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From the vault: what is poverty, and who is ‘poor’?

Families Minister Jenny Macklin, who has shifted some single parents on to the dole, is being panned for saying she could live on Newstart. In this piece from October, Crikey looks at how to define the breadline in Australia — and who is living beneath it.

It was an easy headline, especially given the report was released on a Sunday. “One in eight Australians live in poverty,” said the ABC. “More than two million Australians in poverty,” ran the AAP copy. Fairfax ran some profiles of people struggling to make ends meet off the back of the Australian Council of Social Services’ new report on the extent of poverty in Australia.

Few bothered to look into the basis for ACOSS’s numbers, beyond that it was an internationally-accepted poverty benchmark. ACOSS used the OECD’s poverty definition, which is 50% of median disposable income. It also provided data for another, less austere benchmark, 60% of median disposable income. On the basis of the lower OECD definition, which ACOSS prefers, 2.265 million Australians are living in poverty. Using the 60% definition, 3.7 million Australians are.

Fifty per cent of median disposable income is $358 a week for a single adult and $752 for a couple with two children.

Neither sum is easy to live on. But they’re the product of an arbitrary benchmark: there will always be a substantial proportion of the population identified as “living in poverty” if you define poverty in relation to median income.

But deprivation-based measures of poverty allow us to move away from arbitrary benchmarks and consider how many people are actually in financial circumstances where they’re unable to afford basics most of us consider essential. And some high-quality work on this has already been done, including by ACOSS.

Earlier this year ACOSS published a report, “Who is missing out? Material deprivation and income support payments”, based on a study by Professor Peter Saunders and Melissa Wong of UNSW. The study, which used data from the 2010 “Poverty and exclusion in modern Australia” (PEMA) survey, looked at how many households displayed “deprivation indicators” based on a range of indicators widely agreed to be “essential” for households.

For example, 99% — or more — of people agreed warm clothes and bedding, medical treatment, ability to afford prescription medicines, and a substantial meal at least once a day were essential. Over 90% agreed up-to-date schoolbooks, the ability for kids to participate in school activities and outings, a decent and secure home, and regular social contact were essential. The only survey indicator that appears to have been widely disputed as “essential” was “a week’s holiday away from home”, which was identified as essential by 54%.

The most at-risk group for lacking ‘essential’ items is, unsurprisingly, Newstart-recipient households … this returns us to the debate over whether to increase the level of Newstart assistance.”

Using median income as a measure of poverty allows us to capture the sense of “relative poverty”, which is important in a prosperous Western country. But the PEMA approach also enables a comparative element. For example, 72% of PEMA respondents agree computer skills are “essential”, even if they would not fit into any meaningful definition of absolute poverty.

Using the PEMA data, Saunders and Wong provided us with an alternative take on poverty in Australia. But the result isn’t one to fill us with complacency: 15.3% of households reported lacking at least 3 of the “essential” indicators.

This included 18.5% who couldn’t afford a week’s holiday; indicators at the other end of the scale are much lower: inability to buy prescribed medicines was 2.9%; inability to afford children’s participation in school activities 2.6%. But 20.7% reported not having $500 in emergency savings; nearly 12% reported being unable to pay a utility bill at least once a year.

The most at-risk group for lacking “essential” items is, unsurprisingly, Newstart-recipient households; 61% reported lacking at least three indicators, although the sample size is too small to provide reliable figures. Households reliant on the disability support pension or parenting payments also featured strongly in households reporting deprivation indicators; age pension recipient households featured much less prominently; indeed, had a lower rate of lacking at least three essential indicators than the community as a whole; it was age pension recipients who didn’t own their own homes who were overrepresented.

This returns us to the debate over whether to increase the level of Newstart assistance. In August, even the Centre for Independent Studies, a serial participant in the “poverty wars”, argued there may be a case for an increase in Newstart for the long-term unemployed, provided it came with stronger requirements for recipients to search for work. This would be cheaper than an across-the-board rise that would simply represent a windfall for the majority of Newstart recipients who only receive it temporarily while between jobs.

And however arbitrary, the weekend report from ACOSS does put a human face on poverty. It’s worth examining to see who else is overrepresented: people in poverty are more likely to be female, more likely to be kids or older people, more likely to be single or lone parents, more likely to be from a non-English speaking country. But the difference between metropolitan and regional/rural poverty is quite low: 12.6% of people in cities and 13.1% of people in regional areas.

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  • 1
    Apollo
    Posted Thursday, 3 January 2013 at 12:11 pm | Permalink

    Hmmmm, this is a little complex when I think about it. I remember the government paid support for my my grand niece when their parents went back to university. Now, I’m assuming that parents being pushed onto Newstart won’t get any support payment for each child between 8-16 years old, that will be very tough for them if they don’t get a few hours of work each week to make up for the short fall. If they don’t have a job, they’ll need at least $25 per child per week from the government. But the government’s idea is to get parents into the workforce and be more independent. This is where the government, the Greens and welfare groups all have it wrong in their policy approach.

    In my past life as a manager of a small super market, I’ve met many single mothers (and very few single dads). A tiny number want to work a little, just so they can meet people and ‘men’, they wanted cash in hand so it would not affect their centrelink payment. About 80% of the single mums I met were working. 20% were happy to live on centrelink payments and had no desire to get a job.

    A good number of single mums are discouraged from working by centrelink reducing their payment too much too quickly when the get part time work. They want to work to earn more money but centrelink reduce too much of their payments, so they asked for cash in hand or refused the job if it required more hours which greatly affect their welfare payment. One great problem was that the mums who wanted to work part time had to put their kids into childcare, it costed a lot while Centrelink also reduced their payment so much that many of them felt that it was not worth it to get the part time job.

    Ok, I have to make my tortilla and sauerkraut first. To be continued….

  • 2
    pritu
    Posted Thursday, 3 January 2013 at 12:19 pm | Permalink

    Intolerance towards the unemployed and refugees and others deemed “unfit” in some way, is fostered for political purposes by the Plutocrat (the mining billionaires mainly) directed media and their puppets (the Coalition) in the circus that is now Australian “politics”. It is a cynical means to an unworthy end, to keep the plutocrats softly padded in their mansions. And the rest of us are played for suckers.

  • 3
    Apollo
    Posted Thursday, 3 January 2013 at 1:19 pm | Permalink

    Children turning 8, is the right age to have stronger push to try to get the parents back into the workforce. The parents had 6 years to think about it and 2 years to look for work when the child is between 6-8. I think it’ll be a good thing if there’s some kind of insurance scheme for when the parent become unemployed and can draw from it, possibly make some salary sacrifice contribution to the ATO maximum 2000 per year and the government will match additional 30% of the amount when they draw their money out of the account, overall maximum government contribution will be $5000. Similar scheme could be set up for people who want to get more money than their current newstart rate, but probably best to interest rate or some kind of maturity over the years rather than the government contributing 30%.

    The dole is slightly below the right amount. Let treasurer Apollo show Swanson how to calculate it.

    Newstart Allowance = 2.04 days of minimum wage

    So 2.04 * 8 hours * $15.96 = $260.467 (I added 0.04 day because of the carbon tax)

    Pension = 2.72 days of minimum wage. So it should be $347.289 which is a bit lower than current rate. I can hear the pensioners cursing me now, but my friend is on the pension and said that it’s gone a bit too high. They can raise the pension by 1% only next year to readjust it.

    Gotta make my coffee, I shall continue later…

  • 4
    Shaniq'ua Shardonn'ay
    Posted Thursday, 3 January 2013 at 1:36 pm | Permalink

    As someone who has lived on Newstart and a Disability, I think there is a need to raise the level of Newstart or at least make it easier for people to work at least part time - which has worked quite well for me with Disability to the point where I receive very little in the way of support these days. The big difference for me was that I had paid off the majority of the mortgage before I became ill. From what I have seen in other people, rent seems to be the biggest factor affecting people and perhaps an adjustment to that would be the best way to address the problem.

  • 5
    Apollo
    Posted Thursday, 3 January 2013 at 1:46 pm | Permalink

    Okey doke, now the Greens call for a $50 raise in dole payment is lunacy, and comparing it to other OECD countries is silly.

    I’m sure there are unfortunate people doing it tough and we need to find way to help them, but the idea of throwing money at everything to fix it is not the answer.

    Let me tell you about some of the poor people. Sometimes they can’t be bothered doing the dishes, so they come to the supermarket to buy disposable dish and cutlery. Do the Greens really want to support this kind of behaviour and pay them more?

    There is a demography of people happy to live on the dole, quite a few are fat lards, leaving their cars running, puffing winnie blues pumping greenhouse gas into the atmosphere. Some of their relatives have to buy cigarettes or alcohol for them just to shut their nagging. Giving them $50 more a week will only increase green house emission, more heart disease and lung cancers.

    I’ll come back a bit later to continue…

  • 6
    Apollo
    Posted Thursday, 3 January 2013 at 2:54 pm | Permalink

    Agreed Shaniq. But the people who push for much higher newstart payment leave out details that Newstart recipients and pensioners get much more assistance than the payment rate alone. They get rent assistance if they rent, pharmaceutical benefits, concession cards for travel and some entertainment places.

    Comparing the rate to other OECD countries is like comparing orange to apple. Norway for example has high GST structure, the petrol cost about 80% more than Australia. Electrity cost which makes up a small part of household budget, has increased in recent years in Australia, at the moment we pay about 0.20 Euro which is the same as most of the better developed economies in Europe with the exception of Denmark and Germany which have much higher price, no we are not the highest priced in the world. Some people in Australia whether they are poor or rich, don’t not even know that if you leave the light or power on unnecessarily it cost money on the bill. “I think I should turn it off, I heard it will cost more money”.

    I can’t see the Greens proposing a GST structure like the Norwegian. Cherry picking is not good comparison. When they turn Australians into a culture of recycling like the Swedish who have to import waste from other countries to power their heating, then they might have a case for a much higher dole payment increase.

    Back in a bit…

  • 7
    Apollo
    Posted Thursday, 3 January 2013 at 2:56 pm | Permalink

    0.20 euro kwph

    be back soon

  • 8
    Apollo
    Posted Thursday, 3 January 2013 at 3:42 pm | Permalink

    Speaking of being wasteful, Australians wasted $8 billions of food last year. Wastefulness goes across the board, it does not matter whether you are rich or poor. Some people are always poor because they are always wasteful, some people actually build up wealth because they are good savers so not all rich people are wasteful and not all poor people learn the value of savings.

    $8 billions could have helped resettle so many refugees or build affordable housings, if the money was in the government hands, but Australians cry poor and b*tch and moan hysterically about boat people. They could build high rises in an area of a park and house 10,000 people easily, which will be cheaper for the construction budget. Or the money could go to expanding special need childcare centres, this wonderful program in Melbourne is helping troubled parents or troubled children costing only $36 more per day, but in the long run you’ll have stable children who won’t be caught in the legal system and will contribute to society.

    Australians really need to be more appreciative of what they’ve got, low skilled workers here earn much more than those in Germany. My nephew and his friends from Germany loved travelling and working in Australia after they finished high school. They were able to earn good money and even able to save up to a trip to Asia. I know that some Australians fall into unfortunate circumstances, but the amount of whining in Australia make Australians look like a very weak race.

    Don’t have money to spend and feel depressed? Go meditate, get back in touch with your inner self and try to denounce consumerism, it’ll make you much more happy and fulfilled. $50 dollars more is insane.

  • 9
    zac48
    Posted Thursday, 3 January 2013 at 3:43 pm | Permalink

    @ pritu….Do not equate unemployed Australians with illegal immigrants. OK!

  • 10
    Shaniq'ua Shardonn'ay
    Posted Thursday, 3 January 2013 at 4:39 pm | Permalink

    @zac48 - most illegal immigrants work - you could never get a latte in the city if there weren’t some uk backpackers overstaying their visas to serve you. However if you mean those who have sought asylum, that actually isn’t illegal.

    @Apollo - agreed that PBS medicines etc help but not everything is covered. An increase in Rental Assistance (the maximum is $121 per fortnight) is probably the best way to cover those who have the most trouble. As for bashing the unemployed for smoking, with probably 90% of the price of a pack of cigarettes going back into the governments pocket it seems to be good economic sense to keep them at it.

  • 11
    drmick
    Posted Thursday, 3 January 2013 at 5:46 pm | Permalink

    Geez. The local branch of the see you en tea party has started early this year and has extra fruit cake to boot.
    The Wizzer, and the aggressively loony right don’t take holidays; they are way to paranoid for that.

  • 12
    zac48
    Posted Thursday, 3 January 2013 at 6:00 pm | Permalink

    Shaniq’ua Shardonn’ay. Keep your propaganda to yourself. Most illegal immigrants ‘do not’ work. They live off the Australian taxpayers dollars. The few that might take a cash in hand, non tax paying job, generally within their own community, at less than the legal rate of pay are only taking work from Australians. As far as their ‘illegality’ is concerned, you’ve obviously been listening to to much Hanson Hyphen Young. Supposed refugees who travel through country’s that offer asylum just to get to Australia are ‘not’ refugees but country shoppers. In fact cashed-up, fit, healthy young men who abandon their own country, leaving the “real” refugees, the sick, the disabled, the elderly, the traumatized, the children and their mothers to fend for themselves aren’t even illegal immigrants. They’re simply cowards!

  • 13
    mook schanker
    Posted Thursday, 3 January 2013 at 6:37 pm | Permalink

    All I want to know is how was the tortilla and sauerkraut?!?

  • 14
    Mike Flanagan
    Posted Friday, 4 January 2013 at 9:55 am | Permalink

    Me too Mook.
    I hope Apollo hasn’t forgotten them, for they will be tortured totilla and sootiekraut by now.

  • 15
    Tim nash
    Posted Friday, 4 January 2013 at 10:15 am | Permalink

    This is worth a listen: <a href="http://www.abc.net.au/radionational/programs/rearvision/australia27s-welfare-state/4379252&quot;

    Economically speaking raising social security could help the economy. By raising it 50 dollars it may create a kind of small economic stimulus.

    The Keynesian multiplier would be in effect.

    It would be beneficial if people in jobs paid into a government funded scheme so that would assist them when they where unemployed like they do in Europe.

    These accounts also benefit the economy, like super by creating millions in savings that add to the economy of country.

  • 16
    G Rogers
    Posted Friday, 4 January 2013 at 10:21 am | Permalink

    I should probably go look at a report first before I comment, but admitting this flaw I’m going to comment anyway. I’m not a single mum/parent, I am a woman & I work full time. I’m in no way disadvantaged. I’m old enough to remember what a dole queue looked like, to go to the old fashioned centre & to feel as if being unemployed was to be in the dregs of society, because it wasn’t part of my family ethos. The depressing aspect of being in one of those centres was enough to drive you out to find a job, any job. I also recall what it was like to work various jobs on a marginal tax rate that taxed you if you worked too many jobs. I live in an area divided between the ‘haves’ & the ‘have nots’. And, occasionally I see & speak to single mums, single dads, the people who are not doing so well for one reason or another, who happened to end up, unguided, misguided in this situation. They’ve got kids who they love, they feel trapped in a sort of cycle that is difficult to get out of once there. They make bad decisions sometimes. Sometimes, they have no access to opportunities that will help them advance in life: maybe they were born into families with problems, with disadvantage. Maybe they weren’t lucky like me, to have parents who worked hard, saved money & sent their kids to school or had the intelligence to get a tertiary education & from there it’s pretty easy to keep progressing onwards & upwards in our society. Blind luck. While the basic premise that reducing welfare payments will incentivise people to find work, there’s a lot to be questioned about this premise. Are there jobs for these people to go to? Are these people ready & able to return to work? Who pays, fundamentally, for the loss of a parent from looking after a child at home & being the carer of that child’s mental & physical wellbeing? I’ve known mothers who worked full time on ‘decent’ salaries who spent the majority of that salary on child care & had to take weekend jobs to make ends meet. They felt like bad mothers & they weren’t making a profit. This whole policy seems wrong footed to me. It rests on a series of assumptions that need to be tested. In particular, it seems to discriminate against sole parents who are responsible for the NEXT generation of Australians. Now, what kind of lessons are these kids going to learn, except that our society lacks the compassion to encourage their parents into a work force that will give them a decent pay, a decent amount of ‘social’ interaction & sense of self esteem & independence? Macklin’s comment that she could live on Newstart does not ring true: everytime I go to the supermarket checkout to buy my essential goods, I walk out with the majority of $50 spent & I’m not a spendthrift. Rent is expensive in Australia. Finding a job takes time, application, constant hope, networks. I think this policy will do more to punish the least able in our society than it will achieve in financial savings & I think we will rue the effects it may have on the marginalised. Entrenched, cyclical, intergenerational poverty is not something that Australia wants more of, but less of.

  • 17
    joanjett
    Posted Friday, 4 January 2013 at 5:38 pm | Permalink

    @g rogers thank you for your insightful comment. You are spot on. I see this as being yet again evidence of the govt playing to our basic meanest instincts, terrified of the hun oz terror smashing them of paying “bludgers” to stay on the dole, also the ridiculous surplus fetsh, also courtesy of media hounding.

  • 18
    GeeWizz
    Posted Friday, 4 January 2013 at 6:06 pm | Permalink

    10 Years ago when I was going to University, Youth Allowance was paying me around $140 a FORTNIGHT(found an old bank statement with the payments).

    Now single mothers who could quite easily work the hours 9am to 3pm are whinging they are only getting $490 a Fortnight? Sounds like the lap of luxury to me.

    BTW a Brilliant masterstroke of the Labor Party to vote for ripping payments away from single mums and support Slipper Pete the bottled muscles gazer on the same day they claim Tony Abbott is a misogynist. This stuff comes straight out of the ALP Spin book…

  • 19
    zac48
    Posted Friday, 4 January 2013 at 6:56 pm | Permalink

    @Gee Wizz….Gee, what a stupid comment Gee. Why don’t you take 2 weeks rent out of $490. Then take your gas and electricity bills, not to mention phone bills. Then take out the cost of half a dozen teabags and how much will you have left to pay for the public transport costs to your obligatory daily job interview wearing your dirty clothes because you can’t afford the costs of exorbitant Laundromats. Grow up!

  • 20
    joanjett
    Posted Friday, 4 January 2013 at 8:12 pm | Permalink

    @zac48 don’t feed the tolls, deprive them of oxygen, like a castration ring around a pair of sheep goonies, they will eventually drop off relatively painlessly…

  • 21
    GeeWizz
    Posted Saturday, 5 January 2013 at 12:42 am | Permalink

    Zac old boy, the $490 is on TOP of rent assistance and public housing.

    You can get a pre-paid mobile phone for $180 a year, same with internet. As to electricity and gas bills, hows that Carbon Tax working out for these people?

    Welfare is a privilege… not a right. Your not meant to enjoy it, your meant to get a job.

  • 22
    Tim nash
    Posted Saturday, 5 January 2013 at 10:31 am | Permalink

    You are aware GeeWizz that full employment is a pipe dream.
    That a certain percentage historically has always been unemployed.

    If we decided to remove social welfare that would mess with our economy. If there is going to be always some unemployment then giving them a small amount of spending power helps the economy. ie: people make money out of unemployed people.

    This debate however isn’t about whether to take it away but rather if it is enough. There seems to be a bit of confusion here.

    My thinking is that if you are on a low or minimum wage and you know someone who is on more and is unemployed that would really piss you off.

    This is where the cheating mentality comes in ‘why are they getting more when they are not doing anything and I am working hard and get this small amount’

    So it makes sense that the government makes welfare below Australia’s minimum wage. If they raise the dole they have a problem in that they would have to raise the minimum wage and then we have an inflation problem again.

  • 23
    Person Ordinary
    Posted Saturday, 5 January 2013 at 10:34 am | Permalink

    The major purpose of welfare is to make society better - less poverty, crime, misery - for all of us. To see it jealously as a privilege requires a mind so small that it can not distinguish between relative and absolute self interest.

  • 24
    GeeWizz
    Posted Saturday, 5 January 2013 at 11:40 am | Permalink

    Tim Nash, we should have a system such as the U.K’s where welfare is EARNED not expected as a right.

    You should be able to build up your welfare allowance time based on how long you have worked. For example if you do 2 years of work, this should entitle you to 6 months of welfare benefits should you find yourself unemployed.

    This will finally sort of out the bludgers from those who genuinely need help between jobs as the long term unemployed will get nothing and will finally have to get a job.

    BTW there are plenty of jobs out there, perhaps not in the exact location of individuals choosing, but beggars can’t be choosers.

    Mining jobs are currently paying $100K+ per year for those who are willing to do the work, yet we still got hundreds of thousands of bludgers sitting in Sydney?

  • 25
    Hamis Hill
    Posted Saturday, 5 January 2013 at 12:56 pm | Permalink

    In the political economy the inescapable and iron law of supply and demand rules.
    The call for increased dole payments by a conservative think tank merely reflects their view that payments are now so low that a substantial supply of potential employees cannot muster for potential employment.
    Malcolm Fraser let the cat out of the bag in the 1970’s when he described “the pool of unemployed” who, by competing for employemrt would bid down the price for which they were willing to work exactly in the same manner in which those selling goods or services would reduce prices to get sales.
    What the conservatives fail to expound upon is the effect, of low wages and a subsequent low level of savings, on the amount of money in banks and the interest rates which then can be charged for such scarce (undersupplied) finance.
    All people on welfare payments are deemed to be living below the poverty level and finance companies of any sort except the shysters are forbidden from taking them on for loans since they are legally incapable of paying back a loan and any such loan would be unenforceable.
    So, the main impediment to employment, a lack of reliable private transport, locks great swathes of people out of joining the pool of unemployed competing for work and so moderating wage “inflation”.
    These people, by definition are financially incapable of a “New start”, they are financially incapable of using the bolster of credit cards or cheap car loans to ever start to present themselves anywhere for employment.
    So if, in such a Limbo their behaviour starts to degenerate
    into despaerate and self-destuctive behaviour then your so-called wonderful, all conquering Freemarket of unfettered supply and demand will not sort it out, now will it?
    Heaven help Australia if all the pontificators above were called upon to assemble an army for the defence of the realm.
    Under their moral guidance the miserables and desperadoes would be expected to present themselves for battle armed with sticks and stones and clods of earth.
    They cannot be expected to present themselves for gainful employment under such conditions either.
    Now this is the political economy, as espoused by Adam Smith, not the dismal slough in which Bernard received his training, more’s the pity.
    We might expect more insight and rational action than we otherwise get from this “Politicised” economics of blame the victim.
    A British Prime Minister upon meeting Adam Smith,a professor of Moral Philosophy as well as celebrity author of The Wealth of Nations, speeakinf on behalf of all his fellow parliamentarians said “Sir, we are all your students”.
    Not anything that can be said of very many economists and politicians today, parisan as they are to the views of only one side of the economic debate.
    Luckily responsible citizens can side-step this monopoly presentation of wisdom economic and, via the internet, do as people did in the Ages of Enlightenment and become “students” of Adam Smith for themselves.
    Or they could continue be the intellectueal equivalents of lazy and good for nothing dole bluger layabouts who cannot get out of their own way to present themselves for involvement in the defence of democratic values of civic responsibility armed with a reasonable understanding. A “new start”, indeed.

  • 26
    Hamis Hill
    Posted Saturday, 5 January 2013 at 1:58 pm | Permalink

    Those welfare recipients who are expected to seek employment suffer a severe disadvantage.
    If anyone is living below the poverty level they are deemed incapable of saving and therefore incapable of paying of a loan. By comparison newly unemployed people still retain their credit cards, still have private transport and have much higher prospects of regaining employment.
    Those stuck below the poverty level are well and truly stuck below.
    The six month work for the dole proposition, if it is to lead to gainful employment, should guarantee the recipients a private vehicle loan so that they can satisfy employers who are not on public transport corridors.
    A six month work for the dole scheme which actually revolved around providing those involved with a reliable means of transport and some sort of credit-rating would certainly be a “New Start”.
    Otherwise the long-term unemployed are just “stalled” in a creditless, sub-poverty limbo.
    Overcriticising such victims really just amounts to moral hubris.

  • 27
    Tim nash
    Posted Saturday, 5 January 2013 at 5:02 pm | Permalink

    I think we have some serious problems in this country coming to terms with this idea that there are people who cannot function in society well enough to keep a job.

    We have this idea of a “bludger” which I have always hated.

    As if all Australians should be breaking rocks everyday or building a railway instead being of down the pub.

    I mean who really cares, it’s such an infuriating idea!

    Anyways yes GeeWizz I agree we should have a system more like the U.K.

  • 28
    Arty
    Posted Saturday, 5 January 2013 at 8:53 pm | Permalink

    Back in the 1960s I foolishly left my job in the Big Smoke and returned to the hill-billy village where my mother was living in aged circumstances and it was time for me to replay the parental debt. I attended the CES in the nearby country town at 9am Monday and asked for a job. They all laughed and asked me where I had been all my life. Had I never heard of the Menzies’ Credit Squeeze and the apparent highest level of unemployment since the Great Depression. Never-the-less I kept annoying the CES staff until they found me a job - working for them as a Benefits Assessor.

    That was when I learnt that a goal to grow the economy required a pool of unemployed to avoid the effects of the inflation that could follow.

    People and politicians believed that we needed 2% unemployed to get that sort of growth. Therefore those unemployed should be paid something to be ready to jump when jobs appeared.

    Ah!, those old-time economics!

  • 29
    Sophie Le
    Posted Sunday, 6 January 2013 at 9:36 am | Permalink

    Ah, Bernard Keane was on ABC24 yesterday.

    Interesting, how much is enough for one person might not be for someone else. There’s a survey that found most Australians would be happy with $80,000 income household, something people would consider middle class. On the contrary, an economic commentator dismissed this group of income earners as middle class, they’re more like working class to him although he did not seem as extreme as the American Republicans.

    My friend is a social worker and the stories she told me about her clients are so strange that makes it hard to make sense of this world.

    The people who gambled and lost all the money are very smart at accessing the money which should not be in their hands.

    Half of the people she deals with sound like they need a life skill or life management course. She has to take them here and there for appointments, to look for housings etc. My young girl can do that by herself.

    The Liberal is considering lifting the free income threshold before they start reducing welfare payment. They or the government probably only need to rejig this area a little because the income tax free threshold has increased to around $18200 a year.

    I can see Jenny Macklin chanting “yes we can”, and Adam Bandt holding the picket sign “no we can’t”.

  • 30
    Sophie Le
    Posted Sunday, 6 January 2013 at 1:34 pm | Permalink

    Sounds like they used to pay very little in the old days, if I get Arty correctly.

    Come to think of it the higher income tax free threshold might have encouraged many people to take up part time jobs even though they would get their welfare payments reduced. This might have negative impact on government revenue when employers put them on the book and claim tax. There goes the surplus. I’m vaguely economic literate, maybe someone could do a study into this.

    Poverty has many causes. There are people whose children are two poles apart. Half of their children are lovely and excel in school, the other half don’t want to go to school and wait till they leave school to receive unemployment benefits. Some of them throw tantrum and are so disrespectful to their parents like the are possessed by some evil force. The parents are helpless and don’t know what to do. If the school system can’t identify these problem kids and help them, then Centrelink will have to support them for the rest of their lives unless there is some kind of human improvement programme for problem people.

  • 31
    Suzanne Blake
    Posted Sunday, 6 January 2013 at 4:13 pm | Permalink

    My poor local Labor MP (Deborah O’Neill) owns 6 houses in NSW, QLD, VIC and TAS according to her Parliamentary Declaration. Must be doing it tough as well. On top of that 5 cars, Qantas Chairmans Lounge. She would easy do like on $35 a day

    http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=pmi/declarations.htm

  • 32
    Arty
    Posted Monday, 7 January 2013 at 9:14 am | Permalink

    Sophie Le: the point I wanted to highlight is that growth in the economy was considered to be a “good thing”. But growth depended on a pool of unemployed ready to fill the new positions otherwise employees would have to be stolen from existing businesses creating a knock-on increase in wage inflation.

    It was therefore a reasonable attitude to consider paying about 2% percent of the workforce to be unemployed.

  • 33
    Sophie Le
    Posted Monday, 7 January 2013 at 9:51 am | Permalink

    Thanks for your clarification Arty. My friend said that only Switzerland aims for 2% unemployment these days, 5% is commonly accepted in Australia.

  • 34
    Hamis Hill
    Posted Monday, 7 January 2013 at 10:36 am | Permalink

    Suzanne’s MP owns six houses yet her putative Prime Minister is so pathetic that after all his time in parliament, on parliamentary levels of remuneration, he finds himself burdened with a $700,000 mortgage debt.
    Yet his party chooses this economic incompetent to represent them and to represent the entire nation.
    “What is poverty? and who is poor?”
    At the level to which Abbott aspires and the level at which he presently operates this man is manifestly poor in every accomplishment but rat-cunning, in which he certainly appears to be the national leader.
    Despite all his advantages this man presents as the parliamentary equivalent of the most benighted and abject “dole-bludger” and only the rat-cunning applaud his leadership. An international disgracce that Australia is so impoverished as ti throw up such a “poor” prospect for PM. What must the neighbours think?
    And do not be deceived, after his disgusting act of placing his foot on a child’s meal table in Indonesia the neighbours most certainly are aware of Mr Abbott.

  • 35
    Hamis Hill
    Posted Monday, 7 January 2013 at 11:23 am | Permalink

    Those chronically unemployed under the Swiss system were revealed to be afflicted,( drug addiction and other disabilities) to the point of being unemployable.
    1.7 % on my outdated recollection.
    Yet labour shortages and subsequent rises in labour costs are nothing new, and as the Father of Economics pointed out, high wages, in turn, create a demand for labour saving devices.
    Ancient Rome found no inflationary shortages of slave labour and, like the slave owning Greeks before them, very few applications of labour saving devices.
    Two hundred-odd years ago The Dutch were the richest people in Europe and no-one could “live of the interest on their investments” (as retirees aspire to do now in Australia) for the interest which could be charged on loans was as low as 0.5%.
    Instead the Dutch of two centuries ago “laboured” to produce manufactured goods in workshops their own homes as the way to gain wealth.
    So there are reasonable alternatives to the “Pool of Unemployed” cynically maintained to impede rising wage levels and provide an example of abject poverty which makes the burdens of high personal debt seem quite reasonable by comparison.
    “The poor will always be with us” it seems, except in Switzerland?
    Inshort the ultimate function of the poor is to create a demand for credit.
    Are the sufferings of the “Idle Poor” the source of income for the equally “Idle Rich” who live off the interst on their “Investments”?
    Seems like we really need Moral Philosophers rather than economists to consider this problem of poverty and employment.
    Didn’t someone describe those Dutch and Swiss examples as the “Protestant Work Ethic”, whereas now, in Australia, the B A Santamaria proteges seem on the cusp of re-imposing the Roman economic paradigm, don’t they?
    The Lee Kwan Yu’s of the Asian Century look on with “amusement” as Australians trash their “protestant” cultural heritage under the domination of the medieval superstitions of a minority foreign relgious sect of dubious “christian” pretensions (as their actions show us).
    That would be part of a “poverty” of understanding then, brought on by the notoriuos underfunding of education under the former political regime, also noted, no doubt by our near neighbours?
    Do not seek for whom the Poverty-Bell tolls, Aussies, it tolls for thee.

  • 36
    claire edwards
    Posted Tuesday, 8 January 2013 at 5:26 pm | Permalink

    Its easy to quibble about where to place the ‘poverty line’, who is ‘deserving’ of benefits, or whether Jenny Macklin or Julia Gillard (has anyone asked a male politician yet?) could live on $35 a day. These are distractions from the real issue: namely the inadequacy of the Newstart allowance for all recipients. The Henry tax review, the OECD, and the Business Council of Australia, all argue that the current Newstart allowance rate is too low. A recent ABC News poll found that 71% of people agreed with them. In 2008, the OECD found that the benefits available to single unemployed people in Australia were ranked lowest of the 30 nations they examined.

    The recent Senate enquiry, into the adequacy of Australian welfare payments, published on 29.11.12, stated that submissions from stakeholders were overwhelmingly critical of Newstart, calling it: ‘the most significant barrier to assisting long-term unemployed people return to meaningful employment’, and ‘a pathway to poverty instead of to employment’. The Senate report recommended that initial payments to job seekers be increased, to improve their ability to find work in a timely manner, which seems to contradict current Government rhetoric, that decreasing sole parents benefits will increase their incentives to find work. As Eva Cox argues, some sole parents are prepared to ‘suffer poverty and spend more time with their kids’, rather than return to the workforce. The Australian Council of Social Services is campaigning for Newstart for single people to be increased by $50 per week, a claim that is supported by many welfare agencies.

    Sadly, this is the context within which Single Parent Payments have been phased out for many parents, and as a result, the 84,000 mainly female recipients, who have children aged 8-16, have been transferred to Newstart Allowance, as of 1st January 2013. For many single parents, this will involve a drop in income of at least $130 per fortnight.

    This seems particularly harsh, falling as it does in the middle of the long summer school holidays, arguably the most expensive time of year for parents; just after Christmas, when parents are already struggling financially, and when they are trying to budget for buying new uniforms, school books and other items for the coming school year.

    The original rationale for this transition of sole parents to Newstart, with a paltry saving of $700 million, was to get the budget back in surplus. Now this goal has been abandoned, surely its time to revise Newstart levels upwards, as the spurious end no longer exists, to justify the spurious means.

  • 37
    Romana Leisser
    Posted Wednesday, 9 January 2013 at 11:57 pm | Permalink

    The Federal Government is running out of economic and political reasons not to increase the Newstart Allowance.

    First, there was the Senate inquiry that said the payment does not provide an acceptable standard of living. The inquiry stopped short of recommending an increase at the time due to Budget constraints. But the Government has since said a surplus is no longer feasible.

    Then you have Labor and Greens Senators at the Inquiry supporting the increase, as are a wide range of social welfare experts and organisations. The Greens are poised to move a Private Member’s Bill supporting the Newstart increase as soon as Parliament resumes.

    What’s more, Senior Coalition frontbenchers have confirmed they are considering the issue due to growing community pressure.

    The political tide has turned, and the Government will be swamped if it doesn’t start swimming with the current.

    And with the recommended increase of $50 a week with appropriate indexing, we might even believe Jenny Macklin that she could live on this allowance … for a day or two!

  • 38
    Rebecca Averillo
    Posted Friday, 11 January 2013 at 10:14 am | Permalink

    Welfare agencies are going to be hit hard to support the heartless cut in income support to single parents with the change from Single Parenting Payment to Newstart Allowance. Once again, the community organisations are left to pick up the pieces of slap-happy decision making by an already unstable government.

    My question is - what about the children? It’s not just the single parents themselves who are affected by this decision, it’s the children who will suffer in the long term. Yes the government’s plans are to force these parents into the workforce, however, have they thought about the needs of the children and their emotional state?

    Single parenting is more commonly a result of divorce or separation (some involving domestic violence). The crucial element to supporting these children through adverse life events is to have their carer around when they need them, not shoved in a childcare centre where the children feel even more abandoned. The government is creating a future where children may grow up with emotional issues and further mental health requirements from an already tight budget. Is it not true that this cut is simply creating a quick fix now for a problem later?

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