Poverty is a complex phenomenon with many causes. Government policies that affect poverty generally fall into three general categories: welfare eligibility requirements, financial incentives to work, and time limits on benefits.
Across affluent industrialized countries, programs that increase the availability of cash assistance decrease poverty rates. Multiple studies demonstrate lasting benefits from such policies that reduce near-term hardship and promote opportunity over the long run.
Basic Needs
South Australia (also referred to as SA) is an Australian state located in the southern central part of the country. It is the second smallest of the states, with most of its population living in Adelaide, the capital city. It has a long coastline, but is also known for its arid regions. The South Australian Government has a strong commitment to social welfare policy, with a clear focus on poverty alleviation. It also focuses on promoting equity and supporting those most disadvantaged.
One of the most important issues facing people in South Australia is housing affordability. High house prices and the cost of renting mean that many low-income earners are unable to afford a home. This is especially true for families with children, as they need more space than single adults.
In addition to affordable housing, people need access to nutritious food and adequate transportation to get to work. The SA government is attempting to address these issues by increasing the minimum wage and developing a new transport plan. In the meantime, the government is continuing to invest in public infrastructure and improving access to education and training.
Social protection programs help people meet their basic needs and enable them to participate in income generating activities. They also prevent households from having to sell assets they depend on for livelihoods or withdraw children from school. In SA, social protection transfers are provided by both the state and the Commonwealth Government. In the past, SACOSS has urged both the state and the Commonwealth to prioritize gender-responsive and shock-responsive social protection systems.
Despite these efforts, South Australia continues to face challenges. Poverty rates are high, and many people live below the poverty line. The state has also experienced a rise in inequality. These factors have contributed to the recent slowdown in economic growth.
Although the Australian economy has a strong record in terms of human rights, there are still significant gaps in its approach to the wellbeing of its people. While the country ranks 19th in the world in terms of social welfare policy, its performance in this area is stagnating.
Social Security
The social security system is an important component of a nation’s welfare state, redistributing Government revenue from the tax system to increase the wellbeing of its citizens. It includes both contributory social insurance (like a pension scheme) and non-contributory social assistance programs, such as family allowances. The latter are a key form of support for those unable to work or who have low incomes. Other forms of social protection include access to health services, housing assistance, childcare, quality child education and early childhood development, and public health initiatives.
In Australia, expenditure in this category covers a range of payments and associated services delivered by the Department of Human Services (DHS), including the Newstart Allowance, Austudy/Abstudy, Disability Support Payment, Carer Payment and Parenting Payment. It also covers the National Disability Insurance Scheme (NDIS) and aged care payments. In addition, it covers the myGov service and other services that help people with their everyday affairs.
International evidence indicates that households on specific social assistance payments have a higher risk of food insecurity. This is particularly concerning given that recent research reveals households receiving Disability, Carer and Parenting Payments are at high risk of intergenerational persistence of disadvantage.
A high proportion of these households have fuel or energy poverty, meaning they do not have enough income to afford essential household energy and heating needs, or to pay utility bills on time. This highlights the need for additional work to improve the financial security of people on these particular social assistance payments.
In Australia, a range of organisations and individuals are working to reduce poverty through advocacy, community education and research. These include SACOSS, which leads and supports the community to take actions that achieve its vision of justice, opportunity and shared wealth for all South Australians. The organisation’s Poverty Week activities, held in the lead up to the UN International Anti-Poverty Day on 17 October each year, seek to strengthen understanding of the causes and consequences of poverty and empower communities to act to address it. They aim to inspire a culture of change that includes individuals, communities, organisations and governments.
Employment Assistance
As the global economic recovery continues, restoring the livelihoods of poor and vulnerable people is key. This requires strong social protection (social security) systems to prevent spiking poverty and hardship during recessions and slowdowns and ensure the poorest have access to work and can make productive investments in their future. The COVID-19 pandemic exposed gaps in these critical systems and highlighted the need to make them more effective and responsive. The emergence of the ‘poorest of the poor’ – an estimated 10 million more people living in poverty than before the pandemic – underscores the importance of investing in human capital and boosting social safety nets, including non-contributory cash transfers and voucher programs.
The benefits of well-designed social protection programs extend beyond reducing short-term vulnerability. Multiple studies have shown that policies such as cash assistance, nutrition and housing subsidies and quality early childhood education and childcare lift families’ earnings and increase their chances of escaping poverty. Furthermore, these investments pay for themselves by generating long-term benefits such as improved health outcomes and increased productivity in the workplace.
However, not all governments have a good record in implementing robust social protection systems. In particular, the low-income groups in many countries face a difficult challenge to sustain their livelihoods because of a lack of employment opportunities and weak income supports.
In South Australia, the community services sector is facing an increasing number of clients who are living in poverty and experiencing barriers to employment. These include individuals experiencing family and domestic violence, young people who have been diagnosed with a disability, older Australians who are in poor health and facing financial hardship, those on income support and those who are unemployed.
This year the federal government will cut unemployment benefits for 60,000 people in South Australia. In addition, modelling of negative gearing, CGT discount, super tax concessions and excess franking credits shows that these policies disproportionately benefit the wealthiest households and will push people into poverty.
SACOSS is focused on improving the effectiveness and equity of South Australia’s existing social security and welfare systems. As part of this, we are working on identifying and raising awareness of poverty premiums and poverty traps within current government programs and policies. Our anti-poverty policy package includes recommendations on a range of areas where we believe small changes would make a big difference. We have also produced a booklet of case study examples from the community services sector on the impact of anti-poverty measures.
Pensions
The state has a wide range of social security cash payments. These include the pension (age and invalid) and unemployment benefits; child endowment and maternity allowances; and allowances for carers of children with a permanent or severe handicap. Pension rates are indexed in line with price movements, and the means test has been liberalised on several occasions. The separate property and income tests were combined into a ‘merged’ test in 1961. In 1973 a free-of-income-test, fiat-rate pension called the double orphan’s allowance was introduced for guardians of children whose parents are dead. In 1974 indexation was withdrawn for single people aged 18 years and over receiving unemployment benefits, sickness benefits or invalid pensions. The rate of pension was also increased in 1973, and in 1975 the residence requirement for invalid pension was replaced by a residency proportional formula.
Various other state-based social welfare programmes are provided for persons in need of care and assistance, such as sheltered housing; free medical treatment in hospitals; public housing; school meals; and a comprehensive system of transport services. A number of community-based organisations also operate programmes for older persons to help them live more comfortable lives in retirement and assist them to remain active, healthy and independent.
There is a strong need to ensure that these social protection programmes are well resourced and adequately targeted, and that they respond to changing needs and circumstances in a timely fashion. In addition, they should be integrated with other support programmes – especially those focused on addressing family violence and tackling the underlying issues that contribute to poverty.
In Australia, a high proportion of the population receives government pensions, although there is some variation among the states in terms of the level of retirement income and eligibility rules. Other forms of state-based financial support are available, such as insurance against work injuries and illnesses; industrial awards that provide a measure of paid sick leave; and voluntary occupational pension schemes. A wide variety of private-sector financial support is also available, including superannuation. Private health and life insurance are widely available, as are savings accounts.
