A recent Senate Report claims that ‘poverty’ in Australia is widespread and has been getting worse. It estimates that the number of Australians living in poverty is as high as 3.5 million (18% of the population). But the statistics on which this Report is based are seriously flawed, its use of evidence is partial and selective, and the policies it advocates would make things worse rather than better. The Report is one-sided and misleading. Its treatment of evidence at times falls well short of the standards we should expect of a parliamentary inquiry, and it will do little to help poor people.
- The Report claims that recent increases in prosperity have been ‘captured by a few at the expense of the many,’ but this is false. While the distribution of incomes may have become more unequal, all groups have made substantial and significant gains.
- The Report claims that people living on welfare allowances are ‘poor,’ but this is based on the use of a poverty line which experts explicitly warned should not be used because it is inflated and generally discredited.
- The Report makes extensive use of evidence based on income statistics which are badly flawed. The Australian Bureau of Statistics has warned that these statistics give ‘a misleading impression of the economic wellbeing of the most disadvantaged households,’ yet the Inquiry never queries their use.
- The Report claims that ‘a large majority’ of families under the poverty line ‘experience long-term financial hardship’. In fact, more than 60% of those under the poverty line in 2001 had moved out of poverty by 2002. The Committee ignores this evidence.
- The Report makes selective use of research on hardship, completely ignoring a key finding that hardship has less to do with how much money people have than with how they use it. The question of ‘behavioural poverty’ is not addressed.
- The Report claims over one million working households are in poverty, and that working poverty is on the increase. Both claims are false. The proportion of ‘poor’ people living in wage-earning households has fallen through the 1990s, and the Smith Family finds that ‘the risk of poverty among wage and salary earners is fairly low.’ The one million figure is logically and arithmetically improbable and appears to be based on flawed income data.
- Most of the Report’s 95 recommendations involve additional government spending, but few are costed. There is support for substantially raising pensions and allowances even though this would increase welfare spending by more than $12 billion per year and would exacerbate the problem of welfare dependency.
- The Report represents a manifesto for radical social change involving more government spending, higher taxes and greater regulation of the economy. Its recommendation for a ‘national anti-poverty strategy’ involving a new statutory authority would ensure a permanent and powerful place for the welfare lobby and its academic supporters directly within the heart of government. Not surprisingly, the welfare lobby strongly supports this proposal.
Professor Peter Saunders is Social Research Director at The Centre for Independent Studies and co-author of Poverty in Australia: Beyond the Rhetoric (2002).