How we can solve the poverty crisis in Australia

Olivia Killeen, Communication and Social Policy Officer
Olivia Killeen Communication and Social Policy Officer
20 February 2023
Mother with child paying at the supermarket checkout

Poverty is a shameful truth in our country

A wealthy nation like Australia should not have 3.3 million people and 761,000 children living below the poverty line.

At Sacred Heart Mission, we have been supporting people experiencing poverty and persistent disadvantage for more than 40 years. Over that time, Australian society has changed considerably in many ways, but our challenges with poverty have not improved.

Aussies living in poverty have to make difficult choices every day:

  • Skipping meals or even medication,
  • Suffering from extreme temperatures to reduce utility costs,
  • Missing out on activities in society that most people take for granted, and
  • Struggling to cover rising rent prices and risking losing their homes.

You can read more about the drivers of poverty here.

Poverty and the cost-of-living crisis

We’re all talking about the cost-of-living crisis and there are very few in our communities who remain untouched by rising inflation and sky-rocketing prices.

People on the lowest incomes, those who receive minimum wages or income support payments, are feeling the pinch the most.

Our case management staff report that people who access our services have increasing difficulties with meeting their basic needs and are seeking advice on how to stay afloat.

Our participants often report spending more than 30% or even over 50% of their income on rent, placing them in the category of rental stress, which increases their risk of homelessness.

"Nothing left to spend on something you need"

We are seeing more people using payday lenders or Buy Now Pay Later (BNPL) businesses such as Afterpay and Zip to be able to afford basic goods including groceries. Research by Good Shepherd highlights the dangers of using these services when someone is already financially vulnerable.

Our staff discourage these options, as clients frequently find they cannot pay the instalments either and are then subjected to fees and high interest rates, meaning that people are always ‘chasing their tail’ trying to manage multiple payments and keep up.

Some clients also have historical debt that they are trying to pay down – such as rent, fines and credit cards, which exacerbates these problems. As one staff member bluntly put it, “it’s very expensive to be broke.”

We are aware that some people resort to breaking the law in order to make ends meet. Examples of this include shoplifting, fare evading on public transport, and not paying for parking, which can lead to fines if they are caught.

While Sacred Heart Mission does not condone this behaviour, it is devastating that anyone in our society is needing to make these kinds of choices to get by and afford basic goods like food, rent and medication.

Clients who were asked directly about cost-of-living pressures put it simply:

Poverty continues into the next generation

Ultimately, the Australian Government must do more to address the current cost-of-living crisis, minimise inflation and ensure that people do not get trapped in the cycle of poverty and disadvantage. This is important for people who are working as well as those who are not.

It is extremely worrying that almost one in five Victorian accessing specialist homelessness services in the last financial year had a job; showing that having a job is not enough to prevent homelessness in the current environment.

Poverty causes immediate impacts, but it also produces lifelong and cumulative negative impacts on people leading to poorer outcomes in all aspects of their life. For example, it is common for our clients to have experienced homelessness, housing insecurity and poverty in childhood. They often didn’t go to school consistently, they may have moved around often or gone to school hungry, not performed well academically and left school early.

Leaving school early means that it’s harder to get into employment or improve your education later in life. If you have trouble reading or understanding numbers, it can be hard to get into the workforce – especially now as so many jobs require ‘digital literacy’.

Not being able to get a job that provides a minimum standard of living means that the cycle of poverty and inequality continues into the next generation if parents can’t provide for their children. This can also lead to crime – one encounter with the justice system can have lifelong impacts.

In the same way, without education and employment, people often have poorer health – they can’t explain what’s happening for them or the funds to seek health care when needed. Even Australia’s public health system has waiting lists for services like dental and optometry if you can’t pay for these things yourself.

All of this adds up for people and their families, and poverty can become entrenched in your life – it’s hard to get out of once that has happened.

We have the solutions to fix this problem

There are some clear solutions to alleviate poverty and fix our housing crisis:

  1. Building social housing – Currently there is a national shortage of 433,000 homes for people in the lowest 20% of household incomes. We support the Everybody’s Home Campaign, calling for the Australian Government to build at least 25,000 additional social and affordable housing properties per year.
  2. Improve the income support system – it is not doing enough to prevent people from falling into poverty. We need to Raise the Rate of Jobseeker to at least $78 per day. We also need to reform mutual obligations, the compliance-driven system for accessing income support payments. It is too punitive and stigmatising, causes psychological distress and hinders economic participation. We support the Economic Inclusion Advisory Committee in providing advice on economic inclusion, including income support payments in advance each Federal Budget.
  3. Increase wages – especially the minimum wage, to reduce inequality and leaving low-income earners behind.
  4. Rebuild employment services, to truly help disadvantaged job seekers, especially those who are long-term unemployed to find work.

We cannot go on like this – Australian society must change to guarantee that no one is forced to live in poverty.

Inquiry into Poverty in Australia
Read in our submission how we advocate on behalf of people experiencing chronic poverty and social disadvantage.

Response to the Poverty Inquiry

In February 2023, Sacred Heart Mission made a submission into the Inquiry into the Extent and Nature of Poverty in Australia. In February 2024, the Senate Committee released their final report.

In our submission, we urged the Australian Government to act on the recommendations of a series of inquires held over the last five years – such as those into the Disability Support Pension, JobSeeker (Newstart) and other payments, and homelessness in Australia – that intersect with poverty.

In addition, several state-based inquiries have occurred over this time; as well as research and evidence consistently telling us the same thing:

  1. Poverty in Australia is increasing, and
  2. The same solutions are being shared repeatedly with the government.

The solutions to ending poverty are clear and available. Providing adequate income support is the single greatest factor in reducing poverty in Australia. A lack of social and affordable housing, homelessness, inadequate income support payments and a punitive compliance system, and limited support for disadvantaged jobseekers are all directly linked to disadvantage and poverty in Australia.

Yet again, the report of the Poverty Inquiry highlights these same solutions. We don’t need more inquiries and reports – we need the Australian Government to act on the evidence-informed recommendations of the Poverty Inquiry, and all those before it, and make real progress to addressing poverty and disadvantage in Australia.