What is poverty?

Everybody should have enough money or resources for the basic needs of life – enough food for oneself and for one’s family; a roof over one’s head; and resources to cover clothing, education and health expenses.

Poverty is a relative concept used to describe the people in a society that cannot participate in the activities that most people take for granted. While many Australians juggle payments of bills, people living in poverty have to make difficult choices – such as skipping a meal to pay for a child’s textbooks.

How is poverty defined?

Poverty can be defined in different ways. ACOSS and UNSW use two international poverty lines to measure poverty in Australia. These lines are set as a proportion of median income, and define a level of income, below which people are regarded as living in poverty. We use two poverty lines – 50% of median income and 60% of median income, whereby people living below these incomes are regarded as living in poverty.

We also take into account the costs of housing when calculating income – referring to income before or after housing costs are taken into account. We mostly use ‘after housing costs’, because housing is the largest fixed costs for most households. Those households with lower housing costs are able to afford a higher standard of living than those on the same income with higher housing costs. Find out more here. 

Is there poverty in Australia?

Australia is a signatory to the United Nations’ Sustainable Development Goals. The first of these goals is “No poverty”. However, Australia has the 16th highest poverty rate out of the 34 wealthiest countries in the OECD – higher than the average for the OECD; higher than the UK, Germany and New Zealand. People living in poverty in Australia often miss out on essentials such as food or a roof over their heads. Children living in poverty often miss out on items such as school excursions.

Our 2022 report Covid, inequality and poverty in 2020 & 2021: Build back fairer report no. 3 estimated that in June 2020, 9.9% of people were living below the poverty line, compared with 22.7% who would have been in poverty in June 2020 without the introduction of new income supports such as the Coronavirus Supplement and the JobKeeper payment. An estimated 2,613,000 people were in poverty in June 2020, well below the 3+ million in 2019, and half the number that would have been in poverty (5,772,000) in June 2020 had COVID income supports not been introduced. The report further estimated that, as these payments were phased down, poverty increased to 14% at the end of 2020, when the Coronavirus Supplement was reduced to $125 a week, and to 3,820,000 people by January 2021 when it was reduced to $75 a week.

Prior to that, our report Poverty in Australia 2020: Part 1, Overview found that there were 3.24 million people (13.6%) living below the poverty line of 50% of median income – including 774,000 children (17.7%) and 424,800 young people (13.9%). In dollar figures, this poverty line works out to $457 a week for a single adult living alone; or $960 a week for a couple with 2 children.

The report further found that:

  • More than one in eight adults and more than one in six children are living in poverty.
  • Many of those affected are living in deep poverty – the average ‘poverty gap’ (the difference between the incomes of people in poverty in various types of families and the poverty line) is $282pw.
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Who is affected most by poverty?

Most people living below the poverty line in Australia rely on social security for their income. The type of housing in which people live – rental or owner-occupied – also impacts poverty rates. Our second 2020 report: Poverty in Australia 2020: Part 2 – Who is affected?  found that the majority (56%) of people below the poverty line are renting, while only 17% of people in poverty are home-owners who don’t have a mortgage. In fact, the main factor determining the poverty status of older people is their housing status: 41% of renters aged 65 and over are in poverty, compared with just 10% of all people aged 65 and over.

Among different family types, sole parent families have the highest poverty rates, at 35%. Children in sole parent families, with a poverty rate of 44%, are more than three time as likely to live in poverty as children in couple families, who have a poverty rate of 13%.

People with paid employment are also living in poverty in Australia. Among people in households where the main income is wages, 7% are in poverty. This 7% is made up of families with children, those reliant on only part-time earnings, and those with high housing costs. Since most people live in wage-earning households, this group is a substantial part (38%) of all people in poverty.

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Video: Discussion of poverty in Australia

How has poverty changed in Australia since 1999?

The overall poverty rate in Australia wavered between 11.5% and 14.5% from 1999 to 2017. Poverty declined substantially from 13.1% in 1999
to 11.5% in 2003, then rose sharply during the boom years to 14.4% in 2007. Following the Global Financial Crisis in 2007-08 and a pension increase in 2009, it fell to 12.6%, then rose modestly to 13.1% in 2017.12

The main influences on this have been changes to economic conditions and to Australia’s social security system. In 2009 an increase of $32 a week was granted to the single rate of pensions (excluding the Parenting Payment). This increase, combined with the ongoing indexation of pensions to wage movements, played a large part in the decline in the poverty rate between 2007-08 and 2009-10, although we are unable to measure its impact precisely due to other factors such as economic conditions and rent levels. Find out more on our Causes and Solutions page.

Child poverty has fluctuated at a higher rate, between 14.3% and 18.6% from 1999-00 and 2015-16. It followed a similar path to the overall poverty rate before the GFC, decreasing from 18.6% in 1999-00 to 14.3% in 2003-04, then increasing sharply to 18.1% in 2007-08. However, after the GFC child poverty took a different path to overall poverty. It fell only slightly to 17.8% in 2009-10, decreased to 16.5% in 2013-14, then increased to 17.7% in 2015-16.

These changes in child poverty were influenced by economic conditions, as was the total poverty rate, but changes to the social security system since the GFC have had a direct impact on the increase of child poverty. This is especially true for sole parent families. Parenting Payment, upon which many sole parent families are reliant, was excluded from an increase to pensions in 2009. This was exacerbated by the transfer of 80,000 sole parents from Parenting Payment to the lower Newstart Allowance (now JobSeeker) in 2013, and the freezing of Family Tax Benefits (after accounting for inflation). Find out more on our Causes and Solutions page.

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How does poverty in Australia compare with other countries?

In the latest year for which data is available (2016), Australia had the 16th highest poverty rate of 36 Organisation for Economic Co-operation and Development (OECD) countries. The OECD estimated Australia’s poverty rate then as 12.1% (compared with our estimate for 2017-18 of 13.6%, as the OECD uses a different measure of poverty which does not take account of housing costs).

Among the more wealthy OECD countries, Australia is part of an English speaking group, which has poverty rates above the OECD average of 11.8%.

Poverty in the media