Featured Research

Productivity Commission Highlights Problem of Persistent Disadvantage

5 September 2018

Life Course Centre research has been prominently featured in the Productivity Commission’s latest report on the state of inequality in Australia.

The report cites work from a wide range of Life Course Centre Researchers, Chief Investigators, Partner Investigators and Affiliates, and we are proud that our research has helped to inform this important discussion on inequality in Australia and its social impacts.

The Productivity Commission’s ‘Rising inequality? A stocktake of the evidence’ report, published August 2018, brings together and takes stock of the latest and most complete evidence measuring the prevalence of, and trends in, inequality, economic mobility, poverty and disadvantage across Australian society.

While the report shows that almost three decades of sustained economic growth in Australia have delivered improved living standards for the nation, it also highlights that the problem of persistent disadvantage remains unaddressed.

In launching the report, Productivity Commission Chair Peter Harris said: “Inequality in Australia is a topic that draws diverse and competing views. Yet unlike economic growth, no single metric is going to be definitive”.

He also commented that: “the most accurate picture that can be drawn from the data suggests that each generation is still better off than its predecessor, and that movements in inequality indexes are slight rather than serious”.

Much of the mainstream media coverage on the release of the report has focused on the ‘good news’ headline finding of growth in all income groups in recent decades.

Importantly, the Productivity Commission report does not look just at the distribution of income in assessing inequality, but also considers wealth, consumption, economic mobility and the impact of life cycle events.

One clear finding of the report is that the rate of poverty in Australia is still about 9% (or 2.2 million people) despite the country enjoying so many years of continued economic growth.

“…if there is one lesson for the future out of our analysis of inequality, it is this: despite 27 years of uninterrupted economic growth, and unemployment stabilising at a notably lower level (generally starting with a 5 and not a 7 or an 8), and significant investment in redistribution of income via Family Tax Benefit and child care assistance in the 2000s, and a boost to indexation of the age pension late in that decade, we still have 9 to 10% of Australians living on very low incomes,” Peter Harris told the National Press Club at the release of the report.

“It has varied a bit throughout that period but today, for 2 million or so people, we are where we were thirty years ago. It is not the same 2 million, as the mobility data shows. But the proportion of our society apparently doing very poorly should have reduced over that 30 years.”

So, despite Australia’s sustained economic growth, it is not all goods news and the Productivity Commission report points to poverty and entrenched disadvantage having remained stubbornly high.

The report examines deep and persistent disadvantage as a multidimensional concept that can take the form of low economic resources (poverty), inability to afford the basic essentials of life (material deprivation) or being unable to participate economically and socially (social exclusion).

It says people living in single parent families, unemployed people, people with disabilities and Indigenous Australians are particularly likely to experience income poverty, deprivation and social exclusion. For people in these circumstances, there is an elevated risk of economic disadvantage becoming entrenched, and the risks are particularly elevated for children living in jobless households.

The 2018 ‘Rising inequality? A stocktake of the evidence’ report follows a previous Productivity Commission report on inequality published in 2013. This publication provided important impetus for the Life Course Centre in 2014 and it is very pleasing to now see our research heavily cited in the most recent report.

This shows our research, in particular our pre-publication Working Papers Series, is having an impact among non-academic researchers and informing and shaping important discussion and debate in line with the mission of the Centre.

Selected Life Course Centre research cited in the Productivity Commission report includes:

• Cobb-Clark, D., Dahmann, S., Salamanca, N. and Zhu, A. 2017, Intergenerational Disadvantage: Learning about Equal Opportunity from Social Assistance Receipt, Working Paper Series No. 2017-17, ARC Centre of Excellence for Children and Families over the Life Course, University of Queensland, Brisbane.
• Huang, Y., Perales, F. and Western, M. 2016, ‘A land of the “fair go”? Intergenerational earnings elasticity in Australia’, Australian Journal of Social Issues, vol. 51, 3.
• Martinez, A. and Perales, F. 2017, ‘The Dynamics of Multidimensional Poverty in Contemporary Australia’, Social Indicators Research, 130, pp. 479–96.
• Martinez, A., Rampino, T., Western, M., Tomaszewski, W. and Roque, J.D. 2017, ‘Estimating the contribution of circumstances that reflect inequality of opportunities’, Economic Papers: A Journal of Applied Economics and Policy, vol. 36, 4, pp. 380–400.

The full Productivity Commission report can be found here.