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Monday, October 18, 2004

NATSEM Report damns Howard

The SMH is running an "analysis" (via AAP) of the NATSEM report on low income families. Read the SMH for the positive spin, read my rant for the negative (there you go - balance). This report deals only with the bottom quintile of income earners in Australia.

  • The report only covers people with children. Hence anyone who does not qualify for FTB is not included. Self employed workers or people with zero or negative income are ignored. In short, this is the best case report for the lowest quintile.
  • Unsurprisingly, the job growth in this sector in part-time (growing from 6.4% in 1997 to 10.6% in 2004)
  • The number not in the workforce has increased (growing from 43% in 1997 to 48.8% in 2004)
  • The number of full time employees has fallen from 19.5% to 17.5%
  • The average (and remember - beware of means!) income of the bottom quintile is $554 compared to the national median of $972 per week.
  • The real mean income of the quintile has increased by $87. The CPI increase for food and education are significantly higher than the combined CPI used to calculate the "real" figures in this report (Combined = 20%, Food = 27%, Education = 44%).
  • The percentage of increase of the lowest quintile was 18.5% - including the 5% average increase following the 2004 budget. I.E it really was 13.5%. The total median increase for Australia was 18% with obviously less impact of the 2004 budget.
  • The gap has not closed between poor and middle income families.
  • "...confirm that the income gap between middle families and the poorest families has remained fairly constant between the late 1990s and today. The modest gains made by the bottom quintile between 1997/98 have mostly been eroded by 2004/05."
  • Incomes from employement fell for the bottom quintile in relation to the overall mean.
And some tasty nuggets from the conclusion of the report that the SMH writer obviously didn't read:
While average real incomes for the bottom quintile rose between 1997/98 and 2004/05, the average incomes of bottom quintile families have not moved closer to the incomes of all families.
The fall in real incomes of hypothetical families with older children (where those older children are not in the labour force) provides some evidence that low income families not targeted by improved transfer payment arrangements are at risk of falling behind.
In addition, increases in average income for the bottom quintile do not necessarily translate into improved standards of living for this group, especially in light of the increases in indirect taxes associated with the introduction of the Goods and Services Tax (GST) in July 2000. 1 Because low income families often spend all of their income (or more, if they are drawing on their savings), price increases are likely to have had a greater proportional impact on the types of families focused on in this study than on more affluent families. Increased expenditure has the potential of eroding some of the benefits of improved transfer payments to lower income families.
Many children continue to live in families with no wageearner, and rises in real incomes for the families of these children have not brought them any closer to the economic well-being enjoyed by average Australians.
Even allowing for the assumptions on "real" income growth or the test unit, this report is damning of the last 8 years and clearly shows that economic growth is not translating into prosperity for the poorest Australians. They are being left behind, while the top earners run away with the cream. The government's policy seems to be to run down the poor, then provide a quick boost and run them down again. Meanwhile move them from full-time to part time work and reduce their wages. Trickle-down does not work. Read the report for yourself an then try to understand how the hell this can be reported as "Incomes: the poor get richer".

Update: Even ACOSS is swallowing this one. The late catch up provided to some in the 2004 budget will erode over time and does not address the real issues.


I have also blogged on this one over at C-Files.

"The Poor Are Getting Richer...but so is everyone else".

regards,

HeathG
 

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