Recent figures show that in 2022-23, one in seven people (14.2%), including one in six children (15.6%), lived below the poverty line. Poverty increased significantly after the immediate impact of COVID lockdowns and income supports subsided. Altogether, 3,706,000 people were in poverty during this period, including 757,000 children.
These are the key findings of the latest ACOSS-UNSW Sydney Poverty in Australia report, authored by Dr Peter Davidson and Associate Professor Bruce Bradbury.
Measuring the Poverty Line
The poverty line used in this report was based on 50% of median household disposable income, equivalised to account for the needs of different-sized households. It ranged from $584 per week for a single adult to $1,226 per week for a couple with two children.
We deducted housing costs from both the poverty line and household incomes, using data from the Melbourne Institute’s HILDA survey, to account for one of the largest costs faced by people at risk of poverty. Further, because the costs of disability were not separately identified, it is likely that poverty among people with disabilities was underestimated.
Most people in poverty had incomes well below the poverty line. The ‘poverty gap’ – the mean difference between household incomes for those in poverty and the poverty line – averaged $390 per week (less in dollar terms for smaller households) or 47% of the poverty line.
Poverty Rose Following the Removal of COVID Income Supports and Rent Increases
Over the two years after COVID lockdowns ended, from 2020-21 to 2022-23, poverty increased by 1.8 percentage points from 12.4% (one in eight) in 2020-21 to 14.2% (one in seven) in 2022-23. The number of people in poverty, including children, increased by 593,000. Despite reductions in unemployment during this period. The poverty rate in 2022-23 sat slightly above its pre-COVID level of 13.4%
One reason for the increase in poverty after 2020-21 was the abolition of the Coronavirus Supplement, which almost halved the lowest income support payments. While JobSeeker and related payments were permanently increased by $25 per week at this time, this represented a net $250 per week cut in maximum income support payments for individuals and $500 per week for couples.
A second reason for the recent increase in poverty was a large rise in housing costs, especially rents. Approximately half of the people in poverty rent their homes, while those who own homes outright (mainly older people) have relatively low housing costs. Between 2021 and 2023, the median advertised weekly rent for units rose by 40% in Sydney, 34% in Melbourne and 31% in Brisbane.
When existing tenancies are included, average rents rose more gradually but still jumped by 12% over the two years from December 2021 to December 2023, a stark contrast to a mere 1% increase from 2017 to 2019 and a 1% reduction from 2019 to 2021.
Consequently, among renters in the lowest 20% of income earners, the proportion that spent 30% or more of their income on rent rose from 52% in 2020-21 to 57% in 2022-23.
Assessing the Albanese Government’s 2023 Budget
In its second budget in 2023, the Albanese government increased several social security payments above inflation. While these changes occurred after the period covered by our national poverty estimates, we can assess the degree to which the increases reduced the gap between those payments and the poverty line.
The JobSeeker Payment, Youth Allowance, Austudy and Abstudy Payment and Special Benefit were increased by $20 per week. The Commonwealth Rent Assistance (CRA) was increased by 15%, and the Parenting Payment Single was extended to sole parents whose youngest child was up to 13 years old (from 8 years), so they could transition from the lower JobSeeker Payment, an increase of $85 per week.
We compared the maximum social security payment rates with the poverty line for nine illustrative households in April and September 2023. The increases described below include widely available supplementary payments such as the Energy Supplement. But they exclude initiatives such as Commonwealth Rent Assistance (CRA), which offsets people’s housing costs, since most people on income support payments do not receive CRA.
After the increases in September 2023 (including the regular inflation adjustment):
- A single student on Youth Allowance living away from their parents received an extra $20 per week, leaving them $279 below the poverty line.
- An unemployed single person receiving JobSeeker Payment received an extra $28 per week ($55 per week if partnered), leaving their payments $205 and $182 below the poverty line, respectively.
- Partnered parents with two children aged 8 to 12 years on JobSeeker Payment and Family Tax Benefit received an extra $72 per week, leaving their payments $299 below the poverty line.
- Older people receiving the Age Pension did not receive an increase beyond the normal inflation adjustment, which lifted payments by $16 per week for a single person and $25 per week if partnered, leaving payments $36 and $49 below the poverty line, respectively.
- A sole parent with two children aged 8-12 years received an extra $134 per week. This reduced the gap between their income and the poverty line by almost half (45%), from $297 to $163, but it remained substantial. Importantly, sole parent families whose youngest child was under 8 years old or over 13 years old did not benefit from the extension of the Parenting Payment Single.
The Solutions to Poverty Remain Clear
Broadly speaking, the evidence supports lifting the lowest income support payments (Youth Allowance, JobSeeker Payment and Parenting Payment) above a benchmark level of adequacy, taking account of essential living costs, relativities with other income support payments and wages. Further, income support supplements to cover essential costs above and beyond basic income support – including the extra costs of sole parenthood, disability and rent assistance – should be extended and improved.
Second, barriers to employment should be removed for people disadvantaged in the labour market. This requires a strong commitment to full employment, based on targets that guarantee there are enough jobs and paid working hours overall for people who need them, and fundamental reform of the failed and harmful employment services system.
Third, secure and affordable housing must be available to all. Governments should set ambitious social housing targets and strengthen rental protections, including protections against excessive rent increases.
Dr Peter Davidson, ACOSS and UNSW Sydney.
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