There is no official poverty measure in Australia and no single, agreed, objective indicator of poverty or financial stress. Poverty measurement is a complex and multidimensional concept.
The most common poverty measures, including that used by the OECD, focus on income based approaches. One of the most common measures of income poverty is the proportion of households with income less than half median equivalised disposable household income (which is set as the poverty line); this is a relative income poverty measure as poverty is measured by reference to the income of others rather than in some absolute sense. Australia has one of the highest household disposable incomes in the world, which means that an Australian relative income poverty line is set at a high level of income compared to most other countries.
OECD statistics on Australian poverty 2013–2014 (based on ABS Survey of Income and Housing data and applying a poverty line of 50% of median income) determined the Australian poverty rate was over 26% before taxes and transfers, but falls to just under 13% after taxes and transfers. Though measuring poverty through application of solely an income measure is not considered comprehensive for an Australian context, however, it does demonstrate that the Australian welfare system more than halves the number of Australians that would otherwise be considered as at risk of living in poverty under that measure.
It is important to consider a range of indicators of persistent disadvantage to understand poverty and hardship and its multidimensional nature. Different indicators point to different dimensions of poverty.
While transient poverty is a problem, the experience of persistent poverty is of deeper concern, particularly where families experience intergenerational disadvantage and long-term welfare reliance. The Household, Income and Labour Dynamics in Australia Survey (HILDA) data from the Melbourne Institute of Applied Economic and Social Research shows the Distribution of number of years in poverty
2001–2015. The figure focuses on the longer term experience of working age adults and shows that while people do fall into poverty, only a small proportion of people are persistently poor.