As in many other countries, the eighties have seen the re-emergence of poverty as a political issue in Australia. Rising unemployment and the increased incidence of sole parenthood have put more children at risk of poverty, a development which has prompted increased policy concern. This paper presents estimates of the incidence and structure of poverty in Australia in 1981-82, 1985-86 and 1989-90, using the poverty standard developed by the Poverty Commission in the seventies. The estimates for 1989-90 are based on data generated from the 1986 Income Distribution Survey by a microsimulation model that allows for trends in demographic change, labour market participation and income during the second half of the eighties. The results indicate that the overall poverty rate has increased from 9.2 per cent in 1981-82 to 12.8 per cent in 1989-90. This is despite the fact that the incomes of many low income groups have increased in real terms, in many cases substantially. The reason for this apparent paradox is that the poverty standard is a relative one, and has thus itself been increased in line with average community incomes. One of the conclusions of the paper is that it may be necessary to reconsider the use of a relative poverty standard when assessing short-run trends in the extent of poverty.