How poverty impacts homelessness

(Article updated: 17/10/2018)

More than 3 million Australians live in poverty. Anti-Poverty Week is a time to acknowledge the impact of income inequality and intergenerational poverty. This week we look at the causes and consequences of poverty in Australia, and recognise that poverty can divide the community, creating a wall between people and opportunities to improve their lives.

So what is poverty?

Poverty is about financial disadvantage – not being able to afford the basic necessities of life that provide a minimum standard of living. Living in poverty makes it extremely difficult to participate as a member of the community, whether in education or training, in paid work or socially.

Poverty increases the risk of homelessness. The Australian Homelessness Monitor (The Monitor) revealed that with more 116,000 Australians experiencing homelessness on any given night, the causes of homelessness are complex, with no single trigger. Individual, interpersonal, and structural factors all contribute.

Why is poverty a key contributor to homelessness?

The Monitor shows poverty underpins the risk of homelessness by increasing the factors that influence pathways to homelessness. Housing costs can impact poverty levels for low income households, and the turbulent housing market conditions we’ve seen this decade have a stronger and more immediate impact on homelessness rates than other economic trends.

The incidence of income poverty (after housing costs in Figure 8) reveals that unemployed and Newstart claimants are most at risk.

(Figure 8 from Australian Homelessness Monitor)

(Figure 9 from Australian Homelessness Monitor)

Poverty can impact all individuals, but those most at risk in Australia are families with children as they struggle to pay rental costs that are more than 30% of their income.

New research recently released from UNSW and ACOSS reveals more than 3 million people living below the poverty line and an alarming 739,000 are children.

Income Supports

There’s been a sharp rise in the number of people receiving Newstart Allowance over the last decade. This is partially due to consecutive government policies that have tightened eligibility for the Disability Support Pension as well as some changes in conditions for (Single) Parenting Payments.

Newstart recipients receive $341 per fortnight less than the equivalent Disability Support Pension, a rate inadequate as private rents continue to rise.

For Australians on Newstart Allowance, the levels of poverty are much higher than for people who are on the Disability Support Pension. The incidences of people living in poverty on Newstart Allowance is 55% compared to 36.2% for Disability Support Pension recipients.

(Figure 10 Australian Homelessness Monitor Overview)

Income Payment Penalties

Governments have imposed increasingly restrictive compliance conditions to those on Newstart Allowance. This means recipients are at greater risk of being penalised for things like missing appointments or activities, meaning they are more likely to have their income support cut or restricted.

There has been a fivefold increase in the number of sanctions recorded between 2011 and 2016; these can involve the suspension of payments when a recipient breaches Centrelink conditions.

For people on low incomes, such penalties are likely to have a significant impact on their financial circumstances causing further risk of homelessness.

(Figure 11 from Australian Homelessness Monitor)

There are other social-economic trends contributing to rising rate homelessness in the Australian population. You can find what they are in Australian Homelessness Monitor Chapter 2.

What needs to happen?

This Anti-Poverty Week is a time to acknowledge the impact of income inequality and intergenerational poverty. And we need to recognise and address the causes of homelessness at a systems level. The Australian Government must lead and develop a coordinated policy response to homelessness with the state and territory governments. We need to align efforts to implement dedicated housing, income support and homelessness policies.  Good policies and programs can reduce homelessness.

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