Henderson Poverty Line
The Melbourne Institute has a long history of studying poverty in Australia – a legacy created by the Institute’s foundation director, Professor Ronald Henderson.
In 1966, the Institute of Applied Economics began the first systematic attempt at measuring poverty in Australia by estimating the extent of the problem in the city of Melbourne.
Following the widely publicised results of the study, then Prime Minister William McMahon launched a Commission of Inquiry into Poverty in August 1972, with Ronald Henderson appointed as Chair.
Later that year, the newly-elected Whitlam Government extended the size and scope of the Inquiry, asking it to determine:
- the extent of poverty in Australia
- the groups most at risk of experiencing poverty
- the income needs of those living in poverty, and
- issues relating to housing and welfare services.
These issues were addressed in the Commission’s first major report, Poverty in Australia, which was released in August 1975.
In his report, Henderson sought to identify the extent of poverty in Australia in terms of inadequate income relative to need. Any family with an income below what was considered to be representative of an “austere” standard of living – a poverty line – was considered to be living in poverty.
The poverty line was set at a benchmark income of $62.70 for the September quarter of 1973, which was roughly equivalent to the value of the basic wage plus child endowment (an earlier version of family allowance) for a reference family of two adults and two children. Adjustments were then made for other types of household.
An important feature of the work of the Commission of Inquiry into Poverty was the public release of a wide range of research studies examining different aspects of poverty in Australia. These studies explored several topics related to poverty, such as law, education, mental illness, disability and consumer protection.
Following the Commission of Inquiry, the Melbourne Institute began publishing quarterly updates to the poverty line, which was widely referred to as the Henderson Poverty Line. This work continues today, making it a valuable source of longitudinal data on poverty in Australia.
Beyond the Poverty Line
Following the release of the Commission's reports, the Henderson Poverty Line became the standard used by researchers to gauge progress in the community.
However, issues such as the move away from the traditional male breadwinner model, the end of full employment and problems updating the poverty line have led to the increased use of alternative income- and consumption-based poverty lines.
- Buddelmeyer, H. and Verick, S. (2008), ‘The Dynamics and Persistence of Income Poverty in Australia’, Economic Record, vol. 84, issue 266, pp. 310–321. (An earlier version appeared as IZA Discussion Paper No. 2827).
- Henderson, R.F. (1975), Poverty in Australia: First Main Report, April 1975, Commission of Inquiry into Poverty, AGPS, Canberra.
- Henderson, R.F., Harcourt, A. and Harper, R.J.A (1970), People in Poverty: A Melbourne Survey, Cheshire, Melbourne.
- Johnson, D (1987), ‘The Calculation and Use of Poverty Lines in Australia’, Australian Economic Review, 4th quarter, pp. 45–55.
- Johnson, D (1996), ‘For the Student: Poverty Lines and the Measurement of Poverty’, Australian Economic Review, 1st quarter, pp. 110–126.
- Johnson, D (1996), Poverty, Inequality and Social Welfare in Australia, Physica-Verlag: Heidelberg, Germany.
- Wilkins, R (2007), ‘The Changing Socio-Demographic Composition of Poverty in Australia: 1982 to 2004’, Australian Journal of Social Issues, Vol. 42, No. 4, 481–501. (An earlier version appeared as Melbourne Institute Working Paper No. 12/2007).