The welfare poverty net

Poverty comes in different forms and degrees. But the solutions to poverty, of any kind, are the same – education and employment.

By Nyunggai Warren Mundine, Executive Chairman of the Australian Indigenous Chamber of Commerce

In 1995, the UN World Summit for Social Development adopted 10 Commitments. One of these was to eradicate absolute poverty, defined as “a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information.” Absolute poverty has come to be referred to as “extreme poverty”.

In 2000, UN members committed to 8 Millennium Development Goals. Number 1 was to eradicate extreme poverty and hunger. Three targets were identified to achieve this, including halving the proportion of people living on less than $1 per day. This introduced a monetary measure of extreme poverty – the “dollar a day”, also known as the international poverty line. Now that line is set at $1.25 a day based on purchasing power parity.

Extreme poverty basically means you have nothing and access to nothing; you scrape together what you can to survive. You walk miles to get to drinkable water or siphon it illegally from municipal water pipes. You can’t afford enough food to sustain your body so you rummage for food in the tip or live on a bowl of rice a day or starve. There’s no school in your community or it’s an hour’s walk away with no other transport or you can’t send your children to school because they’re out looking for food and water.

About 1.2 billion people live in extreme poverty, most in rural areas in developing countries.

Recently I annoyed the chattering classes by saying that not even the poorest Australians live in extreme poverty. For this I was called out of touch, having no idea and other things I can’t repeat here.

But my comment was a statement of fact. No Australian lives on anywhere near a dollar a day. No Australian lives without access to food, drinkable water, schooling or other basic human needs. Even the poverty in remote Indigenous communities isn’t extreme poverty. Those communities have drinkable water, food, health services and schools. And unlike most developing countries, Australia has a social security system. The poverty we see in Australia isn’t extreme poverty; it’s state sponsored poverty in the form of chronic welfare dependence and bureaucratic incompetence.

People living in extreme poverty don’t have schooling. People living in state-sponsored poverty have access to schools but don’t attend them – they can’t see the point.

If you don’t believe me, read the Australia Council of Social Service’s report Poverty in Australia 2014. This outlines the face of poverty in Australia and it’s very different from the poverty targeted by the UN’s Millennium Development Goals.

ACOSS defines the Australian poverty line as 50% of median income – $400 per week for a single adult and $841 per week for a couple with 2 children, well above the international poverty line. Australia’s poverty rates are about the same in capital cities as other places. And poverty rates are increasing. A majority of Australians living below Australia’s poverty line rely on welfare as their main income source. Most dole recipients, and a little under half on parenting or disability pensions, live below Australia’s poverty line.

I’m  a strong supporter of Australia having a welfare safety net. But its purpose is to assist people in hard times get back on their feet, not keep them in hard times. The ACOSS Report illustrates the very clear correlation between poverty and welfare dependency in Australia. Some people think the solution to this is to increase welfare. They say welfare recipients live in poverty because welfare payments aren’t generous enough. I disagree. I think the solution is to get people off welfare and into a job.

The UN target of halving extreme poverty was met 5 years early in 2010. By enlarge it was achieved – not because of the UN – but because of economic growth in China. In the 3 decades after China began economic reform its extreme poverty rate fell from 84% to 10%. Without China the UN target wouldn’t have been achieved.

I actually know a lot about poverty because I grew up in it, like most people I knew. My parents started married life in a tent on the Clarence River. In time they moved to a house. It had 4 rooms and around 20 people living in it at any given time. My mother went many nights without dinner so her children could eat. Sometimes bills went unpaid and the electricity was cut off. I’ve also spent a good deal of time in impoverished Indigenous communities across Australia over many decades.

Poverty comes in different forms and degrees. But the solutions to poverty, of any kind, are the same – education and employment. These are the solutions that lifted my family out of poverty and nearly a billion Chinese out of extreme poverty. They are the only solutions to poverty in Australia today.


An edited version of this article was published in The Australian on 17 November 2014 under the headline Chatterers wrong on poverty


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