Old, Single and Poor: Using Microsimulation and Microdata to Analyse Poverty and the Impact of Policy Change among Older Australians*

In recent months in Australia there has been extended debate about whether the age pension, particularly with regard to single pensioners, is sufficiently high to allow older Australians to attain an acceptable standard of living. This is an important policy consideration given Australia's rapidly ageing population. By using microdata and microsimulation models, this paper examines the national and spatial impacts on the distribution of poverty among older single people of an increase in the single age-pension rate. This paper shows that the cost of increasing the single age-pension to 66 per cent of the couple-age pension rate would be about $A1.3 billion and would benefit about 824,000 single age-pensioners. Further, it is estimated that such an increase would reduce poverty rates for lone older persons from 46.5 per cent to 36.5 per cent, a 10-percentage point reduction. Looking at the spatial distribution of such benefits, the effect of the policy change seems to be generally stronger in capital cities, and in bands of rural areas in New South Wales and Victoria. Copyright (c) 2009 The Economic Society of Australia.