A record run of economic growth has lifted living standards, but more than 2 million Australians still live in poverty

Don Arnold/Getty Images
  • Most Australians have benefited from the past 27 years of economic growth.
  • But the rate of poverty is still at 9%, or 2.2 million people.
  • Analysis by the Productivity Commission suggests that each generation is still better off than its predecessor.

Poverty has remained a stubborn fact of life in Australia despite a long run of economic growth, according to analysis of inequality by the Productivity Commission.

The Productivity Commission report shows that the past 27 years of sustained growth have delivered significantly improved living standards for most people but that poverty remains unchanged.

This is a contrast with the US where income distribution is much more uneven, with income growth in the lower income groups about a quarter of that for Australian households.

“Inequality in Australia is a topic that draws diverse and competing views,” says Productivity Chair Peter Harris.

“Yet unlike economic growth, no single metric is going to be definitive.

“While the perception often is that the glass is half empty, the most accurate picture that can be drawn from the data suggests that each generation is still better off than its predecessor, and that movements in inequality indexes are slight rather than serious.”

Most are doing well:

Source: Productivity Commission

The report shows Australia’s tax and transfer systems substantially reduce income inequality.

Australia redistributes less income, relative to other OECD countries, but does a much better job of targeting this to low income earners.

The report also looks at economic mobility, a gauge of whether the rich always remain rich, and the poor always poor.

A healthy level of mobility is an indicator of economic opportunity.

Mobility in Australia is higher than in most OECD countries with widespread movement across the income levels.

For example, 75% of people in the top income group moved to lower income groups 15 years later.

But the rate of poverty in Australia is still about 9%, or 2.2 million people.

Jobless families (households with at least one child under the age of 15 and no paid work) experience the highest poverty rates, followed by jobless child-free households.

Retirees also experience higher poverty levels than working households, but less than unemployed households, reflecting a combination of superannuation income and the higher rates of the Age Pension compared to the Newstart Allowance.

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