Vegemite Index and Cloaks of Invisibility: poverty premiums show why it costs more to be poor
For this year’s Anti-Poverty Week (13-19 October) the South Australian Council of Social Service is highlighting examples where it literally costs more to be poor – effectively putting a premium on poverty.
Poverty premiums are a problem because they make it harder for people struggling on very low incomes, and harder for people on higher incomes to understand the experience of poverty.
Examples of poverty premiums that SACOSS is highlighting include:
- The Vegemite Index – as a very Australian example of the extra costs when people can’t afford to buy in bulk.
- Punishing Penalties – as an example of where flat rate charges or fines (e.g. for general littering) have a disproportionate impact on households with lower incomes
- Cloaks of Invisibility – where outdated or flawed understandings of who is seen as being in poverty mean some people miss out on concessions and supports available to others on similarly low incomes
- Low-income Lockouts – where people on very low incomes can’t afford cost-saving technologies and measures
- Petty Penalties – such as charges that are more likely to be applied to those in poverty, for example, financial institutions and creditors charging fees if payments are rejected because of insufficient funds in an account.
The full poverty premiums report is available via the SACOSS website: sacoss.org.au/poverty-premiums
Quotes attributable to Ross Womersley, SACOSS CEO
We’ve given our poverty premiums quirky names but they represent very real and important challenges for people and households trying to manage on very low incomes.
We have taken Vegemite as an iconic brand to illustrate a broad point about poverty premiums – that if you can only afford to buy small quantities of goods, you end up paying more per unit. The brand has done nothing wrong. It is standard business economics relating to costs of transport, packaging and overheads. But it does highlight the extra costs faced by any households who just don’t have enough in the weekly budget to buy in bulk.
Clearly one of the most important things our federal government can do is to raise income support payments to ensure recipients can cover the basics and put enough food on the table.
And while Vegemite might not be doing anything wrong, the SA Ambulance Service could definitely do better. They really need to update their ideas about who might need support. JobSeeker and Youth Allowance are the lowest social security payments, and yet most people on these payments aren’t eligible for a concession. Any concession available to pensioners should be extended to them. Similarly, we need to recognise that today, having a job (or even several jobs) no longer means that people are not in poverty, so we also need to do better in recognising and supporting people in waged poverty.
Finally, our Punishing Penalties show the disproportionate impact that flat-rate fines and charges have on low-income households. SACOSS has long called for income-based fines, because it is just not fair that people on high-incomes get off with the most trivial consequences while the same fine for the same offence causes significant hardship and might cascade problems for people on the lowest incomes.
Some of the poverty premiums we are highlighting seem like small amounts of money, but these all add up and the cumulative effect simply makes it more difficult for those living in poverty. We are asking that governments at all levels, and relevant companies – in particular utilities and financial institutions – to try to remove poverty premiums in their prices, practices and fees.
Quotes attributable to Jeni Harris, Adelaide mother with lived experience of poverty
There’s only so far that any low-income budget can stretch when even essential items are becoming increasingly expensive. To add poverty premiums on top of this makes it even harder.
I would love to be able to buy items in bulk at better value for money – but for me and many others in similar situations, we simply can’t afford it. If I was to get a littering fine, it would take an enormous chunk out of my income and mean I would have to make awful decisions around what I had to give up in order to pay the fee.
Nobody deserves to suffer from poverty, and these extra costs compound the needless suffering of so many