Time to take one small step to address national poverty

Image courtesy of The Age


By John Ferguson, Executive Officer, Australian Catholic Social Justice Council

In March 2004, a Senate Committee issued its report on poverty and hardship. It was the most exhaustive investigation of the causes, effects and extent of poverty in Australia since Ronald Henderson’s Commission of Inquiry into Poverty, thirty years earlier.

The 2004 report, A hand up not a hand out: Renewing the fight against poverty, was wide ranging – addressing everything from poverty measures to wages and income support, from education and training to gambling addiction, from the circumstances of sole parents to the decline of rural communities.

This inquiry called for the establishment of a National Poverty Strategy and a commitment to action within 12 months of the report being tabled. It warned, ‘Australia will face a crisis of poverty and disadvantage in the coming years … [with] the implication that Australians are increasingly at risk of falling into poverty and indeed more so now than at any time in the post-war era.

The recommended Strategy did not eventuate and the lack of political consensus across parties saw the report and its recommendations shelved.

Many aspects of poverty persist. When they continue to emerge as issues of public concern or political debate it seems inevitable that, without a co-ordinated national strategy, the best that can be hoped for is the ‘piecemeal and inconsistent responses to poverty’ that the 2004 report condemned.

One such issue is the inadequacy of social security allowance payments in keeping individuals and families out of poverty.

At the end of November 2012, the Senate Committee on Education, Employment and Workplace Relations will report on its Inquiry into ‘The adequacy of the allowance payment system for jobseekers and others, the appropriateness of the allowance payment system as a support into work and the impact of the changing nature of the labour market.’ The Newstart allowance is a particular focus. (refer: http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=eet_ctte/newstart_allowance/index.htm)

Church and community sector agencies have been lobbying strongly to get some increase to the poverty-level allowance payments.

Catholic Social Services Australia has been particularly vocal about the inadequacy of allowances over many years. Earlier this year, Executive Director Paul O’Callaghan renewed the call for Newstart and Youth Allowance to be increased.

‘It is widely recognised that $35 a day is not enough for essentials, including rent’.

Noting a growing concern among some federal members over the inadequacy of the payments he said, ‘These voices join with a number of other prominent people in business and academia, such as Dr Ken Henry, Dr Ian Harper, Ms Judith Sloan, Ms Heather Ridout – who are calling for this unreasonably low level of allowances to be rectified.

‘What does it say about us as a nation if we continue to allow more than 300,000 people who have been unemployed for over 12 months to struggle on an allowance level which can even hamper their capacity to undertake effective job searching,’ he asked. (refer: http://www.catholicsocialservices.org.au/node/44210)

Catholic Social Services Australia joined with Anglicare, the Salvation Army and UnitingCare to commission the National Centre for Social and Economic Modelling (NATSEM) study into the adequacy of Allowance payments. The NATSEM report, Going Without: Financial Hardship in Australia, confirms the experiences of many vulnerable families and what social service providers already know. But it provides the full extent of hardship in aggregate terms. The key findings are confronting. For example:

  • Households where the unemployment benefit is the main source of income are more than five times as likely to be in poverty.
  • A high proportion (46.8 per cent) of unemployed households remain in poverty for at least two years compared to the national average of 8 per cent.
  • After housing costs unemployed people have disposable incomes of $242 a week, about 25 per cent of the national average.
  • Unemployed households have $22 a day after shelter, electricity, food and health are accounted for.
  • Over 15 per cent of unemployed households went without meals compared to 3.2 per cent of all households.

The Church organisations are calling for an increase in unemployment benefits for singles by $50 a week, improvements to the tax-transfer system, an independent commission to set adequacy benchmarks and targeted assistance in the form of wage subsidies, vocational training and specialised services to people who are long-term unemployed. (refer: http://www.catholicsocialservices.org.au/node/44789; http://www.catholicsocialservices.org.au/system/files/Going_Without_MCP_Report_Aug_2012.pdf)

This call is not new. For almost two decades, the Churches have been calling for these kinds of improvements.

It is a call that has been supported by the Catholic Bishops of Australia in their 2012 – 2013 Social Justice Statement.

Of all the Allowance payments they say, ‘Over the past decade the unemployment benefit has fallen from 54 per cent to 45 per cent of the after-tax minimum wage. Currently over 600,000 people live on Newstart allowances as low as $35 a day for a single adult, and many have done so for over a year. More than one million people depend on this and similar allowances. Keeping the unemployment benefit well below the poverty line is no way to help prepare people for work.’

They go on to say, ‘It is time to build a genuine social security and wages system that guarantees social inclusion. We need a renewed assessment of the true costs of living for parents and children. This should be the benchmark for setting and adjusting minimum wages and income support payments.’ (refer:

http://www.socialjustice.catholic.org.au/CONTENT/PDF/Social%20Justice%20Statement%202012-2013%20(pdf).pdf )

The 2004 Senate Committee report calling for a National Poverty Strategy warned that the risk of Australians falling into poverty was greater than at any time in the post-war era. Eight years on, the Bishops are highlighting the impact of the global financial crisis and note a growing awareness in the community that competitive markets are not equipped to ensure disadvantaged individuals and their families have access to the essentials of life.

The Bishops are alluding to the observations made by Pope Benedict XVI in his 2009 encyclical Caritas in Veritate. As the global financial crisis started to unravel, the Holy Father observed how a world-wide trend to deregulate and downsize public systems of social protection would mean the rights of the most vulnerable would not be adequately protected when it mattered most. He called for equity and justice to be built into the very operation of the market and for the wellbeing of the vulnerable and unemployed to be respected ‘as the economic process unfolds, and not just afterwards or incidentally’. (refer articles 25, 37: http://www.vatican.va/holy_father/benedict_xvi/encyclicals/documents/hf_ben-xvi_enc_20090629_caritas-in-veritate_en.html)

The current Senate inquiry into the adequacy of allowance payments does not have terms of reference broad enough to consider how equity and justice can be built into the very operation of the market. But it does have the capacity to recommend improvements that would benefit the most vulnerable – those whose need seems always to be considered incidentally and after the economic process unfolds.

It will be interesting to read the report of the Senate Committee. It will be fascinating to see if there is consensus and the political will this time around to take some small steps that would substantially improve the lot of over one million Australians and their households.