From poverty to possibility: charities look for practical solutions to help low income earners

The cost-of-living crisis continues to hurt millions of people across the country, and research has revealed that the highest cost is being borne by those who are least equipped to bear it – people struggling to get by on low incomes.

Recent studies by Anglicare Australia and St Vincent de Paul have lent academic weight to the mountain of anecdotal evidence that financially poorer members of the community must fight harder to keep their head above water.

The organisations have tackled the issue of improving the lot of people suffering poverty and financial stress from different angles: one has proposed a fairer tax and welfare system and the other has looked at inequities in the prices paid for basic items across income levels.

I think this paragraph might be a red herring. I'd assume most of the people discussed in the modelling later in this piece are renters, not home owners. That's why I suggest deleting this. It helps keep the focus on the charity reports.

Problematic pricing

A study by Anglicare Australia titled The Poverty Premium: The high cost of poverty in Australia revealed Australians already doing it tough face higher living costs than those financially better off.

The report compared prices for people who can afford to pre-pay, buy in bulk, or find value in key living expenses compared to those who can’t.

It found consumers are penalised if they can’t afford to buy groceries in bulk, pay costs annually instead of monthly, or upgrade to a more efficient car.

The study contained numerous examples of people on low incomes who reported spending:

• 10% more on fuel for less efficient cars
• 20% more on energy
• 23% more on public transport
• 142% more on mobile phone data

Some low-income earners spent up to 93% more on groceries.

Anglicare Australia executive director Kasy Chambers said people on lower incomes often pay more for the same essentials.

“Our research shows that it costs more to be poor,” she said.

“People pay more because they can’t afford to buy in bulk or shop around.

“They pay penalties if they’re forced to live further away from their work and communities, and the best credit deals are for people with high credit scores and healthy bank balances.

“These extra costs are a poverty premium, punishing people who are already earning less.”

The report revealed that low-income earners can pay up to one and a half times more for the same service, pushing some into debt spirals as they desperately try to juggle costs.

Others forego essentials by skipping meals, missing medical appointments, and avoiding paying for insurance, leading to negative consequences down the track.

“These numbers show us that Australians doing it tough need real action, and real leadership,” said Ms Chambers.

Anglicare Australia called for a plan to stop the lowest paid Australians from being pushed deeper into poverty, saying the plan should include:

• raising the rate of Centrelink payments
• making the minimum wage a living wage
• creating cheaper insurance and energy options for people who need them.

“People on low incomes did not create Australia’s cost-of-living crisis,” said Ms Chambers.

“They shouldn’t be asked to pay a higher price for it.”

St Vincent de Paul Society national president Mark Gaetani said if implemented, the recommendations of the report would make a significant contribution to improving the wellbeing of thousands of Australians doing it tough.

“Our reforms reduce inequality and will significantly reshape the lives of vulnerable Australians by lifting them out of poverty and reducing financial stress,” said Mr Gaetani.

He said the changes would benefit low to moderate income households by requiring a small number of high-income and high-wealth households to pay around $3,000 a year extra in taxation.

“Seeing people sleeping rough is a harsh reminder that more must be done to help those in need,” said Mr Gaetani.

“This help can only come from those sections of society that can afford it. We look to the government to make structural changes to increase equality.”