Poverty Disadvantage

But Australia has a number of stubborn structural factors that embed poverty and disadvantage.

Globalisation and corporate power

Capitalism has lifted innumerable people out of poverty over the last two centuries, significantly increased standards of living, and resulted in innovations that have radically improved human health and well-being.  But, as the ‘the worst economic system, except for all the others’, its shortcomings have been ever more exposed when the interests of short-term profit are put before people.  

In Australia, the abuse of market power can keep prices (and profits) high and disadvantaging those on low incomes the most.  With a relatively small population and the concentration of companies, it is not surprising that there is a wide range of ‘exploitative business pricing practices that enable the extraction of extra dollars from consumers in a way that would not be possible in markets that are competitive’.  An example is the pervasive unethical, harmful and fraudulent conduct by bank staff to drive their commissions and record profits that has cost over half the Australian population up to $201 billion between 2025-2019 exposed by the Banking Royal Commission.

The lack of effective competition and higher prices is evidenced by the fact that we have some of the most profitable supermarket, banking, airline and insurance sectors in the world.

Meanwhile, Australia has one of the highest levels of casual employment in the world, with 2.75 million casual workers, or nearly one in five employees.  An estimated 687,500 casuals want a permanent job, but only a small minority – barely 1 in 15 – have been able to secure it. Up to one third of casual workers report receiving no loading and at least 875,000 casual workers, or again, about one in three, are paid below the national minimum wage.  This creates a lack of basic employee entitlements like paid leave and superannuation, income insecurity, and poor mental and physical health due to precarious working conditions and lack of job security.

It is not surprising that the 2020 Edelman Trust Barometer found that 56 per cent of respondents agreed that capitalism ‘is doing more harm than good in its current form’.  The report also found that high inequality is linked to less trust in government.  The 2025 report confirms the decline in trust of Australians in their employer, especially with low income workers.

Wealth inequality  

Wealth inequality is twice as high as income inequality in Australia and continues to worsen. The share of the nation’s wealth of the bottom 40 per cent declined by around a third since 2004 to around 5.5 per cent. Close to 24 per cent of wealth is held by the top 1 per cent of Australians, well above peer countries such as the Netherlands (13 per cent), Finland (18 per cent), and the UK (21 per cent).  Wealth inequality is getting worse in Australia with the income share of the top 1 per cent nearly doubling since 1980.

With over eight in ten people agreeing that ‘in Australia today, the gap between those with high incomes and those with low incomes is too large’, the top 10 per cent of households ranked by wealth possess 44 per cent of all wealth in Australia. However,  we grossly underestimate just how much the big end of town out-earns the rest of us, with survey respondents thinking CEOs (of publicly listed companies) typically earned 7.1 times an average full-time salary. In fact, the figure is a staggering 103 times.

The increase in house prices and rents, especially since COVID, has meant that property ownership is the main factor in widening the wealth gap, especially between older home and investment property owners, and young Australians on low and modest incomes who are shut out of home ownership and struggle with escalating rents.

As Alan Kohler notes in his Quarterly Essay, ‘it’s destructive because of the inequality that results: with so much wealth concentrated in the home, it stays with those who already own a house and within their families. For someone with little or no family housing equity behind them, it’s virtually impossible to break out of the cycle and build new wealth’.

The result is that from 2003 to 2021 home ownership among people aged 25 to 29 fell from 44 per cent to 38 per cent and for people aged 30-34 it dropped from 57 per cent to 50 per cent, whilst the proportion of median household disposable income required to pay the median rent rose from 26 per cent to 31 per cent.

Australians are facing a rental market that has never been less affordable. Anglicare Australia’s 2024 Rental Affordability Snapshot surveyed rental listings across Australia and found that, out of 45,115 rental listings, only 0.6 per cent were affordable for a person earning a full-time minimum wage; 0.2 per cent were affordable for a person on the Age Pension; 0.1 per cent were affordable for a person on the Disability Support Pension; and none were affordable for a person on Youth Allowance. 

Place-based, intergenerational disadvantage

In Australia, over one in ten of the 2,188 SA2s (Statistical Area 2, averaging 10,000 people) have long-term, multilayered disadvantage with jobless parents; youth not in education, training, or employment; and low-income indicators prevalent. The most overrepresented indicators in the most disadvantaged three per cent of areas in NSW, Victoria, and Queensland relate to public housing, crime, family violence, and unemployment. 

If you are born in Logan, Mandurah, Glenorchy, Christie Downs, Mt Druitt or Broadmeadows, you are highly likely to follow in the footsteps of previous generations and be out of school, unskilled or unemployed; a victim of family violence or abuse; a public housing tenant, suffer from drug and alcohol dependence; mental health issues; and be incarcerated. 

These areas are characterised by high unemployment, low-paid, casualised manual jobs, waves of migrants and refugees, social housing, disaffected youth, and higher crime rates.  Unsurprisingly, research shows that people who live in these neighbourhoods are trapped in poverty.

This persistent poverty is a significant phenomenon in Australian society, with over one in eight of the population found to be persistently poor, especially amongst women, single-parent families, the elderly, and people living in more disadvantaged areas.

Research shows low household income during childhood is a key predictor of disadvantage in later life. Children from households that experienced several years of income poverty, compared with those who did not, are 2.4 times less likely to get a university degree, 1.8 times less likely to be full-time employed, and 1.3 times less likely to have a permanent, ongoing job.  They are also more likely to suffer early adult poverty (3.3 times more likely), to live in social housing (up to 2.5 times), and to experience financial stress (2.5 times more likely) than children from non-poor households.

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Government income support 

Around 2.4 million Australians receive income support payments (excluding the Age Pension), including: JobSeeker Payment for adults of working age; Youth Allowance for jobseekers aged 16 to 21 years; Carer Payment to reflect duties that reduce the capacity for paid work; Parenting Payment for principal carers of young children; Disability Support Pension (DSP) for those with defined impairments to work; and Student payments for those in defined education and training (including for students, Youth Allowance, Austudy, ABSTUDY).

The system includes other payments, benefits, allowances, and supplements such as Commonwealth Rent Assistance, Family Tax Benefit, Paid Parental Leave, Remote Area Allowance, and utilities and pharmaceutical allowances, and various concessions such as health cards.

The rates of JobSeeker and Youth Allowance have not increased in real terms for 25 years.  For 740,800 Australians, JobSeeker is just 20 per cent of the average wage, 43 per cent of the minimum wage and 69 per cent of the pension. The payment is the second lowest in the OECD. Consequently, 60 per cent of households relying on JobSeeker live below the poverty line.

The inadequacy of income support payments harms people’s mental and physical health. More than eight in 10 respondents to a 2024 survey said that receiving income support negatively affected their physical health, and nine in ten said it negatively affected their mental health. Three-quarters said they could not access healthcare and medicine because they cannot afford them.  The survey also found that sufficient food is a discretionary item for people receiving income support. More than two-thirds of people reported reducing their intake of fresh fruit, vegetables, meat, and other expensive items, with nearly two-thirds stating that they skipped meals or ate less to get by (or both). 

People on benefits go to great lengths to pay their energy bills. Nearly seven in ten reported reducing their use of heating and cooling to afford energy bills, and six in ten said they go without food or medicine to be able to pay their energy bill.  One in three said that they have an energy debt. 

Australia’s income support system should play a key role in poverty prevention. However, many income support payments are inadequate on their own to prevent poverty. Consequently, where income support is the main source of income for a household, there is a very high risk of that household living in poverty. 

Education, training and employment

Education is a lifeline to escaping poverty. 

The Smith Family notes that ‘children and young people living in disadvantage have access to fewer books and learning materials in the home.  In many cases, the parents of disadvantaged children may not have the skills or experience to support their child’s education. As these children get older, they have fewer role models and access to mentors and networks that are critical for creating educational opportunities to help them build their aspirations and be motivated to learn.

With those who have only completed Year 12 or below twice as likely as those with a bachelor’s degree to end up in the lowest ten per cent of income, only around 60 per cent of young people growing up in poverty complete Year 12, compared to 83 per cent in high socioeconomic areas.

Indeed, the relationship between education and poverty is 'one of double jeopardy: not only are the poor unlikely to participate in all levels of the education system to the same extent as the advantaged, but their experience in education is less likely to result in favourable outcomes'. This 'double jeopardy' perpetuates the cycle of poverty.

This lack of educational attainment inhibits progress towards gaining the training and skills needed to enter the workforce, with the Australian Government expecting that over the next 10 years, more than nine out of ten new jobs created will require post-secondary qualifications.  

In short, people with low levels of education are more likely to be unemployed and to be unemployed for longer.

The historic mismatch between the skills employers need and those that the education and training systems produce is another barrier.  For people already in poverty, low wages are cited as one reason that the completion rate for apprentices and trainees has stayed around fifty per cent, with female enrolments in apprenticeships in core trades such as carpentry, automotive and electrical remaining below two per cent.  

Then there is the challenge to enable those with lower educational attainment and non-vocational barriers to get into employment.  Enter the Australian government’s $2 billion a year employment services, now called Workforce Australia.   A 2023 Parliamentary Inquiry was damning, finding that ‘Australia no longer has an effective, coherent national employment services system; we have an inefficient, outsourced, fragmented social security compliance management system that sometimes gets someone a job against all odds. The system does not effectively serve job seekers or engage service partners. The Inquiry goes on to conclude that ‘it is clear that the overwhelming majority of unemployed people want to work. But the current rigid approach to mutual obligations is killing unemployed people’s intrinsic motivations and efforts to seek work, by drowning them and those paid to help them in a mountain of red tape, compliance requirements and pointless mandatory activities. People are made to do silly things that don’t help them get a job—such as pointless training courses or applying for jobs they won’t get—and are then harshly and repeatedly sanctioned for trivial or inadvertent breaches of prescriptive’.

Meanwhile, the relatively low reported official unemployment rates mask that nearly three million Australians are either underemployed or out of work, equivalent to one-fifth of the current workforce.  Even for those in work, the rise in the casualisation of jobs to around 25 per cent of employment has resulted in an increase in the working poor with 2.6 million casual employees earning $11.59 less per hour than their permanent counterparts, a pay gap of 28.6 per cent which has been growing steadily since 2016 and is now the highest on record.

Tax system

With around two-thirds of Australians saying the tax system either does nothing to reduce income and wealth inequality, or actually makes it worse, the regressive nature of Australia’s tax system does not help those in poverty.

Personal income taxes are progressive, whereby tax rates increase with income. Households in the lowest 20 per cent pay only four per cent of their overall income in income taxes on average, compared with 15 per cent for the middle 20 per cent and 26 per cent for the highest 20 per cent. 

However, the progressive impact of income taxes is largely offset by the regressive impact of other taxes, such as the Goods and Services Tax, which raises almost twice the share of household income from the lowest 20 per cent of households compared to the top 20 per cent.

Furthermore, we have a tax system that gives preferential treatment to income from assets, such as discounts to capital gains tax, negative gearing, superannuation tax concessions and family trust arrangements, which are used most by older and wealthier Australians.  

As superannuation earnings and withdrawals are not taxed over the age of 60, a retiree household, earning $100,000 per annum, can pay less than half of the tax of a working household with the identical income, purely based on age. 

The result is that, in the past ten years, the Australians over 60 have earned an income around 11 per cent higher than those aged 18-30.

Indeed, we have a system where each year the richest 10 per cent get nearly $22bn a year in tax breaks to use superannuation – nearly double the $12.2bn the government spends funding public schools and $5bn more than the $16.9bn spent on jobseeker.

As well as older Australians earning significantly more private income, government expenditure targeting older Australians – such as the age pension, aged care and health care – has increased significantly in real, per-person terms. In contrast, net expenditure targeting younger households remains relatively constant.

This combination of tax and government spending policies means that Australians over 60 have an average after-tax income 60 per cent higher than those aged 18-30.

This intergenerational inequity in our tax system was front and centre at the Commonwealth government’s August 2025 economic reform roundtable.  The Treasurer, Dr Chambers, now recognises that ‘intergenerational fairness is one of the defining principles of our country, but also of our government’.  

With over a quarter of large companies not paying income tax and technology companies paying a fraction in tax compared to their revenue, it is not surprising that three-quarters of Australians believe big corporations don’t pay enough tax and nearly two-thirds support the implementation of a Windfall Profits Tax.

The last major review of the tax system by Ken Henry recommended an equitable, transparent and simplified personal income tax with a much higher tax-free threshold.  In 2024, he commented that the ‘cost-of-living pressures people are feeling today are the consequence of a lack of genuine tax reform over the last 15 years’.

The Grattan Institute has proposed the halving of the capital gains tax discount, negative gearing limited in line with most other comparable countries, and home equity above $750,000 be included in the Age Pension assets test. But with the heavy political cost of tax reform (most recently with Bill Shorten’s Labor losing the ‘unlosable election’ in 2019 on an election platform that included changes to both negative gearing and the Capital Gains Tax (CGT) discount), any party risks angering a significant proportion of the electorate.

With Australians set to inherit an estimated $3.5 trillion over the next 20 years, in the greatest wealth transfer in the nation's history, there are calls for the reinstatement of an inheritance tax which was abolished in the 1970s in line with 24 of the 38 OECD countries.

Cost of living crisis

The recent rise in interest rates and prices of essential goods and services, such as fuel, mortgage payments, rents, utilities, and healthcare, has caused the recent cost of living crisis. Whilst wealthier households have managed their higher expenses by cutting back on discretionary spending and dipping into savings, lower income households spend a much larger portion of their income on housing and other essentials.

The cost of living crisis has made it harder for low-income households to afford basic necessities like food, housing, and utilities, leading to increased food insecurity, housing stress, and a rise in child poverty, with the most vulnerable experiencing a decline in living standards and increased financial hardship; and, ultimately, pushing more people below the poverty line. 

Gambling

At a record $31.5 billion and rising, so large are Australia’s annual gambling losses that they now eclipse what governments spend on aged care and what is spent on the National Disability Insurance Scheme.  This represents the largest per capita losses in the world.

An estimated 3.1 million Australian adults are engaged in some form of harmful gambling, which is linked to financial stress, family violence and poor mental health. Nearly two-thirds of Australian adults have gambled at least once in the past 12 months, a 14 per cent rise in the last five years. Nearly one in three adults gamble at least monthly.  Younger adults are particularly affected with 18–24-year-olds who gamble regularly nearly twice as likely to be at high risk of harm compared to older age groups.  

Among the 550,000 high-risk gamblers in Australia, over two-thirds have cognitive, behavioural or mental health conditions, two-thirds experience financial hardship (such as going without meals) and one in six experienced suicidal thoughts. One in five of those whose partner gambled weekly or more experienced intimate partner violence.

More concentrated in low income areas, poker machines account for the most gambling losses in Australia at $12 billion with gamblers in poorer suburbs losing more than three times the money to poker machines compared to gamblers in more advantaged areas.

Lower-income households are particularly vulnerable, as the rising cost of essential goods and services further squeezes already tight budgets, leaving even less room for unexpected expenses, emergencies, or discretionary spending. 

Gamblers who had problems spent much more of their households' income on gambling than other regular gamblers, with those experiencing severe problems in low-income households spending an average of 27 per cent of their disposable household income on gambling - equivalent to four times their yearly household utility bills, or more than half the grocery bills for that income group.

Intimate partners and children of gamblers are worst hit, and the ripple effects of gambling on families include emotional and mental health impacts, physical health problems and addiction, breakdown of family and social relationships, conflict, intimate partner violence, and child maltreatment.

Climate change

Climate change exacerbates existing socioeconomic disadvantages by disproportionately impacting low-income Australians, who often live in areas most vulnerable to extreme weather events like heatwaves, floods, and bushfires, while lacking the financial resources to adapt, leaving them more susceptible to housing insecurity, increased energy costs, and health risks due to poor housing conditions. 

ACOSS estimates that there are about 1.8 million low-income households in Australia that cannot afford to escape extreme temperatures because they're stuck in inefficient homes that are expensive to warm or cool. With very hot days and heatwaves becoming more common, Australians experiencing financial and social disadvantage are worst impacted through homes with poor energy efficiency, high energy prices, low incomes, and health conditions.  

ACOSS’ 2024 public, online Heat Survey found that more than half could not cool their home because they do not have air conditioners or fans, have them but they are broken or could not afford to run them.  People in social housing or private rental have limited control to modify their home or access working efficient air conditioners to better deal with extreme temperatures. Eight in ten reported that exposure to high temperatures in the home had negative physical and mental health impacts, making them unwell. For many, the heat seriously aggravated existing chronic health conditions.

Lack of government targets

Unlike other countries, and possibly deterred by the Prime Minister’s promise at a speech at the Sydney Opera House that ‘by 1990, no Australian child will be living in poverty’ and the continued lack of progress to the Close the Gap targets, our governments have avoided measuring, setting, and reporting on targets.

Worse, as the Australian government notes, and unlike 160 other countries, we have no official poverty measure in Australia and no single, agreed, objective indicator of poverty.

We only need to look to our neighbours. New Zealand has legislated a target to halve child poverty to less than ten per cent by 2028.  Similarly, the UK has a target to reduce the rate of children in poverty by 2027/28 to 6 per cent on the material hardship measure; 5 per cent on the before-housing-costs income poverty measure; and 10 per cent on the after-housing costs income poverty measure.