POVERTY IN AUSTRALIA

Poverty in Australia Facts About Poverty Statement on Poverty Links to more information

The Salvation Army and the National Coalition Against Poverty

The Salvation Army estimates that there are 2.5 million Australians living in poverty, which is approximately 12% of the population. This is an increase of 400,000 people in the last three years, or an additional 0.5% of Australians living in poverty since 2002.

The Salvation Army submission to the Senate’s Inquiry into Poverty and Hardship stresses that despite the increased wealth in Australia, where GDP has grown from $180 billion in 1992 to $830 billion in 2000, poverty still limits the lives of many Australians.

In 2004, 1.5 million Australians sought help from The Salvation Army, an increase of 11% from the previous year. This increased demand reflects the poverty and hardship experienced by many in people in Australia.

The Salvation Army calls on the government to make a commitment to:

1. create more jobs

2. increase income support to 25% of the male average weekly wage

3. remove the penalties that reduce payments to social security recipients.

The Salvation Army has long been dedicated to addressing and removing poverty. This makes it highly appropriate for the Army to join the ranks of churches, non-government agencies and international aid agencies dedicated to take ongoing action to eradicate poverty by forming the National Coalition Against Poverty in 2000.

Other members of the National Coalition Against Poverty include:

• Victorian Council of Churches

• UnitingCare

• Catholic Social Services

• Brotherhood of St Laurence

• Australian Council of Social Services (ACOSS)

• Federation of Community Legal Services

• Over 50s Association.

For more information on the National Coalition Against Poverty, please contact the Brotherhood of St Laurence (BSL) at http://www.bsl.org.au

Why is The Salvation Army supporting the National Campaign Against Poverty?

The National Campaign Against Poverty has distributed postcards for the public to add their individual voice towards the alleviation of poverty. The postcards call for the government to implement three achievable reforms that would reduce financial hardship in Australia. These reforms are:

1. To create more jobs

There are more than six unemployed people for each vacant job in Australia. The current unemployment rate of just under 6% represents about 600,000 people.

The Australian Council of Social Services (ACOSS), drawing on social security data, found that 50% of all people on unemployment benefit have been out of work for a year, and of these, most have been unemployed for over 2 years. Clearly more jobs are needed.^[1]

2. To increase income support to 25% of average male earnings (as is the case for existing pensions)

The rates of payment for people on social security benefits remain very low. Currently an unemployed single person receives an unemployment benefit of around $192 a week.^[2] Their unemployment payment is $30.00 less than aged pension. If they receive rent assistance ($47), their total payments are about $239. This is $58 less than the Henderson poverty line of $297.^[3]

Young people under 21 receive even less. Their payments are set at around $155 a week, if they are not living at home. Clearly, housing and groceries are not priced at youth or jobless rates. It is easy to see why on a weekly basis, The Salvation Army is called on to provide 12,000 food vouchers, 160,000 meals and 3,000 beds to marginalised people of all ages.

The Salvation Army supports the call for all payments to be raised to the same rate as the age pension (ie $226 a week), which is set at the very modest rate of 25% of the average male weekly wage.

3. To eliminate the ‘breaching’ system that penalises people by reducing their payments

Unemployed people’s hardship can be increased due to social security penalties that cut their payments for weeks if they cannot meet Centrelink job search rules. These rules can include keeping a job diary, applying for a certain number of jobs each fortnight, making a timely response to Centrelink letters or attending interviews. The rules can even penalise an unemployed person who moves to an area of lessened job opportunities.^[4]

Research has shown that people do not deliberately break the rules and that the most vulnerable people the homeless, the ill, the isolated and the illiterate are most likely to be penalised (ACOSS and National Welfare Rights Network 2000).^[5]

The social security penalties cut payments by 18% for eight weeks for a first breach (i.e. $275) ^[6] and 24% for half a year for second breach (i.e. $1137). For a third breach payments are cancelled completely for 8 weeks (i.e. $1458).^[7]

The government in March 2003 agreed to reduce the number of weeks of penalty for the first breach but didn’t alter the other two breach penalties. The National Welfare Rights Network has estimated that up to 20,000 people will lose their entire payment in the next 12 months.

The Salvation Army believes that these penalties are unreasonable and merely increase the hardship experienced by the most disadvantaged people in our community.

[1] ACOSS 5/2/2003 Media release 'Overcoming Joblessness in Australia: 12 Budget priorities’ p 2, from www.acoss.org.au  Social Security Data shows that in December 393,100 people have been unemployed for over a year, most of these unemployed for over 2 years.

[2] FACS (2003), Centrelink Rates for 20 September – 31 December 2003, p 10 from Centrelink web site – newstart rate single person over 21 years:$385 per fortnight; $192.50 per week.

[3] Professor Ronald Henderson developed the Henderson Poverty Line in the early 1970s. This measure identifies the amount of money needed to meet essential costs for individuals and families. This sheet uses the ‘after housing poverty line figure for a single person’ from The Melbourne Institute of Applied Economic and Social Research, Poverty Lines: Australia March Quarter 2003, Table 1 p. 1 see http://www1.ecom.unimelb.edu.au/iaesrwww/miesi/poverty.html

[4] Pearce D., Disney J., and Ridout H., (2002) Making it Work; The Report of the Independent Review of Breach and Penalties in the Social Security System, Fine line Sydney p 5 para 1.15, p 60 para 5.12, p 87 7.29.

[5] ACOSS Media release 15/11/2000 Major Welfare and Community Groups call for Penalties overhaul p 2 (NB Salvation Army AET and AST both signatories) see also ACOSS and NWRN (2000) Doling out the punishment: the rise and rise of social security Penalties p 1 see also p 3 comparing breaches to fines for crimes – eg Drink Driving ($546). Both at www.acoss.org.au

[6] National Welfare Rights Network 27/3/2003, Media Release: Social Security penalty reductions unblock welfare reform package from www.welfarerights.org.au

[7] The Report of the Independent Review of Breach and Penalties in the Social Security System (2002) p 78 para 7.4