Unit 1
Unit 3
Distribution of Income
The Henderson Poverty Line
When people are discussing the distribution of income, it is common to hear an assertion that a certain number of people (or a certain percentage of people) are living “below the poverty line”. To gain a complete understanding of the way in which income distribution is assessed in Australia, you will need to understand this concept.
In1973 Professor Ronald Henderson was the head of the Melbourne Institute of Applied Economic and Social Research, which was the first economic research unit established at an Australian University. In that year his team attempted to calculate the bare minimum that a couple living in Australia would need in order to survive. This was the beginning of the Henderson Poverty Line – any couple that was trying to survive after receiving less money than was calculated as necessary was considered to be “below the poverty line”. At that time, it was believed that an adult couple could survive on $62.70 per week.
Obviously things have changed a lot since 1973! For one thing, we now need to account for many different types of household units. While there are many households that are made up of one adult couple, this does not cover the vast majority of the population. Accordingly, it has become necessary to publish a table that covers couples, single parents, people with children (or other dependents) and even different family units where there is no one who works. New figures are published each quarter. You can find the latest report by clicking here.
In December 2009 the Melbourne Institute published its report as at the September quarter of that year. One interesting fact about the poverty line in that quarter was that it was lower than it had been in the June quarter – it fell by $17.94. This reflects the fact that the overall level of inflation was very low during that period, and the price of some essential items actually fell. This was due, in part, to slightly better weather conditions and therefore better crop yields.
The table that you can see here was taken directly from the December 2009 report. From this you can determine exactly how much the Melbourne Institute believes is the minimum amount that your family would need to survive. For example, if you are thinking about moving out of home and living on your own, according to this table you will need to earn at least $401.48 per week – anything below that and you will be living in poverty. On the other hand if you choose to share with one other person you will need $537.07 between you. A person living on this amount certainly won’t live an extravagant life, but according to this research they will be able to survive in the Australian economy.
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