Measuring Poverty in Australia—The Role of Income

Abstract

Despite Australia's long history of independent poverty research, successive governments have failed to adopt official poverty measures. There is broad agreement among poverty researchers and advocates that at least two types of poverty measures should be adopted: income-based measures and direct or multidimensional measures of living standards. This article focusses on income-based measures. It outlines key methodological choices faced by researchers including income definitions, the treatment of housing and other assets, and optimal poverty thresholds. To assess the validity of a poverty line set at 50% of median equivalent household disposable income, we compare the profile of people in households with incomes below this level and those experiencing multiple deprivation of essentials. The article concludes with broad guidance on the development of optimal income-based poverty measures for Australia.