Income Poverty in Australia

This project is being conducted by Dr Roger Wilkins of the Melbourne Institute.

The 2004 Australian Senate inquiry into poverty demonstrates notwithstanding party-political motivations that poverty remains a key social policy issue in Australia today. Understanding the extent and nature of poverty in Australia, how this has changed over time, and the sources of these changes are correspondingly of fundamental importance. While there is a large volume of research into poverty in Australia, dating back to Henderson et al. (1970), the research has been dominated by efforts to determine the aggregate extent of poverty efforts which are in turn dominated by the issues surrounding the definition and measurement of poverty leaving some important gaps in the literature. Especially notable is that there has been almost no investigation of the causes of changes in the extent and incidence of poverty over time.

In this paper, we seek to address some of the limitations of the existing research, drawing on the unit record files from the nine Australian Bureau of Statistics income surveys conducted over the period 1982 to 2000-2001. We begin by describing the evolution of measures of income poverty over the period, in aggregate and disaggregated by family type. This represents a time period not previously examined in its entirety, spanning the Hawke-Keating Labor governments and the first five years of the Howard Liberal-National Coalition government.

We then proceed to investigate the sources of changes in family poverty rates, considering the roles played by changes in employment patterns, wage rates, welfare payments (income support and non-income support payments), the income tax system and demographic characteristics (family composition, age, educational attainment, country of birth). The methodology adopted is that of Dickens and Ellwood (2004), who investigate changes in poverty in the US and UK between 1979 and 1999. This approach enables quantification of the effects of changes in demographic characteristics, employment patterns, wage rates and income taxes and transfers and identification of direct linkages between specific changes and effects on poverty. Clearly, such information is valuable not only in informing policies aimed at eliminating (relative) deprivation and disadvantage, but also in ascertaining the implications for poverty of policies with other objectives.

The Melbourne Institute contact for this project is Dr Roger Wilkins.

Funding source: Economics and Commerce Faculty grant.