A Bleak Future…

The Committee receiveda great deal of evidence on the impact of poverty on young people. Of most concern was the impact on the education of young people and therefore their employment prospects. Witnesses painted a bleak picture of young people struggling to continue their education and training in households where there is very little money for even the basic necessities of life. As has already been noted in the Committee’s chapter on education, low-income families find it difficult to fund the educational needs such as uniforms, books, excursions and computer equipment (Page 270).

For many young people leaving school early is an easy option. However, without an adequate education there are very few opportunities for a successful working career. The labour market in Australia has changed and unskilled young people face the prospect of few full-time jobs and many part-time or casual jobs (Page 270).

Many examples were provided of young people forced out of home due to family breakdown and to financial stress. Where young people are forced into inappropriate and transient accommodation or even homelessness, maintaining an educational program or a job is extremely difficult. SACOSS stated:

“By the time you reach our service, school is one of the last things on your mind, and they have been out of that system for a long time. You cannot sustain education if you have nowhere to live and you cannot sustain education and keep up with your peers if you are moving. Again, it goes back to the transitional housing, the lack of response and the lack of ability for people and families who are very poor to be able to stay in one place” (Page 271).

Finding affordable and secure accommodation is a major issue facing young people, particularly those in low paid work, insecure employment or who receive government benefits. The Smith Family noted that many younger single people are struggling in the private rental market. Low-income young singles have the highest rate of housing stress of any type considered by The Smith Family study Barriers to Participation, with almost four in every five low-income young singles reporting housing costs that exceed 30 per cent of their disposable income (Page 271).

The Hunter Council of Social Services commented:

“…the youth Newstart Allowance and even those who get their independent rate, the living away from home rate, or the homeless rate, as people like to know it, accommodation is the same cost regardless of the income you get from Centrelink. For a young person who is homeless, to access accommodation is near impossible: a one-bedroom flat is around $110 to $150. An adult has got a higher chance of getting it purely because the income they receive from Newstart is a higher amount purely based on age” (Page 271).

Homelessness may become the only option for young people who cannot find affordable accommodation, who face discrimination in the private rental market or who have no income because of breaching:

“I don’t have a house ’cause you stopped my payment and I could not pay rent” (Page 272).

For some unemployed youth, lack of developmental opportunities and isolation may lead to mental health problems. One Australian study, which examined mental health of unemployed youth, found that the majority of unemployed youth with psychological problems were not suffering from these problems prior to unemployment. Another study found youth who become unemployed after leaving school suffered from greater unhappiness, boredom, anger with society, loneliness and helplessness than employed school leavers (Page 272).

There are also a number of long-term consequences of youth poverty and unemployment. Once out of the workforce, reemployment may become harder due to low self-esteem and isolation. Some youth, disillusioned with the prospects of employment, may opt out of the labour market altogether. For youth who experience unemployment, there is evidence that they are more likely to experience low hourly wages, underemployment, repeated unemployment, and increased periods of unemployment. They become part of the ’working poor’ and may lose skills or fail to develop new skills. This captures young people, and ultimately their families, in a cycle of poverty (Page 274).

Students and Poverty

While it is acknowledged that education is an important pathway out of poverty, as mentioned above, many young people cannot access education or cannot complete their education because of the lack of financial resources. Those continuing with tertiary education often do so in the face of poverty which is exacerbated by low levels of income support, high costs of living including accommodation and high costs of equipment and books (Page 289).

It was argued that the large levels of poverty amongst the student body are due in part to the inadequate levels of income support payments. University students studying full-time are eligible for one of three income support payments: Youth Allowance (for those in full-time study under the age of 25 years), Austudy (full-time students over 25 years) or ABSTUDY. These payments were designed to facilitate access to the education system for students who are unable to provide their own financial support. However, it was argued that payments are currently at such low levels and have such stringent restrictions on eligibility that they effectively keep people in poverty while they are studying (Page 289).

ACOSS research indicated that in July 2002 those receiving Youth Allowance and Austudy payments are well below the poverty line, with a single adult student receiving Austudy being 39 per cent below the poverty line and those on Youth Allowance 20 per cent below (Page 290).

Student bodies noted that the payment for Austudy was $82 per week less than the payment received by unemployed people due to a lower benefit payment and that Austudy recipients cannot receive Rent Assistance. Rent Assistance is available to those receiving Youth Allowance but only if they are considered ’independent’ (Page 290).

Young people are dependent on their parents until the age of 25 unless they can prove that they are independent. There are strict definitions of independence under the Youth Allowance regulations. Students who do not meet the criteria for independence, are deemed to be dependent on their immediate family, irrespective of whether they receive financial support or not. It was argued that many students cease receiving financial assistance from parents well before they turn 25, even if they live in the family home. MUSU stated: (Page 291)

“Even if students are staying at home, it is not necessarily the case that their parents will support them. Some of the students who are working the most who are struggling the most are actually students from middle-class backgrounds who are living at home but whose parents are not supporting them. Therefore, the age of 25, being deemed the age of independence, is unrealistic insofar as students are supporting themselves from a much earlier age. To assume that, at the age of 25, they have been supported by their parents for the previous six or seven years is somewhat farcical. It is simply not the case” (Page 291).

If a student is deemed to be dependent, the parental or family income is means tested in assessing the student’s entitlement to assistance. The parental means test was seen to be poorly targeted. Payments are reduced after the parental income threshold of $28,150 per annum. This was considered to be too low and excluded many students from income support, yet the parents or partners of these students did not earn enough to support them. One student commented on the impact of the stringent parental income test:

“I am not eligible for Austudy because the government says my dad earns too much. I live with him and his second family and three half-sisters who are much younger than me. I can’t afford to live on my own and feel a real burden on my father. I don’t like asking him for money because he always seems to be worried about making ends meet” (Page 291).

Many students seek to be classified as independent by earning the required amount of income for the independence test. This can place a huge burden on students:

“On a personal level, for me to access youth allowance, because my father was just over the threshold, I had to work every Thursday and Friday night, all day Saturday and all-day Sunday, plus I had another job which would interfere during the week. I failed subjects that year. I earned the money. I was able to access the independent rate for youth allowance, but I failed” (Page 292).

While casual employment allows students flexibility to fulfil their coursework and study requirements, casual labour is often unstable and unreliable. There is no permanent and ongoing employment contract and casuals are not entitled to employment benefits such as sick leave and holiday leave. Students undertaking casual work often find it difficult to plan study activities and are uncertain about their level of finances from week to week. There is also pressure to work more hours to compensate for the lack of employment benefits and lack of employment security (Page 293).

The NUS commented:

“The fact that students have to work such long hours to survive while trying to further their education has implications for the whole sector, and the value that students can gain from their education. The Australian Vice Chancellor’s Committee expressed this view in their submission to the Senate Committee into Higher Education: there is growing concern that students’ work obligations in part time, and sometimes full time, employment prevents them from gaining optimum value from their studies. The effort of holding down a number of jobs hinders students from attending all their classes or having sufficient time for out of class study” (Page 294).

The Students Union of the University of South Australia concluded:

“There can be no doubt that the quality of students’ educational experience is diminished by long hours of employment, student stress and tiredness. It also raises questions about the long-term social impact on graduates who have not been able to adequately engage with their studies due to the pressures of low finances and long hours of employment” (Page 294).

The rising cost of living has also had a significant impact on student incomes. While there have been increases in costs of food, utilities and travel, it is accommodation and the cost of books and equipment which has had the most severe impact. Rents in inner city areas have increased substantially and this has created great difficulties in accessing accommodation near to educational institutions for many students. While moving to an outer suburb may appear to be an option, the increased costs of travel and the impacts on time for work and study make it untenable. In Sydney for example (back in 2003), students typically spend two-thirds of their income on rent. In Melbourne, a two-bedroom apartment that could be rented for $154 a week in 1981, cost $250 in 1999, and in 2022, cost $430. The already severe accommodation problems faced by students are even more difficult for Austudy recipients as they do not receive Rent Assistance (Page 294).

Students relying on income support are about three times as likely to take out a loan to continue their studies. The NUS noted that students from equity groups are also more likely to take out a loan, including students with a disability, people who move to study, those form low socioeconomic backgrounds and women with children or Indigenous women. The Union concluded that ’thus the most marginalized students are more likely to start their working lives with sizeable debts from their study’ (Page 296).

In 2003 the average student left with a debt (excluding HECS) of $4000, and in 2020 this figure was $9390.

The Union stated that ’supplement loans prey on the fact that government income support is so far below the poverty line, ensuring that students who are reliant on income support graduate with an even greater level of indebtedness’. The NUS recommended that Supplement Loans be abolished, and student income support increased (Page 296).

Indebtedness is also increased through HECS fees. In 2003, students accumulated a HECS debt of between $11,000 and $30,000 (Page 296), in 2020 this figure had increased to $23,000 to $50,000

It was argued that in order to minimise poverty and inequality it is imperative that student debt not be worsened by further increases and deregulation of the HECS fee. NUS concluded:

“These two combined effects are going to lock students into a life of poverty while they are at university and seriously affect the life choices of students once they graduate. Things like buying a home, starting a family and building their savings are already being affected, with students having to carry HECS debts of $20,000, $30,000 and even higher. If HECS fees are going to increase again, the life choices of more and more students are going to be affected. Our economy, our society and our culture are all going to be dramatically affected by having so much of our young Australians’ money locked away in a debt to society” (Page 297).

The Salvation Army considered that ’the reticence of government in providing adequate funding for students is perplexing given that tertiary education is actively encouraged and promoted by government’:

“The other key issue is the low amount of student subsidies and students become dead averse to the prospect of living in absolute poverty while at university combined with the fact of coming out of university with a substantially large student debt. Many students, especially those from rural and regional areas, those from Indigenous areas and those simply from a working-class background are turning away from university, and that is a particularly frightening fact. In this report, NUS focuses very clearly on a number of student groups that are most heavily affected, including women, queer students and students from Indigenous backgrounds. These three groups are groups that suffer substantially. Women are a very good example because we all know, I am sure, that women find it particularly hard to pay back their HECS debt throughout their working lives. With HECS increasing, it is quite likely that almost two in every five women will never repay their HECS debt after graduation, and this is particularly concerning” (Page 299).

NUS commented that with HECS increasing, “it is quite likely that almost two in every five women will never repay their HECS debt after graduation, and this is particularly concerning” (Page 297).

Reference: Senate Community Affairs References Committee Secretariat, E. Humphery, C. McDonald, P. Short, L. Peake, and I. Zappe. (2004). A hand up not a hand out: Renewing the fight against poverty, Report on poverty and financial hardship. The Senate Community Affairs References Committee Secretariat, Senate Printing Unit, Parliament House, Canberra. Pages 270 – 299.