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The centralized welfare state at the crossroads

By Philip Mendes - posted Tuesday, 22 November 2016

The Australian government currently spends 158 billion dollars a year on welfare which is about 35 per cent of total government spending of $450 billion. This is a large amount of money which is expected to grow to 270 billion by 2020. Yet few stakeholders seem satisfied with the outcomes of this spending.

The current Coalition government, influenced at least in part by neoliberal agendas, claims that welfare spending is out of control and unsustainable. The government has adopted what they call a Priority Investment Approach to social welfare which aims to reduce the numbers of people long-term reliant on income security. An actuarial valuation of the income support system undertaken by Price Waterhouse suggested that 3 specific groups: young carers, young parents and young students were at particular risk of long-term reliance.

Consequently, the government has promised to invest in strategies such as the "Try, test and learn" fund that will improve the individual lives of long-term recipients by enabling them to move from welfare to employment. But critics have already raised concerns that the government's agenda may simply result in people who are poor and socially excluded on income security being shifted to situations of equal or even greater poverty and social exclusion without income security.


What seems to be missing here is an acknowledgement that outcomes for individuals reflect both individual agency and choice (as often highlighted by conservatives) and the social context of people's lives as reflected in the availability of positive and supportive social and community connections or what is called social capital (also defined as processes of social trust and cooperation).

This is by no means to deny that some individuals from disadvantaged backgrounds utilize resilience to achieve very successful lives. A number of important case studies of this nature are presented by Sara Hudson in the latest issue of the neoliberal Centre for Independent Studies Policy Magazine (Spring 2016). But oddly Hudson fails to mention in her conclusion – although it is detailed in her case studies – that virtually all these high achievers had significant mentors such as teachers or employers. It was positive social capital as well as individual determination that transformed their lives.

Of course, progressives have recommended a very different approach to the Coalition government. Most notably, ACOSS have long recommended a $50 per week increase to the Newstart Allowance for the unemployed on the grounds thatthe low payment leaves many recipients living in poverty. Such an increase has been specifically rejected by the government.

Other commentators have similarly argued that the government needs to address the broader structural (not just behavioural) causes of disadvantage. For example, John Falzon from St Vincent de Paul (writing in The Guardian) urged the government to invest in jobs, education and affordable housing instead of pushing people below the poverty line.

Similarly, Jack Waterford (writing in the Sydney Morning Herald) emphasized that assisting the long-term unemployed into work would require major intervention at individual, family and community levels.

And Andrew Hamilton (writing in Eureka Street) argued that the priority should be assisting the human welfare of vulnerable people, rather than saving money, and that any welfare system should be judged on whether their basic needs are met.


Overall, the progressive critique seems to be rightly questioning why we are spending so much time and money on the stick (that is paternalistically monitoring the poor and ensuring that they comply with a range of mutual obligation requirements with the most extreme example being the growing number of compulsory income management programs), instead of the carrot (that is targeting resources to assist their participation and social inclusion). Yet at the same time, there is little detailed discussion of what a more liberal, democratic, participatory and arguably more effective income security system might look like. Even an increase in Newstart whilst mildly alleviating poverty, would arguably do little in isolation to transform the lives of people cut off from positive social and community support and connections.

This limited debate also begs the question of what the service users think. We spend huge amounts of money to supposedly help people, but then hardly bother to consult income security recipients as to whether they view existing services and payments as meeting their needs.

In my opinion, we need to start considering radical alternatives to the status quo. One possibility might be a guaranteed minimum income (GMI), that is a scheme by which every citizen is guaranteed a basic income above the poverty line which is not tied to any work test or behavioural conditions.

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This is the text of an address to the Port Phillip Community Group AGM by Philip Mendes.

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About the Author

Associate Professor Philip Mendes is the Director of the Social Inclusion and Social Policy Research Unit in the Department of Social Work at Monash University and is the co-author with Nick Dyrenfurth of Boycotting Israel is Wrong (New South Press), and the author of a chapter on The Australian Greens and the Israeli-Palestinian Conflict in the forthcoming Australia and Israel (Sussex Academic Press).

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