Poverty and social exclusion
The Melbourne Institute has a long history of undertaking research on poverty and social exclusion tracing back to its formation under the leadership of Professor Ronald Henderson and his seminal research on poverty in Australia.
Development of the Henderson Poverty Line
In 1966, under the direction of Henderson, the Melbourne University Institute of Applied Economic and Social Research began Australia’s first systematic attempt at measuring poverty in Australia by estimating the extent of poverty in the city of Melbourne.
Following this, a Commission of Inquiry into Poverty was set up in August 1972 by the Liberal Prime Minister William McMahon, with Henderson appointed as Chair. The Whitlam Government elected later that year expanded the size of the Inquiry and its scope, giving it specific responsibility to focus on the extent of poverty in Australia together with the groups most at risk of experiencing poverty, the income needs of those living in poverty, and issues relating to housing and welfare services. These issues were addressed in the Commission’s first main report, “Poverty in Australia,” which was released in August 1975.
In this report, Henderson sought to identify the extent of poverty in Australia in terms of inadequate income relative to need. Any family with incomes below what was considered as representative of an ‘austere’ standard of living, widely known as the Henderson poverty line, was considered to be living in poverty. The poverty line was set at a benchmark income of $62.70 for the September quarter 1973, which was around the value of the basic wage plus child endowment (an earlier version of family allowance), for a reference family of two-adults with two children based. Adjustments were then made for other household types.
The Melbourne Institute has since been publishing quarterly updates to the Henderson Poverty Line.
An important feature of the work of the Commission of Inquiry into Poverty was the public release of a wide range of research studies examining different aspects of poverty in Australia organised around the topics of law and poverty, education and poverty, poverty and mental illness, poverty and disability, and, consumer protection and poverty. These research reports formed the basis of subsequent main reports of the Commission.
References
Henderson, R.F. (Chairman) (1975), Poverty in Australia First Main Report April 1975, Commission of Inquiry into Poverty, AGPS, Canberra.
Henderson, R.F., Harcourt, A. and Harper, R.J.A (1970), People in Poverty A Melbourne Survey, Chesire, Melbourne.
Johnson, D (1987), The Calculation and Use of Poverty Lines in Australia, Australian Economic Review, 4th quarter, pp. 45-55.
For further publications of the Commission of Inquiry into Poverty search the National Library catalogue
Other research on poverty
Although never officially used by governments as a measure of poverty, the Henderson Poverty Line became the standard used by researchers to gauge progress in the community. However, issues such as the move away from the traditional male breadwinner model, the end of full employment and problems with updating the poverty line have led to the increased use of alternative income and consumption based poverty lines, for example, setting the poverty line at some fraction of median or mean incomes. Research on poverty at the Melbourne Institute has followed these developments exploring the implications of taking a wide range of approaches to poverty measurement.
References
Buddelmeyer, H. and Verick, S. (2008), 'The Dynamics and Persistence of Income Poverty in Australia', The Economic Record, Vol. 84, Issue 266, pp. 310-321. (An earlier version appeared as IZA Discussion Paper No. 2827)
Johnson, D (1996), For the Student: Poverty Lines and the Measurement of Poverty, Australian Economic Review, 1st quarter, pp. 110-126.
Johnson, D (1996), Poverty, Inequality and social Welfare in Australia, Physica-Verlag: Heidelberg, Germany.
Wilkins, R (2007), The Changing Socio-Demographic Composition of Poverty in Australia: 1982 to 2004, Australian Journal of Social Issues, Vol. 42, No. 4, 481-501. (An earlier version appeared as Melbourne Institute Working Paper No. 12/2007)
Multidimensional approaches to disadvantage
In recent times broader concepts of disadvantage have taken over from the more traditional ways of thinking about, and measuring, poverty. These include Nobel Prize winning economist Amartya Sen’s notion of capability deprivation. Another example of these approaches is the social inclusion approach, which in its contemporary form has been predominately conceived and implemented in Europe, and more recently has been taken up by governments in Australia (see, for example, the Australian Government’s Social Inclusion Agenda.
What these approaches share is that they explicitly identify that socio-economic disadvantage, whether it be social exclusion or capability deprivation, is multidimensional in nature and therefore its extent, nature, causes and consequences can only be understood by examining the range of dimensions of disadvantage, exclusion or deprivation that are present.
Capability deprivation
At its 40th anniversary, the Melbourne Institute embarked on a project to review and implement multidimensional approaches to the measurement of, and policy improvement towards reducing, poverty and disadvantage. As a contribution to the project, Professor Bruce Headey of the MI developed a framework for assessing disadvantage influenced by Sen’s (1999) ‘capabilities’ and ‘functionings’ approach.
For more information see:
Headey, B (2006), A Framework for Assessing Poverty, Disadvantage and Low Capabilities in Australia, Melbourne Institute Report No. 6 Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Melbourne.
Social exclusion
In 2008, the Melbourne Institute commenced collaboration with The Brotherhood of St Laurence to develop a new way to measure social exclusion in Australia. The results of this project are presented in the recently launched social exclusion monitor.
This collaborative project built involved initial developmental research to consider the most appropriate approach to measuring exclusion in Australia using existing data collections. After consultation with a range of policy experts in 2009, a methodology was selected that built on the developmental work of Headey (2006) drawing on the capabilities framework articulated by Amartya Sen. Using this approach, a measure of exclusion was constructed incorporating seven life domains: material resources, employment, education and skills, health and disability, social connection, community and personal safety. For further details see:
Scutella R, Wilkins R & Horn M, ‘Measuring Poverty and Social Exclusion in Australia: A Proposed Multidimensional Framework for Identifying Socio-Economic Disadvantage’, Melbourne Institute Working Paper No. 4/09, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Melbourne.
Scutella R Wilkins, R and Kostenko W (2009), ‘Estimates of Poverty and Social Exclusion in Australia’, Melbourne Institute Working Paper No. 26/09 Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Melbourne.
The Melbourne Institute has also been contracted by the NCVER to contribute to its research program on ‘The contribution of education and training to social inclusion: To explore the reduction of disadvantage through education and training’. Link to http://www.melbourneinstitute.com/labour/research-contracts.html