Price of poverty hurts us all, yet research reveals an easy fix – Australian Broadcasting Corporation

Report on the Economic and Social Costs of Poverty in Australia in Relation to Sustainable Development Goals

Introduction: Poverty as a Barrier to Sustainable Development

Poverty in Australia presents a significant challenge to the nation’s progress towards the United Nations Sustainable Development Goals (SDGs). Inadequate social safety nets, particularly the JobSeeker payment, directly contravene SDG 1 (No Poverty) and create cascading negative impacts on other key goals, including SDG 3 (Good Health and Well-being), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequalities). This report analyses the multifaceted costs of maintaining poverty, drawing on expert analysis and empirical data from a temporary welfare increase during the COVID-19 pandemic.

Analysis of Current Welfare Policies and SDG 1 (No Poverty)

Australia’s primary unemployment benefit, the JobSeeker payment, is insufficient to prevent poverty. The rate falls significantly below established benchmarks such as the Henderson poverty line and the relative poverty line (half of median household income). This systemic inadequacy undermines the core objective of SDG 1.

• A temporary “coronavirus supplement” introduced during the COVID-19 pandemic effectively doubled most welfare payments, lifting many recipients out of poverty and demonstrating that poverty eradication is an achievable policy choice.
• The supplement was discontinued in March 2021, reversing these gains and returning thousands of families to a state of financial hardship.
• The Economic Inclusion Advisory Committee (EIAC) has stated that the low rate of JobSeeker is a barrier to employment, suggesting that current policy may be counterproductive to achieving both SDG 1 and SDG 8.

Impact on SDG 3 (Good Health and Well-being)

The direct correlation between poverty and adverse health outcomes imposes a substantial burden on individuals and the public healthcare system, hindering progress on SDG 3. Individuals on low incomes are often forced to make choices detrimental to their health.

1. Malnutrition and Poor Diet: Insufficient funds lead to choices between basic needs, such as food and medical care. Reports from welfare recipients include diagnoses of malnutrition and scurvy due to an inability to afford nutritious food.
2. Inaccessible Healthcare: The cost of medication and doctor visits becomes prohibitive. One case study noted that a recipient required antibiotics costing $150 per fortnight for a skin condition.
3. Increased Strain on Public Health Systems: When preventative care and necessary medications are unaffordable, conditions can worsen, leading to costly emergency services and hospitalisations. A preventable week-long hospital stay on intravenous antibiotics costs taxpayers significantly more than providing adequate income support.

Economic Implications for SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reduced Inequalities)

Research indicates that maintaining poverty may be more expensive for society than eliminating it. The costs are borne by taxpayers through increased demand on public services and lost economic potential, which directly impacts SDG 8 and exacerbates the wealth gap addressed in SDG 10.

Quantifiable Costs of Poverty

• Child Poverty: A report by the NSW Council of Social Service quantified the annual cost of child poverty in New South Wales at $60 billion, equivalent to 7.8% of the gross state product. This includes $25 billion in direct costs and $34 billion related to diminished health and life expectancy.
• Economic Stimulus: The $20 billion coronavirus supplement demonstrated that low-income individuals have a high propensity to spend, boosting consumption by an estimated $4.5 to $5 billion and stimulating the economy.
• Social Return on Investment: Research by Mandala Partners found that raising JobSeeker payments to 90% of the age pension would deliver a $24 “social return” for every $100 invested. This return is realised through:
  • Government savings from fewer hospital and GP visits.
  • Reduced mental healthcare and justice system costs.
  • Intergenerational benefits from improved childhood development.

Policy Frameworks and Recommendations for SDG Alignment

Current policy frameworks appear misaligned with sustainable economic and social objectives. The government spends approximately $4 billion annually on private job service providers, a system whose compliance framework has been found to be “not operating in alignment with the law.” Experts argue these funds could be more effectively used for direct income support.

Policy Considerations

1. Increase Income Support: The EIAC recommends raising JobSeeker and related payments to approximately 90% of the age pension, arguing this would alleviate poverty without creating a disincentive to work, thereby supporting both SDG 1 and SDG 8.
2. Invest in Prevention: Acknowledging the high societal costs of poverty—in healthcare, justice, and education—requires a shift towards preventative investment in social security. This aligns with the long-term vision of the SDGs.
3. Recognise Poverty Alleviation as an Economic Tool: Providing adequate income support is not merely a social expenditure but an economic investment that yields measurable returns through improved health, increased economic participation, and reduced strain on public services.

The evidence suggests that lifting people out of poverty is a policy choice with significant positive implications for Australia’s commitment to the Sustainable Development Goals. The social and economic costs of inaction are substantial and avoidable.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article primarily addresses issues related to poverty, health, inequality, and economic well-being, which directly connect to several Sustainable Development Goals (SDGs). The central theme of the article is the struggle of individuals living on unemployment benefits in Australia and the broader societal and economic costs of poverty.

• SDG 1: No Poverty

  This is the most prominent SDG in the article. The entire text revolves around the experience of living in poverty, the inadequacy of welfare payments (JobSeeker), and the temporary relief provided by the “coronavirus supplement.” It explicitly discusses poverty benchmarks like the “Henderson poverty line” and the “relative poverty line.”

• SDG 3: Good Health and Well-being

  The article establishes a strong link between poverty and poor health outcomes. Melissa Fisher’s personal account of being diagnosed with “malnutrition and scurvy” and having to choose between food and medicine is a direct illustration. The article also cites research showing that “poverty is associated with poorer rates of health” and that raising income support leads to “fewer hospital and GP visits.”

• SDG 10: Reduced Inequalities

  The article highlights the significant inequality experienced by those on low incomes. The chart from the Grattan Institute visually represents the gap between unemployment benefits and the median household income. The discussion about the JobSeeker payment being “far below the average of similar nations” also points to inequality on an international scale.

• SDG 8: Decent Work and Economic Growth

  The article connects poverty and social support systems to economic participation and growth. It mentions that the Economic Inclusion Advisory Committee (EIAC) believes the low JobSeeker rate may be a “net negative for workforce participation, since poverty is a barrier to employment.” Furthermore, it discusses the economic stimulus effect of increased welfare payments, noting that recipients “are going to go out and spend it,” boosting consumption by “$4.5 billion and $5 billion.”

• SDG 4: Quality Education

  While not a primary focus, the article connects poverty to educational outcomes. It cites research stating that “poverty is associated with… lower rates of education.” It also implies that alleviating poverty supports education, as children can “grow up in households that can afford to… send them to school with everything they need to succeed.”

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the issues discussed, several specific SDG targets can be identified:

1. Target 1.2: Reduce poverty in all its dimensions

   By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions. The article directly engages with this target by discussing Australian poverty measures like the “Henderson poverty line” and the “relative poverty line.” The temporary “coronavirus supplement” is presented as a policy that, for a brief time, lifted many people above these lines, demonstrating that reducing poverty is a “policy choice.”

2. Target 1.3: Implement social protection systems

   Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable. The article’s entire focus is on Australia’s social protection system, specifically the JobSeeker payment. It critiques the adequacy of this system and analyzes the impact of increasing payments, which aligns directly with the goal of implementing effective social protection.

3. Target 3.8: Achieve universal health coverage

   Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines for all. Melissa Fisher’s story is a case study in the failure to meet this target for vulnerable populations. Her inability to afford doctor visits and essential antibiotics, which cost “$150 a fortnight,” demonstrates a lack of financial risk protection and access to affordable healthcare, leading to more severe health outcomes and costly hospitalizations.

4. Target 10.2: Promote universal social and economic inclusion

   By 2030, empower and promote the social, economic and political inclusion of all. The article discusses the work of the “Economic Inclusion Advisory Committee (EIAC),” whose very name reflects this target. The debate over raising JobSeeker is framed as a matter of economic inclusion, ensuring that unemployed individuals and those with disabilities can meet basic needs and participate in the economy.

5. Target 8.5: Full and productive employment and decent work

   By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities. The article touches on this by noting that poverty itself is a “barrier to employment.” The EIAC’s finding that the low JobSeeker rate is a “net negative for workforce participation” suggests that inadequate social support hinders the achievement of this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article mentions or implies several indicators that can be used to measure progress:

• Proportion of population living below the national poverty line (Indicator 1.2.1)

  This is explicitly mentioned. The article refers to the “Henderson poverty line” and the “relative poverty line, which is half of median household income.” The included chart visually tracks the unemployment benefit rate against these specific poverty lines over time, serving as a direct measurement tool.

• Proportion of population covered by social protection floors/systems (Indicator 1.3.1)

  The article provides a figure for the number of JobSeeker recipients (“830,000 recipients”), which is a direct measure of the population covered by this specific social protection program. The adequacy of the payment level is the central question for measuring the effectiveness of this coverage.

• Proportion of population with large household expenditures on health (Indicator 3.8.2)

  This is strongly implied through Melissa Fisher’s testimony. Her need to spend “$150 a fortnight” on antibiotics, a significant portion of her income, illustrates the high financial burden of healthcare costs on low-income individuals. Her subsequent hospitalization, which “costs taxpayers potentially thousands of dollars a day,” is an indicator of the consequences when preventative care is unaffordable.

• Prevalence of malnutrition (Indicator 2.2.1)

  While related to SDG 2 (Zero Hunger), it is used in the article as a key health indicator. Melissa’s diagnosis of “malnutrition and scurvy” due to her inability to afford nutritious food is a stark and measurable indicator of the severe health impacts of poverty.

• Economic costs of poverty

  The article introduces specific economic indicators to measure the cost of poverty and the return on investment from alleviating it. The NSW Council of Social Service report quantified the cost of child poverty in NSW at “$60 billion every year.” Research by Mandala Partners calculated a “$24 ‘social return'” for every “$100 invested” in raising JobSeeker, providing a clear metric for evaluating policy effectiveness.

4. Summary Table of SDGs, Targets, and Indicators

Source: abc.net.au