LCC Working Paper Series: 2014-08


Arturo Martinez Jr. and Francisco Perales

Non-technical Summary

Poverty measurement and monitoring is of key importance for policy planning. Having a good understanding of what specific factors are responsible for national increases in poverty enables policymakers to devise more effective and cost-efficient policies aimed at tackling disadvantage.

There is growing recognition in academia and among the public that being ‘poor’ is not simply lacking money, but also suffering from ill health or disability, not having an appropriate home, feeling unhappy with one’s life, or lacking a decent level of education. However, the bulk of existing research on poverty in Australia still uses over-simplistic poverty measures that are based solely or largely on income indicators.

We contribute to the Australian body of evidence on poverty by considering a multidimensional measure of poverty that is not confined to people’s income, but also considers information on their health, education, employment, safety, social support, and community participation. Additionally, we employ a novel analytical technique that enables us to determine how much of the year-on-year changes in national poverty rates are due to changes in each of the domains outlined before.

Our findings suggest that about 35% of the Australian population can be considered ‘marginally disadvantaged’, 5% ‘deeply disadvantaged’, and 1% ‘very deeply disadvantaged’. Multidimensional poverty in Australia has remained fairly stable between 2001 and 2012, but this overall picture of stability masks substantial changes in its different components. For example, recent favourable changes in employment and education have lowered poverty, whereas recent unfavourable changes in materials resources and health have increased it.

Altogether, our findings underscore the importance of taking a more holistic approach to understanding and tackling poverty and disadvantage in Australia. High levels of disadvantage are clearly against the Australian ideal of a ‘fair go’, hamper national social progress, and present true challenges to sustainable economic growth. Researchers, policy makers and other stakeholders need to redouble their efforts to ensure that the benefits of current economic growth become accessible to all Australians; else this benevolent economic spell will be remembered historically as a lost opportunity to create a fairer and more equal society.


November 6, 2014