Monitoring poverty – Australia needs to raise its game

Extreme poverty exists in Australia but is rarely measured or reported on. That could all be about to change, Peter Saunders writes.

Each year, Anti-Poverty Week serves to draw public attention to poverty in Australia, including how much exists and what can be done about it. The media highlights some of our starkest failings and occasional successes, and poor families explain their struggles and miseries, but soon the week passes and people move on.

Such events are an important vehicle for promoting the need for action, but action rarely follows because those with the power to act know not only that action costs money (and a sound diagnosis of the issue), but also that the topic will not feature in next week’s headlines.

However, all this may be about to change, driven by developments from an unexpected source.

In September 2015, the 193 members of the United Nations General Assembly formally adopted the Sustainable Development Goals (SDGs) to replace the Millennium Development Goals for the period up to 2030.

Goal 1 of the SDGs is “to end poverty in all its forms everywhere”. The first two targets within that goal are: by 2030 eradicate extreme poverty for all people everywhere; and by 2030, reduce by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions.

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Speaking at the UN Assembly, Foreign Minister Julie Bishop described the SDG poverty reduction goals as “an ambitious, bold – and necessary – objective”, adding, “In giving effect to the new agenda, we can share lessons from our own experience”.

Although many Australians think that the first of these goals is only of relevance to the poorest countries in the world where extreme poverty is concentrated, the SDGs apply to all countries. Even Australia will need to ensure that extreme poverty is identified and eliminated over the next decade or so.

Existing household surveys suggest that small pockets of extreme poverty do exist in Australia, although those affected may be facing only a temporary drop in income, may be self-employed and facing lean times, may be able to draw on other resources to fill the gap, may have had their welfare payment cancelled or suspended because they have failed to meet compliance requirements, or may simply have understated their income.

Against this, the surveys used to measure poverty are household surveys and thus do not cover the groups most likely to be experiencing extreme deprivation: groups like the homeless refugees and others living in institutional settings.

We should not kid ourselves that extreme poverty does not exist within our midst, even if those affected never feature in the poverty statistics.

The second SDG poverty reduction target is significant for several reasons. Firstly, it refers to individuals who are poor, not to individuals who are living in households that are poor – existing poverty measures only capture the latter.

Second, the reference to ‘poverty in all its dimensions’ implies moving beyond a narrow income-based approach to identifying and measuring poverty – as is now common in academic studies of poverty.

Finally, the reference to assessing poverty trends ‘according to national definitions’ raises particular challenges for Australia, since we do not have an agreed national definition of poverty.

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Following the adoption of the SDGs, the World Bank established the Commission on Global Poverty to advise it on how best to measure and monitor poverty over the period up to 2030. The Commission – headed by eminent economist Professor Sir Tony Atkinson, who sadly passed away soon after its completion – made a number of recommendations that are designed to close the gap between the measurement of extreme poverty in a global context, and how individual countries measure and assess their own performance in a national context.

It recommended that a new International Poverty Line (IPL) be developed for each country that maintains the real value of the existing ‘dollar a day’ line in that country. All countries would also be required to produce a regular National Poverty Statistics Report (NPSR) that will set out the local currency value of the IPL and its relation to official poverty lines used in the country, and provide details of national trends in poverty using both the IPL and other national measures.

The World Bank has already endorsed the NPSR recommendation, describing it as a “demanding requirement”, but one that is fundamental to “better link the global poverty monitoring exercise to poverty analysis undertaken at the national level.”

This requirement will mean that Australian authorities will no longer be able to hide behind a veil of ignorance when explaining how the country identifies and measures poverty and how much of its different forms exist. It will hopefully serve to bring Australia closer to world’s best practice when it comes to poverty measurement and anti-poverty policy development.

Julie Bishop was right to say that we can share lessons from our own experience. It may not be an edifying prospect for many of our policymakers, but they need to raise their game, and the world will be watching.