New research shows ‘pernicious effects’ of removal of Coronavirus Supplement

A new report from the Poverty and Inequality Partnership led by ACOSS and UNSW Sydney has found that while the Coronavirus Supplement introduced in 2020 gave recipients the breathing space to afford basics such as food and medication, its removal had a pernicious effect that hit hard.

Australian experiences of poverty: risk precarity & uncertainty during COVID-19 found the extra $275 a week from April 2020 was critically important to improving wellbeing during the pandemic.

The qualitative research study, based on phone interviews with 33 income support recipients, revealed the payment provided a reprieve from ongoing financial stresses and allowed recipients to plan for their future for the first time.

But when the supplement was first reduced from September 2020 and then abolished in April 2021, participants were forced to return to acute financial stress and experienced increased feelings of exclusion.

Report authors Professor kylie valentine, Dr Yuvisthi Naidoo and Dr Elizabeth Adamson from UNSW’s Social Policy Research Centre stated that the supplement was “far from [a] bonus payment” but that it "allowed participants to experience something closer to a life without ongoing, debilitating worries about money”. They noted that research participants used the supplement for essentials such as food, medical, personal or household items, to pay off debt and to deal with emergencies.

When the supplement was withdrawn, research participant Jacqui* said she could no longer buy food from Aldi but instead buys expired food from a food pantry, while Sharon said she lives on only one meal a day.

The research found that the benefits of the supplement were enhanced by the temporary relaxation of activity testing and compliance obligations.

The report also found that the COVID-19 pandemic was particularly hard for people who had precarious housing situations and health complications.

Participants said that isolation, anxiety and insufficient income were impacting both physical and mental health, such as Craig who said his mental health took a “rapid decline”.

Lucy said that COVID-19 made it impossible to maintain her previous quality of life, where she had picked up small pieces of work from various employers: “I felt like I’d diversified my income from all different people. But it was like everything had gone. I never thought I’d get to a point where everything had gone.

The report also noted that successful emergency initiatives to house people experiencing homelessness showed how access to adequate and affordable housing, with the support of case workers who are adequately resourced to provide the services needed,   is able to transform lives. Several participants said their case workers went above and beyond to connect them to community support services.

ACOSS CEO Dr Cassandra Goldie said the report showed how the pandemic hit people on low incomes the hardest.

“These compelling human experiences show how tough the experience of poverty can be,” she said. “Australia is one of the wealthiest nations in the world, yet people can’t afford to keep a roof over their head, are eating only one meal a day and buying expired food.

“The report clearly shows how the Coronavirus Supplement provided people with enough to live on for the first time. We must urgently increase income support payments so that they cover the cost of the basics.”

Professor Carla Treloar, Director of UNSW’s Social Policy Research Centre, said the report demonstrated how policy responses made a big impact during the pandemic.

“The response to provide additional financial support, quickly and with few eligibility criteria, was critically important to maintaining people’s wellbeing,” she said.

“The supplement gave people a reprieve from ongoing financial stresses and helped them through difficult social isolation.

“Community service providers also played a major role and helped transform people’s lives by connecting them with accommodation, health and social support.”

People who are living on income support available for interview: 

  • Melika who struggles to survive on less than JobSeeker with her 6yo daughter near Newcastle
  • Michael, a former IT contractor on JobSeeker who has higher food costs due to serious food allergies
  • Michelle who is without paid work and lives in social housing in Hobart

An earlier report by the Poverty and Inequality Partnership found that temporary income supports introduced during COVID lockdowns in 2020 – the Coronavirus Supplement and Economic Support Payment – pulled 646,000 people, including 245,000 children, out of poverty.

Key findings:

  • People experiencing poverty felt the same pandemic stresses as people with more resources, including concern for older relatives and educating children at home, but the negative effects of isolation hit them harder. For example, their access to the online services that many people used to ease loneliness and stress were restricted.
  • The pandemic ‘heightened and worsened’ damaging experiences many already had including isolation and fragile health as many were confined in poor-quality homes.
  • Being at home had an impact on expenses, and earlier research found that energy bills increased for some groups living on low incomes. Stay at home orders also increased the risk of domestic and family violence for some people.
  • Parenting stress was particularly acute among migrant families because they were more likely to be experiencing financial hardship, ineligible for JobKeeper and found home learning harder.

*Names have been changed


Poverty gaps

This graph shows the average poverty gap for all households in poverty from 1999 to 2019. It is in 2019 dollars, and using the 50% median income after-housing costs poverty line.

The higher (red) line shows poverty gaps measured using the pre-2007 ABS income definition, while the lower (dark blue) line is based on the post 2007 income definition. The light blue line shows the quarterly changes in the poverty gap during the 2019-20 period.

The average poverty gap increased steadily from $168 per week in 1999 to $254 per week in 2009 (in constant 2019 values), then rose to $290 per week in 2017. Over that period the poverty gap followed a different pattern to the poverty rates during the same period, reflecting a combination of factors working against each other:

* Changes in the composition of people below the poverty line after 2009 reduced the poverty gap before 2009 and increased it afterwards. These influences were partly offset by increases in housing costs throughout this period.

* Before 2009, a substantial proportion of people below the poverty line relied on the Age Pension, which was just below poverty line. A pension increase in 2009 lifted many older people above the poverty line.

* This meant that a growing proportion of people in poverty were on much lower payments such as Newstart Allowance (whose value declined in comparison with median household incomes as discussed previously), increasing the poverty gap.

The right side of the figure (light blue line) shows the changes in the poverty gap over the four quarters of 2019-20. The poverty gap rose from $291 per week in September 2019 to $323 in March 2020, then fell to $310 in June 2020., mirroring the rise and fall of the poverty rates during the same period.

 

 


Percentage of children in poverty from 1999-2019

This graph shows the percentage of children in poverty from 1999 - 2019, using the 50% of median income after-housing costs poverty line.

The poverty line used is 50% of median income, taking account of housing costs. The lower (dark blue) line shows poverty rates measured using the pre-2007 ABS income definition, while the higher (red) line is based on the post 2007 income definition. The light blue line shows the quarterly changes in poverty rates during the 2019-20 period.

It shows that child poverty, alongside the overall poverty rates, declined substantially from 1999 to 2003 (from 18.6% to 14.3%), then rose to 18.8% in 2007. It fell gradually to 17.6% in 2017.

It also shows that child poverty rose sharply than fell dramatically during the first year of the pandemic (2019-20); from 16.2% in the September quarter of 2019 to 19% in the March quarter of 2020, then fell to 13.7%, a two-decade low, in June 2020.


Poverty lines by family type

This table shows poverty lines by family type in dollars per week, including social security payments.


Percentage of all people in poverty from 1999 - 2019

This graph shows the percentage of all people in Australia in poverty from 1999  - 2019. The poverty line used is 50% of median income, taking account of housing costs. The lower (dark blue) line shows poverty rates measured using the pre-2007 ABS income definition, while the higher (red) line is based on the post 2007 income definition. The light blue line shows the quarterly changes in poverty rates during the 2019-20 period, when the impacts of COVID-19 lifted the poverty rate from 13.2% in the September quarter of 2019 to 14.6% in the March quarter of 2020, and the extra coronavirus income support payments introduced meant it fell to 12% - a 17 year low - in the June quarter of 2020.


One in eight people in Australia are living in poverty

One in eight people in Australia, including one in six children are living in poverty, a new report released on the eve of Anti-Poverty Week has found, as cost of living pressures continue to put households under strain.

As many as 13.4 per cent of the population (or 3.3 million people) and 16.6 per cent of children (or 761,000 kids) were living below the poverty line in the first year of the pandemic (2019-20), according to the Poverty In Australia 2022 report by the Australian Council of Social Service and UNSW Sydney, using the latest available data from the ABS.

The study also revealed people in poverty are falling further behind the rest of society, with their average weekly incomes dropping to $304 below the poverty line.

The report found that temporary income supports introduced during COVID lockdowns in 2020 – the Coronavirus Supplement and Economic Support Payment - pulled 646,000 people, including 245,000 children, above the poverty line. Those new supports almost doubled the lowest income support payments, including the JobSeeker Payment.

These results demonstrate that Australia can swiftly reduce poverty by raising income supports.

In the first three months of 2020, as large parts of the economy were shut down by Covid restrictions and thousands were put out of work, the poverty rate soared to 14.6 per cent.

But boosted income support payments announced in April that year saw the poverty rate drop to a 17-year-low of 12 per cent over the next three months.

The effect of the boosted payments on children was even more dramatic, reducing the child poverty rate from 19 per cent in the March quarter of 2020 to a 20-year low of 13.7 per cent in the June quarter of 2020, lifting 245,000 children above the poverty line.

The extra income meant that single adults receiving social security payments went from being $134 a week below the poverty line in March to $146 above it in June 2020, while couples with two children went from being $187 below the poverty line to $361 above it at the same time. However, by April 2021, Coronavirus Supplement (initially $275 a week) was abolished and in its place Jobseeker and related payments were increased by just $25 a week.

Professor Carla Treloar, Director of the Social Policy Research Centre at UNSW Sydney, said the report highlights the unacceptable levels of poverty in our nation.

‘Australia is one of the wealthiest countries in the world, yet we have one in eight people and one in six children living below the poverty line,’ she said.

‘There are 3.3 million people in Australia desperately struggling to pay the bills and put food on the table. There are 761,000 children who are denied a good start to life.’

ACOSS CEO Dr Cassandra Goldie said: ‘These figures should be a source of great shame for our nation. We can and must do better.

Dr Goldie also said the study showed there is a clear way to reduce poverty in Australia: ‘Almost doubling the JobSeeker rate pulled 646,000 people out of poverty in 2020. That is a huge advance in an incredibly short period of time.’

‘The increased payments reduced child poverty by a massive 5.3 per cent, giving 245,000 kids in Australia the chance of a better future.

‘The report shows that the solutions to ending poverty in Australia are clear. Increasing Jobseeker and related payments to at least $73 a day is a crucial first step, as well as an increase to Commonwealth Rent Assistance and a substantial investment in social housing so that there are enough affordable homes for people on the lowest incomes. We must also invest in energy efficiency and solar retrofits for low-income homes.

'As it develops its approach to a well-being budget, the Federal Government should prioritise including specific targets and strategies for reducing poverty to ensure that no one is left behind.

‘ACOSS agrees with the Treasurer that we need to have a conversation about how we can grow the revenue Australia needs to pay for the essential services and safety net we need, to end poverty and deliver wellbeing and we are keen to work with the government on this.’

Read the report at: https://bit.ly/PovertySnapshot


Key findings in the report:

  • The poverty line (based on 50% of median household after-tax income) is $489 a week for a single adult and $1,027 a week for a couple with two children, according to the latest available data from the ABS (2019-20).
  • More than one in eight people in Australia (13.4 per cent) lived below the poverty line in 2019-20, the first year of the pandemic. That amounts to 3,319,000 people.
  • One in six children (16.6 per cent) live in poverty. That amounts to 761,000 children.
  • The poverty rate soared to 14.6 per cent in the March quarter of 2020 due to Covid-19 restrictions.
  • But it fell to 12 per cent – a 17 year low – in the June quarter of 2020 due to boosted income support payments - The boosted payments brought 646,000 people – or 2.6 per cent of all people – out of poverty.
  • The child poverty rate rose from 16.2 per cent in the September quarter of 2019 to 19 per cent in the March quarter of 2020, then fell to 13.7 per cent – a two-decade low – in June 2020.
  • Average weekly incomes of people in poverty (from different-sized families) are $304 below the poverty line. This is known as the poverty gap.
  • The poverty gap increased steadily from $168 a week in 1999 to $323 in March 2020 and fell to $310 in June 2020 due to the extra Covid-19 income support.
  • Boosted income support pushed weekly social security payments for single adults with no private income from $134 below the poverty line to $146 above it. Single parents with two children went from $119 below to $176 above the poverty line. Couples with no children went from being $152 below to $411 above the poverty line while couples with two children went from being $187 below the poverty line to $361 above it.

The study was based on ABS data for the 2019-20 financial year, which is the latest available. The 13.4 per cent poverty rate and 16.6 per cent child poverty rate are the yearly average.

The poverty line is defined as 50 per cent of median after-tax household income, adjusted for household size.