4. Health and disability;
5. Social connection;
6. Community; and
7. Personal safety.

The SEM finds that about five per cent of Australians faced deep social exclusion and a further one per cent faced very deep social exclusion in 2012, amounting to almost one million people, or about 39 per cent of those living below the poverty line, echoing the findings of SPRC’s deprivation approach……

…evidence of the persistence and of the risk of chronic poverty:

*About a quarter of the people who manage to exit poverty have returned to being poor within two years; and
* About 12 to 15 per cent of poor households are still poor 11 years later.

…individuals with a high risk of facing long-term disadvantage fall into the following categories:

* Those with low education attainment, including those who did not complete high school;
* Indigenous Australians;
* Households with someone living with a long-term health problem or disability;
* Those aged 65 and over;
* Jobless households; and
* Those living in disadvantaged areas……

Low-income individuals and households tend to have the poorest health outcomes: They are more likely to have higher mortality rates, lower life satisfaction, poor self-assessment of their health, and higher rates of long-term or severe health conditions.19 Individuals with poor health conditions are less likely to participate fully in the workforce and in some cases, particularly for the more acute and long-term illnesses, there is the additional cost of caring for those who cannot care for themselves……

Policy lessons While each of the three areas of disadvantage comes with its own challenges and policy implications, this study suggests some overarching perspectives that are applicable to all policies, regardless what aspect of disadvantage is being addressed. Entrenched disadvantage is a complex and significant problem: • An estimated four to six per cent of our society experiences chronic or persistent disadvantage. This amounts to about one to 1.5 million Australians; • Between 12 and 15 per cent of disadvantage spells last more than a decade; • The longer an individual spends with significant disadvantage, the more likely they are to be stuck in the spell; • The risk of falling back into a disadvantage spell is highest in the first two years of exiting poverty, affecting about a quarter of people who have exited; and • Children who grow up in a home with entrenched disadvantage are more likely to face the same problem……


Addressing entrenched disadvantage is an onerous task. Current policies are not working as well as we would hope and despite Australia’s relatively good economic performance, our scorecard when it comes to getting people out of the cycle of disadvantage has not been as good. There is a lot more work to do to reduce disadvantage and make sure it does not become entrenched. To do so would require a suite of policies that are evidence-based, focused on long-term objectives, with the view to address the drivers behind the persistence of entrenched disadvantage, including the need to ensure that individuals have the right environment (such as stable housing) to enable better participation. These policies would be subject to transparent evaluation, including ongoing evaluation to ensure they remain effective and have a long-term impact on individuals.

More research into the dynamics of disadvantage, perhaps through the development of better longitudinal data, is required to develop this suite of policies and to inform good policy. One thing is certain: Entrenched disadvantage is a complex problem and in the absence of appropriate and effective policies, it is not going away. A nation as rich as Australia has no excuse for not doing better – we can, and should, do better not just for the benefit of those who are disadvantaged, but for the benefit of all Australians.

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