Rate of poverty among children

This graph shows the rate of poverty among  all children according to the 50% and 60% median income poverty lines, in 2017-18 and 2015-16.

In 2017-18, 17.7% of all children were living in households experiencing poverty, rising to 25.7% when the 60% poverty line is used. The risk of poverty is highest for children in sole parent families, which is three times that for children in couple families according to the 50% poverty line (44.2% compared with 12.7%).

In 2015-16, 17.3% of all children were living in households experiencing poverty, rising to 26% when the 60% poverty line is used. The risk of poverty is highest for children in sole parent families, which is three times that for children in couple families according to the 50% poverty line (39.4% compared with 13.1%).


Rate of poverty by age (% of people)

This graph displays the rate of poverty among all people by age groups.

2017-18:  Among children, the rate of poverty is 17.7% based on the 50% of median income poverty line, and 25.5% when using the 60% poverty line. The poverty rate among young people (15-24 years) is also above average at 13.9% (20.2% when the 60% of median income poverty line is used). Among people aged 25 to 64 years, poverty rates are somewhat lower (at 12.1% and 17.6% at the 50% and 60% of median income poverty lines respectively). People 65 years and over who own or are buying their home are less likely to experience poverty than the rest of the population when the 50% poverty line is used (10.3%) but more likely when the 60% poverty line is used (23.7%). This figure also shows the profound impact of housing costs on poverty rates among older people by displaying the poverty rate among the 10% of older people who rent their homes, which is considerably higher than that of older people who own their homes, at 41% when the 50% poverty line is used and 58.1% when the 60% poverty line is used.

2015-16: The rate of poverty among children is 17.4% based on the 50% of median income poverty line, and 26% when using the 60% poverty line. The poverty rate among young people (15-24 years) is also above average at 14% (20% when the 60% of median income poverty line is used). Among people aged 25 to 64 years, poverty rates are somewhat lower (at 12% and 18% at the 50% and 60% of median income poverty lines respectively). People 65 years and over are less likely to experience poverty than the rest of the population when the 50% poverty line is used (12%) but more likely when the 60% poverty line is used (28%), reflecting the close proximity of the Age Pension to the 50% of median income poverty line before-housing costs are taken into account.


Comparison of selected income support payments and poverty lines, 2015-16 and 2017-18

High levels of poverty among households reliant on income support payments are due in part to the level of these payments, which generally sits below the poverty line. A household reliant on income support payments usually needs extra income such as part-time earnings to avoid poverty. How much extra income is needed depends on the difference between the payments and the poverty line, and also on housing costs (which are taken into account in this research).

This table compares the standard maximum rates of major income support payments with before-housing poverty lines in 2015-16 and 2017-18. In this case, the gaps between maximum payment rates and poverty lines are based on a cameo family type with no private income, so they do not take account of the private incomes and housing costs of families in the ABS income survey sample.

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Poverty rates among Aboriginal and Torres Strait Islander people, by region, in 2016

This graph shows that the poverty rate for Aboriginal and Torres Strait Islander people is 31%, and that poverty amongst Aboriginal and Torres Strait Islander people is twice as high in very remote communities (54%) as in major cities (24%). However, it must be noted that accurate measurement of poverty is in these communities is hampered by non-declaration of income and the complexity of family structures and income-sharing arrangements, all of which likely result in under-estimation of poverty in Aboriginal and Torres Strait Islander communities.


Trends in average weekly after tax income

This shows how average household incomes grew in ‘real terms’ (after inflation) for the lowest, middle and highest 20% income groups in Australia, as well as the highest 5%. It shows that income growth was very uneven during the boom from 2000 to 2008. The average income of the lowest 20% grew by 5.6% per year in real terms, compared with 5.9% for the middle 20%, 7.2% for the highest 20%, and 10.3% for the highest 5%.

After the GFC, from 2008 to 2016, household incomes grew much more slowly and less unequally. The average household incomes of the lowest 20% grew by 2.5% per year (aided by a large pension increase in 2009), compared with 0.3% for the middle 20%, 0.8% for the highest 20%, and a decline of 0.6% for the highest 5% (likely due to falls in returns from investments.


Annual percentage increase in weekly income, before and after the GFC in 2008

The graphs breaks the average annual increases in household income into two periods, before and after the Global Financial Crisis (GFC) and then shows the increase in income over the entire period 1999-00 to 2017-18. 

It shows that the average incomes (after inflation) of the highest 20% rose by an average of 5.0% per year during the boom years, and 0.6% afterwards. The incomes of the middle 20% rose more slowly, by an average of 4.1% per year during the boom and 0.5% afterwards. The incomes of the lowest 20% grew more slowly again, by 3.9% a year in the boom up to 2007, but just 0.4% from 2007 to 2017-18.

Over the period as a whole, average annual income growth (after inflation) was 2.7% for the highest 20%, compared wtih 2.2% for the middle 20% and 2% for the lowest 20%. The overall increase in incomes over the 18 years was 48% for the highest 20% compared with 40% for the middle 20% and 36% for the lowest 20%.


Changes in income shares before and after the GFC in 2008

This graph shows the changes in the share of household income to each income group before and after the Global Financial Crisis (GFC) and then shows the changes over the entire period 1999-00 to 2017-18.

Before the GFC, the share of the highest 20% group rose by 1.6%, while those of the middle and lowest 20% fell by 0.4% and 0.3% respectively. After the GFC, the share of the highest 20% fell by 0.5% while those of the middle and lowest 20% each rose by 0.1%. Over the whole period, the income share of the higest 20% increased by 1.1%, while that of the middle 20% and lowest 20%, whose shares fell by 0.3% and 0.2% respectively.


Trends in reliance on social security

The percentage of people in households relying mainly on social security for their income  declined overall between 1999-00 and 2015-16, although the share of people of working age relying on these payments rose in 2007-08 due to the Global Financial Crisis.

This long-term decline in social security reliance was due mainly to lower unemployment (before 2008), the closure of ‘pension’ payments for people between 50 and 64 years in the mid-1990s, ‘welfare to work’ policies that also restricted access to pension payments for people of working age (in 2007 and 2012), and growth in the private incomes of retirees (from superannuation, employment and other investments).

You can find out more about changes in Australia’s income support system on our Causes and Solutions page.


Trends in the single rate of Newstart Allowance (now JobSeeker), pensions and wages

This contrasts changes in the maximum weekly rates of Newstart Allowance and Pensions for single adults with changes in full time wages (both median and average measures) between 1993 and 2019.

The ‘real’ value of pensions rose from $283 per week to $437, an increase of 56%, while Newstart rose from $250 to $270 (largely due to ‘compensation’ for the GST, and the energy supplement compensating for higher energy prices), an increase of just 8%. The main reasons for this disparity were that, unlike pensions, Newstart Allowance is only indexed to consumer prices and not wage movements (and was not increased in ‘real terms’ since 1994), and that Allowance recipients missed out on the $32pw increase in the pension rate in 2009.

Over this period the gap between the two payments increased from $33 to $171 per week.

The graph also shows that the minimum wage has progressively fallen behind both median (middle) and average fulltime wages.

You can find out more about the changes in income support payments on our Causes and Solutions page.


Reduction in inequality due to the social security and income tax systems

This tracks the impact of the income support and income tax systems on household income inequality in Australia, using the Gini Coefficient.  The bottom lines show the impact on inequality of the social security system – the difference between private income and gross income. The top lines show the impact on inequality of the income tax system – the difference between gross income and disposable income. Social security payments have a greater overall impact on inequality (ranging from a 9.4% to 11.6% reduction in the Gini for weekly income) than income tax does (ranging from a 4.3% to 5.8% reduction). The impact of social security on inequality decreased in the years before 2008 (represented by the rise in the bottom row), increased shortly afterwards (represented by the fall in the bottom row), then declined after 2011.

The impact of social security on inequality is influenced by three main factors:

(1) Changes in the share of recipients in the overall population
This is shown here. Changes in unemployment were a major factor.
(2) Changes in rates of payment, whether due to indexation or one-off changes such as the increase in pensions in 2009. These are shown here.
(3) Changes in eligibility requirements, such as the transfer of sole parents to Newstart Allowance in 2012. Find out more here.

The impact of income tax on inequality varied in three stages. It decreased (the top row rose), then increased (the top row fell) in the early 2000s, declining in the mid-200s, increasing in the early 2010s, and declining again in the mid-2010s.

The impact of income tax on inequality was also influenced by three main factors:

(1) The impact of inflation and income growth on average tax rates (‘bracket creep’)
(2) Changes to tax rates and thresholds (such as the large tax cuts from 2003 and 2010 which more than offset the impact of bracket creep)(3) Changes in the tax ‘base’ such as restriction on the tax free status of superannuation in 2015). Find out more here.

Broadly speaking, the most important tax changes affecting income inequality were the large income tax cuts from 2003 to 2010 (which increased inequality) and the lack of tax cuts afterwards (which reduced it). Income tax cuts are rarely progressive in overall terms because the lowest one third of individual adults have incomes that are too low to pay tax, so they do not benefit from tax cuts. Find out more here.