Poverty Before and After Paying for Housing

Abstract

This report presents new data on the incidence of poverty in Australia. The findings are based on recently-released unit records from the Australian Bureau of Statistics' Income and Housing Survey 1981/82 and, for the first time since Professor Henderson's Commission of Inquiry into Poverty, they include an analysis of the effect of housing costs on poverty levels. The paper argues that any analysis of poverty requires an understanding of the relationship between accommodation costs and incomes. In the decade after the Henderson study, the incidence of poverty, defined simply in terms of income, changed little: the IHS showed that 11.6 per cent of income units had incomes below the poverty line, compared with 10.2 per cent in 1972/73. However, the present study found a substantial increase in the extent of poverty after housing outlays had been accounted for, suggesting that access to affordable housing is no longer the cushion against poverty that it once was. In the 1972/73 survey, 6.7 per cent of income units were in poverty after paying for housing, but by 1981/82 this proportion had risen to 11.2 per cent. The analysis investigates the impact of housing tenure on the likelihood of experiencing after-housing poverty and concludes that it is particularly prevalent amongst tenants of private landlords (21.4% of such income units are below the after-housing poverty line), those paying rent to someone in the same dwelling (19.0%) and tenants of housing authorities (18.8%). However, poverty is not exclusive to these tenures and, in terms of numbers alone, the category containing most income units in after-housing poverty was couples with dependent children who were purchasing their homes - mainly because of the sheer size of this category overall. The paper reviews recent government policy on housing and related issues, and notes its differential impact on households in the various tenure types. If the effect of housing on poverty is included - as it clearly should be, as housing is an important indicator of wealth - then the extent of poverty in Australia appears to have increased over the 1970s. After-housing poverty reflects not only the low income levels of those involved, but also the effect of their housing circumstances. Income units below the poverty line experience not only much lower incomes but also significantly higher accommodation costs than other people. The paper concludes that measures aiming to ease poverty must address both aspects of the problem and must incorporate an understanding of the complex relationship between housing and poverty.