Poverty Matters

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Poverty Matters

• Paul Flatau, Economics, MBS
• Murdoch University

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Presentation Overview

• Poverty matters Because it is important
• Why is poverty important?
• Rights, Fairness and Justice (Equity)?
• Costs and Consequences of poverty (Efficiency)?
• How important in national policy agendas has the
  issue of poverty been?
• Internationally UN Millennium Development Goals
  and in some countries e.g., the UK- The end of
  child poverty
• In Australia Henderson poverty commission, the
  Hawke child poverty pledge, the poverty wars the
  Social Inclusion Agenda and Closing the Gap agenda

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Presentation Overview

• Poverty matters .. The nuts and bolts of
  poverty
• If poverty matters we need to..
• Be able to define, measure and estimate the
  level, incidence and structure of poverty
• Assess trends in poverty, determine what are the
  key causes of poverty - determine where the key
  problems lie
• Take action to alleviate poverty and evaluate how
  successful we have been in this objective

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Poverty matters Its important
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Why does poverty matter?

• Rights Fairness and Justice (equity)?
• Rights All have a right to shelter, to be free
  from hunger, be adequately clothed, and have
  access to education and health services.
• Perhaps more than that - all have a right to
  achieve a standard of living that is consistent
  with what is seen as customary for residents of
  the country in which they live
• Fairness and Justice A fair and just society
  cant allow some people to live in sub-standard
  conditions while others live in comfort or plenty
  Note that fairness and justice is about lots of
  things not just a world free of poverty (e.g.,
  equality)

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Why does poverty matter?

• Costs consequences (Efficiency)?
• Poor health, nutrition and child developmental
  issues
• Lower quality of life, poor self esteem and
  increased social isolation
• Lower educational attainment, skills and
  productivity, underutilisation of labour feeds
  through to lower economic growth
• Higher expenditures on health, income support and
  many social services than would otherwise be the
  case
• Increased crime/domestic violence and reduced
  social cohesion
• Intergenerational consequences

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An International focus

• UN - Millennium Development Goals (MDGs) agreed
  to at the United Nations Millennium Summit in
  2000
• Eradicate extreme poverty and hunger by 2015
  (1st MDG) Targets and indicators against which
  performance in eradicating poverty can be judged
• T1 Reduce by half the proportion of people
  living on less than a dollar a day
• T2Achieve full and productive employment and
  decent work for all, including women and young
  people
• T3 Reduce by half the proportion of people who
  suffer from hunger

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An International focus

• UK Blairs commitment to end child poverty (1999
  speech in honour of William Beveridge)
• Our historic aim will be for ours to be the
  first generation to end child poverty forever,
  and it will take a generation. It is a
  twenty-year mission, but I believe it can be
  done. ..the child born in the run-down
  estate, should have the same chance to be healthy
  and well educated as the child born in the leafy
  suburbs.
• Gordon Brown, Chancellor at the time, Child
  Poverty Review, 2004 The concentration of
  poverty amongst households with children is the
  greatest indictment of our country in this
  generation and the greatest challenge of all.

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An International focus

• Followed by specific goals and measures
• Halve child poverty by 2010 and eradicate it by
  2020
• Three measures used
• Absolute poverty The proportion of children in
  households with incomes below 60 per cent of the
  (real) 1998/1999 median income.
• Relative poverty 60 per cent of contemporary
  median equivalised household income and
• Combined material deprivation and relative
  poverty
• And a policy focus on alleviating child poverty
  maintained since the initial commitment

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Source Ending child poverty Everybody's
business March 2008
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Australia

• 1975 Henderson Poverty Commission Report - First
  large-scale assessment of poverty in Australia
  and the most comprehensive statement seen in
  Australia of a poverty alleviation program
• Raise pensions/benefits to poverty line and
  update using AWE
• Guaranteed minimum income scheme
• Emergency services to be extended
• Macroeconomic policy to be geared towards full
  employment
• Extend coverage of minimum wage
• Specific attention given to long-term
  unemployment
• Raise unemployment benefits
• Housing policy expansion of housing authorities
  program
• Expansion of social services- Child care, Home
  help and short term accommodation

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Australia

• The Hawke Pledge Labor's election campaign
  launch, June 23, 1987
• So we set ourselves this first goal By 1990
  no Australian child will be living in poverty
• Linked to the introduction of the Family
  Allowance Supplement --designed to lift families
  above the Henderson poverty line
• Hawke 20 years later "It was a silly shorthand
  thing. I should have just said what was in the
  distributed speech - By 1990 there would be no
  financial need for any child to live in poverty
• Outside of the social security reforms led by
  Howe there was an absence of a detailed research,
  measurement and evaluation agenda around the
  pledge. This was a significant missed opportunity
  (cf with the Blair pledge)?
• The aftermath of the pledge - Labor reticence to
  commitment to poverty targets and explicit
  poverty alleviation goals

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Australia

• Poverty Wars Release of the Smith Family NATSEM
  study in 2001 Financial disadvantage in
  Australia1990 to 2000 the persistence of
  poverty in a decade of growth response from
  Centre for Independent Studies and Howard Govt
• PL based on 50 of mean or median income and
  Henderson ES
• Mean measure poverty rate rose from 11.3 in
  1990 to 13.0 in 2000.
• Median measure poverty rate rose from 8.2 in
  1990 to 8.7 in 2000.
• Poverty wars continued in the following 5 or 6
  years E.g. St Vincent de Paul Societys 2005
  report on The Reality of Income Inequality in
  Australia
• Peter Saunders (UNSW) The Poverty Wars
  Reconnecting Research with Reality
• While highly critical of CIS also points to the
  need to develop richer poverty measurement
  approaches we shall return to this theme later
  

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Social Inclusion Agenda

• Minister for Social Inclusion a Social Inclusion
  Board Social Inclusion Unit
• Working definition of social exclusion from Julia
  Gillards speech to ACOSS April 2008
• When people are denied access to experiences and
  opportunities that are fundamental to their
  wellbeing and dignity
• Social Inclusion Agenda Overall goal to give all
  Australians the opportunity to
• Secure a job
• Access services
• Connect with family, friends, work, personal
  interests and neighbours
• Deal with personal crisis such as ill health,
  bereavement or the loss of a job and
• Have their voice heard.
• Evidence-based targets but no explicit
  alleviation of poverty goals/targets or
  detailed discussion of poverty itself

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Social Inclusion Agenda

• However early social inclusion priorities include
  components very much focused on those in poverty
  -
• Children Education
• Year before formal school children to be able to
  access 15 hours of early learning programs a
  week,
• Extension of the Brotherhood of St Laurences
  Home Interaction Program for Parents and
  Youngsters (HIPPY) currently operating in
  Melbourne - to 50 disadvantaged communities
• Identifying school populations facing special
  risks and challenges and National Partnership in
  addressing the educational needs of low
  socio-economic status schools
• Homelessness Green White Paper
• 150 million committed to the building of 600 new
  houses for homeless Australians
• National Mental Health and Disability Employment
  Strategy

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Closing the Gap

• COAG in 2002 on-going review of Indigenous
  disadvantage Overcoming Indigenous
  Disadvantage Key Indicators.
• Some of the key headline indicators (2007 Report
  latest)?
• 17-year gap in life expectancy between Indigenous
  and non-Indigenous Australians mortality rates
  for Indigenous babies three times greater than
  for all Australian infants
• Reading, writing and numeracy differentials at
  year 3 Indigenous students only half as likely
  as other students to complete secondary school
• Lower employment and higher unemployment rates
  than the non-Indigenous population
• Indigenous adults 13 times more likely to be
  imprisoned and juveniles 23 times more likely to
  be in detention than the non-Indigenous population

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The COAG Overcoming Indigenous Disadvantage
framework
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Closing the Gap

• Apology to the Stolen Generations crucial step
  in closing the gap
• Continued roll-out of NTER Extensions
• the Cape York welfare trials and various WA
  communities including in the Kimberley with the
  WA Government (the Hope Report)
• Social Justice Report 2007 critical of the
  restrictions on the rights of Indigenous peoples
  and of procedural fairness restrictions
• Setting targets
• Every Indigenous four year old in a remote
  Aboriginal community to have access to a proper
  early childhood education program, and be engaged
  in proper pre-literacy and pre-numeracy programs
• Closing the gap in life expectancy, infant
  mortality, and mortality up to five years of age
• Halving the current gaps in literacy, numeracy
  and employment for indigenous Australians
• Indigenous housing in remote communities 1.6
  billion

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Poverty matters The nuts and bolts
of poverty
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First we must define poverty

• Different definitions but this in itself does not
  invalidate the concept - two examples
• European Union definition of poverty The poor
  shall be taken to mean persons, families and
  groups of persons whose resources (material,
  cultural and social) are so limited as to exclude
  them from the minimum acceptable way of life in
  the Member State in which they live
• UN World Summit for Social Development Absolute
  poverty a condition characterised by severe
  deprivation of basic human needs, including food,
  safe drinking water, sanitation facilities,
  health, shelter, education and information. It
  depends not only on income but also on access to
  services

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Then we must measure poverty

• Choose the unit of measurement
• Money metric (1) Income Typically cash based
  (before and after housing costs) but wider
  definition more appropriate even up to a
  comprehensive income measure (2) Expenditure
• Own units e.g., basic needs
• Set the threshold - poverty line
• If money metric specification of income or
  expenditure consistent with definition may
  require significant preliminary analyses of
  community views on what constitutes minimum
  acceptable way of life and income/expenditure
  dollars consistent with this equivalence scales
• In practice often 50-60 of median income
• Measure poverty using data
• In Australia large range of sources (e.g, Income
  Distribution Survey, Household Expenditure
  Survey, HILDA) for income or expenditure poverty.
  Problem areas homelessness Indigenous sampling

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Then we must assess outcomes

• Examine the standard of living and level of
  (absolute or relative) deprivation experienced by
  those assessed to be in poverty (and those not in
  poverty) -
• Extent to which households actually go without
  the necessities of life
• Circumstances and needs of those in poverty
• Household characteristics family
  characteristics - children
• Gender
• Labour market and skills
• Needs (housing, mental and physical health,
  alcohol and drug dependence problems, income
  management) very underdone in the literature
• Location
• Background Indigenous status, ethnicity, period
  of residence/visa category
• Social isolation and services not accessed

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SPRC Mission Australia, BSL and Anglicare study
The deprivation index
Gross weekly household income
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SPRC Mission Australia, BSL and Anglicare study
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SPRC Mission Australia, BSL and Anglicare study
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SPRC Mission Australia, BSL and Anglicare study
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An Australia free of poverty

• Poverty alleviation programs
• Address structural causes of poverty
• Economic growth, raising the education levels of
  those from poorer backgrounds, labour market
  programs, improve housing and health outcomes
• Meet individual needs
• Raise pensions/benefits for those categories
  where payments below poverty line Target social
  security support to those most in need Reduce
  poverty traps in means tests applied to social
  security payments targeted support programs for
  those with high and complex needs.
• Communities and neighbourhoods targeted programs
• Support to children
• Targets and evaluation
• Advocacy