In 2005-06 the HILDA Survey moved towards providing a full set of
household financial accounts on a longitudinal multi-year basis. A full set of
accounts, which includes measures of wealth and consumption as well as
income, will enable us to make much improved assessments of trends in the
economic well-being of Australians. In this paper the accounts are used as a
basis for suggesting improved estimates of financial poverty.
National measures of poverty in Australia and other Western countries are
usually based only on low income. But this is conceptually incorrect; the
measures lack validity. To be poor is to have a low material standard of
living – involuntarily. So measures of poverty should also take account of
household consumption and wealth. If a household has an adequate level of
consumption or a reasonable amount of wealth (net worth), it should not be
classified as poor, even if its current income is low.