Speeches

Speech - "No child will live in poverty" - 30 years later, a new direction

21-July-2017

The Hon Alan Tudge MP

Minister for Human Services

 

“NO CHILD WILL LIVE IN POVERTY” – 30 YEARS LATER, A NEW DIRECTION

 

SPEECH TO THE CENTRE FOR INDEPENDENT STUDIES

 

SYDNEY

 

20 JULY 2017

 

Check against delivery

 

Acknowledgements…

Thirty years ago, almost to the day, the then Prime Minister Bob Hawke made the statement that by 1990, “no Australian child will live in poverty.” It was a powerful message, signalling that government policy would be geared towards those least fortunate and least capable of looking after themselves.

But thirty years on, poverty still exists among children and more generally. On just one measure, around 29,000 children are homeless at some point in any given year. We are one of the richest countries in the world, and have experienced 25 years of uninterrupted economic growth, yet impoverishment still exists in our nation. How can this be?

Today, I would like to discuss the nature of poverty in Australia, particularly amongst children, and how we are faring 30 years after Hawke’s pledge. My main argument is that the primary approach to tackling child poverty over the last 30 years – higher income support payments and more community services – will not provide the solution to significantly reducing entrenched impoverishment over the next 30 years.

Rather, we will have to collectively address what I call the ‘pathways to poverty’ more systemically. These include welfare and other dependencies, poor education standards and family breakdown. This is the focus of much of the government’s efforts.

POVERTY IN AUSTRALIA

There is no good single definition of poverty. The most commonly cited definition, and that used by the OECD, is that a person is in poverty when their disposable income is less than 50 percent of that of the median household income.

On this measure, there are three million Australians living in poverty, including 731,000 children (17.4 percent of all children), according to the last Poverty Report by ACOSS.  Compared to a decade ago, the poverty rate – again using this measure – has slightly dropped overall, but the proportion of children living in poverty has increased by two percent.

This measure of poverty is useful in identifying the pockets of low income and for highlighting wealth inequality. For example, it shows that children in lone parent families are more than three times more likely to be in the low income category than children in coupled families.  But this is about the end of its usefulness. The measure says nothing about the absolute level of income. As long as there was any wealth inequality, the measure would say that there was poverty, even if everyone was very well off in absolute terms.  Moreover, it would suggest that if we made middle income Australians worse off, the poverty rate would decline because the median income would dip.

Absolute poverty or absolute deprivation is a more useful measure for assessing the well-being of very poor Australians. That is, can people afford the basics for themselves and their children such as food, clothing, shelter and education? I believe this is also how most Australians would conceptualise poverty and what they would be concerned about from a policy perspective.

On this measure, we are doing better in large part because of the approach to impoverishment over the last 30 years: higher social security payments and an increase in the number of social services.  The Parliamentary Library notes “over the last thirty years, a combination of income transfer and program responses, such as funding for homelessness services, have more or less ameliorated the worst effects of poverty for most Australians... Few Australians live in absolute poverty.”

This is not surprising when one examines the welfare payment increases over this time. For example:

  • A couple on an unemployment benefit with one to two children today receives between 27 percent and 38 percent more in real terms than they would have done thirty years ago.

  • A single parent on an unemployment benefit with one to two children today receives between 34 percent and 67 percent more in real terms than they would have done thirty years ago.
  • A person on an unemployment benefit without children today receives around 10 percent more in real terms than thirty years ago.

Today, an unemployed couple with three children would receive about $48,000 in welfare payments each year. This is the equivalent to a $60,000 salary. A single mother on a parenting payment with two children would receive over $31,000 in payments each year. On top of that, they may be eligible for a public house and many other free services. The welfare system allows for advances on payments and emergency payments in times of crisis. Tens of millions is provided in the form of emergency relief on top of this.

These figures I quote are not a lot of money, but nor is it complete deprivation. It is a good safety net to ensure that no one need go hungry or without clothing, shelter and the basics.

The greatest challenge is perhaps being an unemployed person with no children. This payment is modest, but as the Minister for Social Services, Christian Porter, has pointed out, the number of unemployed people who live just on this payment is very small – less than one percent - and then they typically come off the payment quickly.

The increases in welfare payments described above has been complemented by a significant increase in social services over the last 30 years. Today, there are programs and services for a vast array of social problems; homelessness, activities after school, breakfast programs, domestic violence initiatives, mental health, youth programs and more. 

In aboriginal communities, the extent of service growth has reached close to saturation level. The Auditor-General found that aboriginal communities now have one service for every five residents. At the time of writing its report in 2013, it found that Wilcannia, for example, had 102 funded services from 18 state and federal agencies, with 17 further proposed. Its Indigenous population was 474.

In other areas, there are a similar array of services. They are not always coordinated and some are more useful than others.  But along with welfare increases, the services sector has meant that we have a situation today where no one need go hungry.

This does not mean that people don’t struggle. We know they do. The Social Policy Research Centre survey in 2010 found, for example, that almost one in five have insufficient funds to have a week’s holiday away from home each year; almost one in ten struggled to get comprehensive home or car insurance and many struggled to afford regular dental checks.

There are still very significant problems, which I will come to, but we should be collectively proud that absolute poverty is now rare in Australia. 

However, while absolute poverty is rare, impoverishment still exists in many pockets. We see it acutely in remote Indigenous communities, but it is apparent in many other pockets of Australia including in the suburbs of our largest cities.

It is not complete lack of income that is always the problem, but a general dysfunction that means that children’s potential is not able to be maximised.

The most acute and tragic example of this is Fetal Alcohol Spectrum Disorder, which affects an estimated 25 percent of babies in some places. In essence, their brain is affected from the alcohol abuse of their mother.

Over 225,000 children suffer from abuse or neglect or were at risk of suffering from this last year – a “national shame” according to Father Frank Brennan.

As I mentioned at the outset, around 29,000 children are homeless at some stage in any given year.

Around 1 in 14 Year 9 students (7 percent) do not meet the national minimum standard for reading. Thousands of young Australians go through the education system and remain functionally illiterate. I have met teenagers who sign their name with an ‘X’.

One in eight children live in a jobless household.

This is the real impoverishment today and comes about despite the increases in welfare payments, increases in social services and an economy which has grown for 25 years straight.

Noel Pearson frequently notes that over the last 30 or 40 years, despite formal racism ending and a huge increase in money invested in remote communities, the social fabric of them has declined. The dysfunction that characterises many of the remote communities today was not there in the 60s and 70s.  Children went to school then; the men had jobs; and the respect for elders was strong.

But it is not an indigenous issue; it is a human issue. It is just that we see the issues most acutely in the remote communities and, therefore, they provide lessons for the rest of Australia.

And this comes to my main point. Few suggest that increasing the level of welfare payments and significantly increasing the number of services in remote locations will improve the circumstances of children in those areas. There are sometimes big payments delivered in the form of royalties (which is the equivalent of a large increase in income support payments) but they don’t make the difference.

This is the same across Australia. We have done well in alleviating absolute poverty through higher welfare payments and more social services, but this formula will not provide the step-change improvement to addressing modern impoverishment over the next thirty years. 

My concern is that many in the social services sector and even many in the business community believe that an increase in welfare payments remains the primary solution to modern impoverishment. Further, the focus on higher payments means that less thought is given to the fundamental reasons why impoverishment exists despite the increases in payments over the years.

If more money was the answer, we would have solved many of the problems years ago. Unfortunately the challenges of modern impoverishment are more complex. We need the best minds put towards the issues in a more sophisticated manner. I would like to see the business groups and ACOSS, and other groups with a commitment to addressing disadvantage, examine the underlying issues of modern impoverishment as much as they argue for higher payments.

The goal must be broader than ending relative inequality (which underpins the standard definition of poverty) or even absolute poverty (which is largely, although not completely, addressed in Australia). Fundamentally, it is more about providing the best opportunity for children and adults to have the choice and opportunity to achieve their potential. In this regard, it is Nobel Laureate Amartya Sen's definition of poverty that is most useful in my view. That is, alleviation of poverty is actually about people having the capability and freedom to participate in society and choose their own destiny.

An Australian may be relatively wealthy in global terms and be without hunger or lack of clothing but if their education is poor, or they have drug or alcohol addictions, then their capabilities and choices will be limited. Their potential is not able to be realised.

PATHWAYS TO POVERTY

A good way to think about modern impoverishment and how we can better address it is to consider what I call the ‘pathways to poverty.’ 

This name – the pathways to poverty – and the framework that I want to briefly outline has come from the United Kingdom’s Centre for Social Justice. But my experience from working on indigenous issues for over 15 years and my work in the welfare portfolio informs my belief that it is also a useful framework for Australia. It is a useful framework for thinking about how to maximise choice and opportunity.

The Centre for Social Justice outlines five pathways to poverty that require attention.

The first is family breakdown. As the Centre for Social Justice notes, the “family is where the vast majority of us learn the fundamental skills for life; physically, emotionally and socially it is the context from which the rest of life flows.” Wherever there are strong families - regardless of their makeup - there are typically strong capable children. Children don’t tend to go hungry when part of a strong family. 

Unfortunately, over the last few decades family breakdown and family dysfunction have become more common, particularly in the least advantaged sections of society. 

One of the more remarkable changes of our society in the last 30 or 40 years is the growth in sole parent families. In the mid-1970s, 9.2 percent of families with children under 15 were sole parent; today it is 15.8 percent. I make no judgment on any of these families – I grew up in one of them – but a breakdown of family structure contributes to impoverishment for many. As I noted above, single parent families are more than three times more likely to be living in relative income poverty compared to couples with children. 

Care for the elderly can also be compromised when families break apart.

The second pathway to poverty is ‘worklessness’. Work is the most effective route out of poverty, both in absolute and relative terms. If we examine ACOSS’s poverty report (which looks at relative poverty), we find that 62 percent of unemployed people are in their definition of poverty, whereas only four percent of full time workers fit their definition. By working, people’s capabilities are strengthened. The reverse is also true; long term welfare dependence diminishes capability and confidence.

It is commonly said, and it is true, that the best form of welfare is a job.

Our goal must be not only the creation of jobs – which is central to the government’s agenda – but the elimination of impediments to people taking up work when it is available.

Reducing welfare dependency is a critical part of the welfare reform agenda, which Minister Porter, the Minister for Employment, Michaelia Cash and I have been leading. We have strengthened the compliance system to encourage able people to maximise their opportunities of finding work. Minister Porter has initiated the Priority Investment approach (modelled from the successful New Zealand initiative) to fund and harness the ideas of the private and community sector to reduce dependency and encourage people into work. Minister Cash has initiated the PaTH program to reduce the risk to businesses of offering opportunities to unemployed people and to encourage those people to take them up. We now have mobility incentives in place so that people are more able to move if work is not available in the immediate region.

This is a huge task to address what, in many cases, has become intergenerational welfare dependence. But it is essential work to addressing impoverishment.

The third pathway is drug and alcohol addictions. This is a further factor that is seen acutely in remote communities, but is increasingly common throughout disadvantaged communities across Australia. The Centre for Social Justice summarises it well; “Addiction to drugs and alcohol remains a shocking feature of life in many disadvantaged neighbourhoods. It shreds the fabric our society. It wrecks families, ruins childhood, causes mental illness, encourages welfare dependency, and fuels a revolving door of crime and incarceration.”

This has got worse in recent decades and there is no easy solution to this.

A great deal has been done to crack down on the supply of drugs (and in some places to limit alcohol availability).  But with drugs like ‘ice’, which is synthetic and easily manufactured, we will never be able to beat it on the supply side alone.

This is why we have been looking at the demand side, as well as providing structured support to assist people get off their addiction.

I have been overseeing the development and implementation of the Cashless Debit Card for the last two years, which works to limit the amount of welfare cash than can be spent on drugs and alcohol. To date it is working effectively and we plan on expanding it further. Thirty one percent of participants say they are better able to care for their children as a result.

In addition, we are introducing trials of drug testing of welfare recipients to identify issues and assist them to get off their addictions.

We are also reforming the reasonable excuse rules for job-seekers so that their addiction is only accepted as a reasonable excuse for non-compliance with their mutual obligations if they are receiving treatment for their addition.

This has been complemented by the provision of over $685 million for treatment and support services.

Ultimately, though, we need to change cultural attitudes towards drug taking. Most young people still take drugs for the first time because of social reasons. We have changed cultural attitudes towards other addictions, including smoking, and can do so with drugs. 

The fourth pathway is education failure. Australia has a very good education system but there is complete education failure in some pockets. In the Northern Territory, only a quarter of children attend school often enough to learn effectively (which is about 80 percent of the time). Thousands of children leave the school system after ten years functionally illiterate. 

Again, this is neither an indigenous issue, nor one that has always been apparent. Rather, it is apparent in the suburbs of our cities, and at least in the indigenous context, has got worse in the last few decades. In the 1970’s, schooling was the norm with Noel Pearson reflecting that no one from his grandfather’s generation was illiterate.

Their income might be higher today, but a child who is functionally illiterate has few options in life. 

While the states and territories have primary responsibility for school education, the Turnbull Government is contributing, including through its indigenous education initiatives as well as the extra funding to the Smith Family’s Learning for Life program.

The final pathway is indebtedness and lack of financial capability. If one is not in control of their finances, it is very difficult to be in control of one’s life. There is little data on the extent of this problem at the most disadvantaged end of the spectrum. In 2013-14, 30 percent of low income households had household debt three or more times the household disposable income. This is up from 22 percent a decade earlier. The Social Policy Research Centre survey, that I mentioned earlier, found that 18 percent of people did not have $500 in savings for an emergency situation.

There are several programs in place to try and alleviate this problem, but I am not convinced that we have the formula just right yet. For example, we provide $100 million each year to improve people’s financial wellbeing or capability, yet only 4 percent of people who seek emergency relief are connected to financial management assistance. One in five people with more than 50 percent of their income from welfare say they have difficulty understanding financial matters.

We need to do better in this space, acknowledging that some have very basic capability and, therefore, need quite intense income management while others would benefit from financial management assistance to be on a much better footing.

CONCLUSION

These ‘pathways to poverty’ can be debated by well-meaning people. Some of them interact with each other and, perhaps, there are other factors that should be included, such as housing security and mental health.

My intent in outlining this framework was not to provide the solution to each of the problems - an impossible task in 30 minutes - but to provide an alternative way to think about impoverishment in Australia today and a flavour of government initiatives which contribute towards alleviating it.

Entrenched disadvantage or impoverishment is perhaps the toughest overall challenge in Australia, but arguably the most important to address. We cannot solve it by doubling the number of services once again. We cannot solve it by having another step-increase in welfare payments. 

Rather, we need collectively to put our minds to the underlying factors, which have changed since Hawke’s day, and be clear eyed about how to tackle them. 

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