Degree Name

Master of Commerce


Department of Economics


The paper attempts a comprehensive investigation of the question of poverty and begins by placing the problem in its economic perspective as part of the overall economic problem. The poor themselves, are well aware of the matter of "the scarcity of resources" and their difficulty centres on their relative position to that of the rest of society.

But while most people have a vague notion of "poverty" as it exists in society today, they are often unaware of the distinction between absolute and relative poverty. While cases of absolute poverty still occur in Australia, the incidence of this has decreased over the years, but the continuing inequalities of income and wealth distribution still leaves a significant proportion of Australians deprived of the minimal levels of health, housing, food and education that our present stage of scientific knowledge specifies as necessary for life as it is now lived in this country.

The O.E.C.D. countries have also initiated international efforts to develop standardised social indicators which will give a more accurate view of the degree of well-being world-wide.

National studies of poverty have concentrated their efforts on the distribution and level of income as the prime measure of poverty. Consequently, this leads to the identification of persons receiving very low incomes, indicating those most in need. Those outside the workforce and unable (or unwilling) to work, are excluded from the income earning population. Many of these people are outside the workforce through no fault of their own and include the elderly, the sick, the unemployed, female heads of young families and children from such families. These people are dependent on social security payments for an income. Henderson and others found that most poverty existed amongst these social welfare recipients as the amounts of payment were below an austerely drawn poverty line.

The total taxation system in Australia is regressive on the lower income groups when indirect taxes are taken into account. Little research has been done in Australia which considers the combined effects of taxation and the incidence of public expenditures.

The Commission of Enquiry into Poverty (1975) constructed detailed indices and poverty lines in their efforts to measure the extent of poverty and to identify the characteristics of the poor. Given the limitations of these studies, they were nevertheless valuable in providing benchmarks and demonstrated that 10.2% of Australian adult income units were "very poor" while a further 7.7% were "rather poor". Present methods of measuring poverty would indicate that international comparisons of the level of poverty in various countries because of the different concepts and definitions involved are virtually meaningless.

Once the characteristics of the poor are identified, policies can be formulated to change these characteristics in some way, or at least ease the hardship of persons suffering from their inadequate economic ability. There has been a great deal of work and evidence gathered to identify exactly who the poor are in Australia and the particular problems they face in meeting their "normal needs as average persons (employees) regarded as human beings, living in a civilized community" (Justice Higgins, 1907).