CEDA report: More than a million Aussies living in poverty a disgrace

The number of Australians living in entrenched disadvantage is a disgrace and without a radical policy shake-up Australia will never reduce this number or the cost to taxpayers, CEDA Chief Executive Professor the Hon. Stephen Martin has said when releasing CEDA’s latest research, Addressing entrenched disadvantage in Australia, today.

Professor Martin said the past 20 years had essentially been a massive failure by successive governments to address entrenched disadvantage and policies have been economically short-sighted.

“It is a disgrace given more than 20 years of economic expansion in Australia that four to six per cent of the population – one to 1.5 million Australians – is classed as being in entrenched disadvantage, with little to no hope of getting out of that situation,” he said.

“We need to tear up the rule book and have a radical overhaul of how we tackle entrenched poverty. Labour market programs – essentially using a big stick to tell people they’ve got to get a job or face even further financial disadvantage – should not be the primary policy instrument for this group of people.

“It is absolutely clear that labour market policies have not worked because they fail to tackle the heart of the problem and yet it seems they are the only approach successive governments are willing to focus on.

“The main problem often isn’t that people don’t have a job, but the consequence of a range of other issues including education levels, mental health, social exclusion or discrimination.
“It may well be that welfare spending may have to increase but the payoff longer term is potentially significant.”
Professor Martin said it is a complete waste of taxpayers’ money, and short-sighted, to continue to spend welfare money without having effective policies in place to support people to move out of entrenched poverty.

“While there is much media attention on the need to rein in welfare payments such as unemployment benefits, the contribution to welfare payments as a share of GDP in Australia is relatively low compared with other OECD countries,” he said.

“In addition, our report shows that the distribution of welfare payments has been well targeted – about 42 per cent of social benefits go to the lowest 20 per cent of households – compared with the OECD average of around 20 per cent.

“However, the area where we are missing the mark is early intervention. Telling people who do not have a stable home base or in some cases even basic education levels to go and get a job is pointless. People need a stable foundation to start with for labour market programs to work.

“What they need is a ladder of opportunity to pull them up – support to make them employable – not further penalties to push them down”.
Professor Martin said there have been government funded early intervention policies that have worked, but they have not been sufficient to tackle the enormity of the issue.

“This is as much an economic issue as it is a social one. We know for example that children raised in entrenched disadvantage are at high risk of being trapped in entrenched disadvantage as adults,” he said.

“By properly addressing this from an early age we can reduce the burden on government budgets of supporting people later on and increase workforce participation which is good for our economy as a whole.“It is unlikely that any country can wholly eliminate poverty and disadvantage. However, Australia most definitely can and must do better.” Professor Martin said CEDA’s report focuses on three key areas- education gaps, Indigenous disadvantage and mental health – because they highlight significant characteristics of those at risk of chronic poverty.

Key recommendations in the report include:

  • Improving provision of community-based care and early intervention programs to minimise hospital admissions and re-admissions for those with mental illness.
  • Setting policies that are created in collaboration with Indigenous communities and are customisable.
  • Ensuring policies targeted at Indigenous Australians do not impinge on a person’s independence and autonomy, and if they do, ensure they are carefully targeted and on an opt-in basis.
  • Address the intergenerational nature of educational disadvantage by targeting parents and children. Increasing and making better use of existing longitudinal data to develop evidence based policy. 
  • The development of programs that better recognise that people who experience entrenched disadvantage are likely to need help to establish a stable domestic environment before they can transition to work. 
  • Developing life-course, long term policies for high risk individuals with a focus on early intervention. 
  • Subjecting all programs and policies to transparent evaluation that includes follow-up evaluation to ensure they are working in the long term.

The report will be launched at an event in Melbourne, with Victorian Minister for Housing, Disability and Ageing, Mental Health and Equality, the Hon. Martin Foley along with Alison McClelland, Commissioner, Productivity Commission and report advisory group member; and contributing authors Dr Francisco Azpitarte, Ronald Henderson Research Fellow, Melbourne Institute of Applied Economics and Social Research and The Brotherhood of St Laurence and Anne Hampshire, Head of Research and Advocacy, The Smith Family.

The launch event will be followed by a series of events being held in Perth, Sydney, Brisbane, Adelaide and Hobart.

Click here to read Addressing entrenched disadvantage in Australia