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Current measures underestimate poverty – study

22 May 20180 comments

The cost of living is rising rapidly and families on low incomes – including many from refugee or CALD communities – are amongst the hardest hit, according to a new study.

Researchers from the University of New South Wales’s social policy research centre have found that raising two children costs a low-income family $340 per week, including $77 for food, $65 for housing and $61 for schooling.

The new study, using more precise methods of estimating family costs, found they are significantly higher than previously thought and rising.

It found the cost of raising two children for a low-income family was $340 per week. The same cost was $280 for unemployed families in receipt of Newstart allowance.

A single child would cost a low-income family between $137 and $203, or $106 to $174 for unemployed families.

The researchers identified each regular expense for low-income and unemployed families at acceptable standards of living and estimated the cost.

The study is part of broader research aiming to inform decisions about the adequacy of minimum wages and Australia’s social safety net.

Earlier research found social security payments such as Newstart were completely inadequate. The earlier study also detailed harrowing stories from unemployed families struggling under the weight of cost of living pressures.

Author of the latest report Prof Peter Saunders said the study produced evidence of people living in “terrible” circumstances.

“These were people having a terrible times. Talking through the kinds of things they went without, or how they had managed with a toothache, trying to knock teeth out with screwdrivers,” Prof Saunders said.

The study also aims to assess modern attitudes on what constitutes a proper standard of living. It captures shared costs associated with children like power and rent, and captures new and emerging costs like mobile phones.

The researchers say old models for estimating family costs are now near useless, because they simply update decades-old assumptions with changes to the consumer price index (CPI).

Prof Saunders said the study should prompt a rethink of the adequacy of key social security payments, such as Newstart, which has not increased in real terms for more than 20 years.

“I would like to see the adequacy of low-income social security payments and minimum wage be subject to a more sensible, reasoned discussion about what we expect people to live on in Australia,” Prof Saunders said.

“What you can do with the budget standards, is if you find that the Newstart allowance is $50 a week short in your budget then you can say, well those people who are missing $50, what are they going to have to go without to make ends meet?” he said.

“I think that’s a much more sensible way than what we’re doing at the moment. The automatic indexation kind of lets the government get away without addressing these issues,” Prof Saunders said.

The Australian Council of Social Service (ACOSS) has launched a campaign to see the Newstart allowance increased, saying that the single rate of $278 per week was completely inadequate.

ACOSS says Newstart is now so low that recipients cannot afford basic needs such as housing, food, and transport.

It advocates lifting payments by $75 a week to “reduce poverty for hundreds of thousands of people across Australia”.





Laurie Nowell
AMES Australia Senior Journalist