Australia has a poverty problem – so why is there no agreed measure of it?
In a cost-of-living crisis and a housing crisis, coming off the back of a global pandemic and amid an escalating climate catastrophe, understanding poverty and inequality is paramount.
But Australia does not have an agreed national measurement for poverty or disadvantage. All the research, reports and strategies by governments and social services are created using different methods, working against different benchmarks and coming to significantly different conclusions about how many people are deprived and by how much.
But there are globally recognised, flexible and effective ways of measuring the complex nature of poverty which have allowed governments around the world to accurately work out the level of deprivation experienced by their citizens and to change it.
So how can Australia do better?
Isn’t that Henderson guy looking at this?
You may have heard of the Henderson poverty line. It was designed in the 1960s by a Cambridge academic at the University of Melbourne, Prof Ronald Henderson, who published a groundbreaking study into poverty in Melbourne. He was asked by the federal government to expand that work to examine poverty levels Australia-wide.
The resulting report set a benchmark for what was considered poor: in 1973, that was less than the disposable income required to support the basic needs of a two-adult, two-child household, determined to be $62.70 a week, indexed over time.
Related: How much of a ‘fair go’ do Australians really have to escape poverty?
Half a century later, the Henderson poverty line is still commonly used as a way of benchmarking income poverty. But it has limits.
It’s not an agreed-upon method. It doesn’t take into account changes in standard of living or purchasing power of an income. And there’s the fact that poverty is not just a matter of differences in income (how much money you earn) or wealth (the total value of the assets you own). A host of other factors contribute to it too.
Why isn’t measuring income enough?
Prof Sabina Alkire describes it as the necessity of seeing poverty with two eyes rather than one. She’s an Oxford academic who was one of the creators of a system used by nearly 40 countries, as well as the United Nations Development Programme, to measure the overlapping, intersecting elements of poverty.
Prof Alkire was in Australia this week, on a trip organised by the Brotherhood of St Laurence, to make the case for Australia deciding on an official measure of income poverty and setting up a multidimensional poverty index, or MPI – a national method of quantifying poverty in all its complexities.
“A multi-dimensional poverty measure says, OK, these are big social problems. They affect people’s lives. You are working on them. Let’s make a measure that both shows what the deprivations are and then, when there’s success in reducing them, gives credit and celebrates,” Prof Alkire says.
She poses a hypothetical: say Australia managed to solve its housing crisis, significantly reduced domestic violence, and made early childhood education more accessible. Would the results of that – which would undoubtedly have an impact on the intensity and experience of poverty – show up in income figures for that year? Probably not, and if it did, it would provide only a limited, partial picture of success – yet people’s lives would have improved in multiple ways.
An MPI, however, takes into account those different elements and makes progress on them visible and quantifiable – and shows us where we need to do more.
What counts as deprivation?
That’s up to us. The UN’s global MPI, used to measure poverty in more than 100 developing countries, factors in nutrition, child mortality, years of schooling and attendance, cooking fuel, sanitation, drinking water, electricity, housing and material assets to determine levels of poverty. Experience a critical mass of these things at once and someone is considered poor.
The method can be adapted for higher-income countries too. Some European countries focus on housing quality, health and disability, education, employment, political engagement, social connections, the environment and the experience of violence as the building blocks of their indexes.
In 2019, the United States Census Bureau launched a multidimensional deprivation index which took into account the official income measure as well as education, health, housing quality, neighbourhood quality and economic security. It found the income poverty rate for 2017 was 13.4% but the rate of deprivation was 15.4%. And they weren’t all the same people – the new tool had exposed entirely new cohorts of people in need, including those who were not income poor but were significantly deprived in other ways – in total, 18% of the population.
It also showed improvements – for example, the effect of Obamacare on health – that weren’t captured by the income measurements.
Won’t this be a lot of work?
In many ways we’ve already started. Once we’ve agreed on what goes in, data that already exists, such as that from the annual Household, Income and Labour Dynamics report, can be used to analyse what’s already happened. And it could also highlight opportunities for efficiency, where overlapping issues for particular groups of people could be targeted together and reduce duplication of resources.
And the consensus is clear that change is needed. In submissions to the federal Senate inquiry on the nature and extent of poverty in Australia last year, multiple organisations including the Australian Council of Social Service, thinktank Per Capita, Anglicare and the Antipoverty Centre all advocated for a new, modern and consistent approach to poverty measurement.
Whatever benchmarks we decide to set, whatever solutions we look to, however, these should be determined in consultation with the experts in poverty, Prof Alkire says: “the men, women and children who experience it”.
