Poor Statistics: Getting the Facts Right About Poverty in Australia - The Centre for Independent Studies
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Poor Statistics: Getting the Facts Right About Poverty in Australia

In January, CIS published a short paper, Poor Arguments, which showed that a Smith Family/NATSEM (National Centre for Social and Economic Modelling) report on poverty exaggerated the number of people who are ‘poor’ and wrongly claimed that poverty had worsened in the 1990s. The welfare lobby, however, continues to make misleading and inflated claims.

These claims are driving political demands that government increase welfare benefits and play a more active role in managing the economy. They are also being used to justify a political agenda which seeks a redistribution of income and wealth, for there is an assumption that helping the poor involves reducing the incomes of those who are better off.

Some welfare organisations suggest that poverty statistics are unimportant and that the CIS critique of the Smith Family’s figures was a distraction from the real business of tackling poverty. But the statistics are crucial, for they are influencing the social policy debate.

NATSEM and the Smith Family claim that 11 out of 12 different measures of poverty all show an increase during the 1990s and that CIS picked the one measure that is out of line. This is misleading. Their report actually contained six different measures (not 12), and the report’s authors warned that two of these should not be used. Of the remaining four, three support our claim that ‘relative poverty’ rates showed no significant change through the 1990s and only one supports the NATSEM/Smith Family assertions.

If anybody has been selective in using the evidence, it is the Smith Family and NATSEM, not CIS.

Our suggestion that no more than 5% of Australians should be defined as being in ‘relative poverty’ has been queried, but we show here that it is consistent with other work that NATSEM itself has published. Indeed, other NATSEM publications back up our argument that its report for the Smith Family fails to take account of the large numbers of people who move out of poverty, that the report’s estimates are biased because they exclude the value of government services, and that its reliance on self-reported income data may be unreliable.

The NATSEM research team used measures and procedures in developing its report for the Smith Family which they had characterised in other writings as likely to produce flawed results – specifically, inflated poverty estimates.Welfare lobbyists in Australia have linked political action on poverty to a broader egalitarian agenda of income redistribution. They seek to narrow the ‘income gap’ by reducing higher incomes as well as improving the incomes of those lower down. This sort of thinking is based on a ‘politics of envy’ – even though these organisations seek to deny it.

Professor Peter Saunders is Director of Social Policy Research at The Centre for Independent Studies and is an Associate in the Department of Sociology at Macquarie University.