A poverty of policy


Screen Shot 2015-10-17 at 5.51.35 pmNICK CATER

The Australian, 12 January 2016


It is hard to say which notion captivated Australians least in Bill Shorten’s Year of Ideas. Certainly nothing that has emerged so far is likely to rouse the masses, let alone offer a serious alternative in tackling the nation’s challenges. 

To say that Shorten has a mountain to climb before the next election understates his ­predicament. He’s staring at the north face of the Eiger with nothing but a beach towel and a frisbee.

How would a Shorten government tackle the ballooning welfare bill that is forecast to rise to well over a quarter of a trillion dollars a year by 2026?

The imminent release of the party’s revised social policy may answer that question. Then again, it may not. “Funding” is not a word that crops up often in the speeches of Labor’s welfare spokeswoman Jenny Macklin.

Instead she promises “a suite of social policies fit for a modern, inclusive Australia”, “a new agenda for inclusive growth”, and a rejection of “excess inequality”, all of which sound like excuses for redistributing wealth rather than constructing an effective and affordable safety net.

Macklin cites the World War 11 writing of William Beveridge, the brains behind the British welfare state, as the basis for her claim that the private sector is not capable of producing enough jobs and that full employment and the “equalisation of wealth, income and opportunity” is the responsibility of the state.

Meanwhile, back in the real world, the task of reforming our creaking, complex and profligate welfare system cannot be delayed much longer. The only thing more disturbing than its cost is that it doesn’t do what it is supposed to.

If welfare is a safety net to prevent people down on their luck from falling into poverty, too many are falling through its cracks. In any case, the genuine relief of poverty demands something more than a Centrelink payment. It requires giving those who struggle to overcome the friction of everyday life the wherewithal to get their lives back together. On this measure, the system is performing abominably.

Anyone who imagines that increased spending alone will make the system any better than it is today clearly hasn’t been paying attention. The assumption of the architects of the welfare state, that dignity could be restored to the dispossessed simply by giving them money, has proved dangerously naive.

The unfeasibly large level of government spending required to maintain a deeply flawed system is at last concentrating political minds on providing welfare more effectively and efficiently.

First, however, we need to find the language to talk about it. The argument that welfare should be cut simply to save money is political poison, particularly for parties of the centre-Right. Labor and the Greens must know full well the system needs fixing, but are unlikely to pass up an opportunity to boost their self-proclaimed compassionate credentials.

Yet it is centre-Right governments in New Zealand and Britain that are making the most progress in welfare reform. They have done so by toning down the rhetoric about balancing books and rediscovering core liberal-conservative principles of choice and opportunity. For Robert Menzies the goal of a Liberal government was to preside over a country that was both prosperous and just. “To every good citizen the state owes not only a chance in life but a self-respecting life,” he said in 1943.

The tendency on the Left has been to see welfare as an end in itself, the means to “lift people out of poverty” rather than a step towards self-sufficiency, or what the Left prefers to call empowerment. Former British prime minister Gordon Brown’s inflated claim to have lifted hundreds of thousands of children out of poverty illustrates how fallacious that approach can be.

The majority of those “lifted from poverty” under Brown remained in workless households where incomes had increased above the arbitrary line of 60 per cent of the median wage by a combination of tax credits and a recession-induced fall in average earnings. It is a moot point whether any of those families noticed a material difference in their lives.

This has led some, such as the conservative British think tank the Centre for Social Justice, to reject any definition of poverty based purely on income. The CSJ has identified five pathways to poverty: family breakdown, educational failure, worklessness and benefit dependency, addiction and serious personal debt.

Underpinning the new approach to welfare in Britain is the conviction that welfare is almost always a subprime solution. It is far better that people be in charge of their destiny, with the dignity that comes from work.

There is nothing overtly political about a policy designed to reduce moral hazard and make work pay. Innovative programs designed to reduce family dysfunction and reduce the number of children living in workless households deserve support from both sides. Yet in Australia, as in other developed economies, it is the centre-Right that is doing the hard yards, while the Left all but ignores the fundamental flaws in our welfare system.

In Australia the Coalition government has spent its first term laying the groundwork for reform that has the potential to pay dividends. Patrick McClure’s report, commissioned in the early days of Tony Abbott’s government, made the case for streamlining the payments system and pointed to other areas requiring attention.

An unexpected bonus from Malcolm Turnbull’s cabinet reshuffle is that he now has two members of his senior team driven by the imperative of welfare reform, Social Services Minister Christian Porter and Treasurer Scott Morrison.

Improving the welfare system is a long-term task. Success will not come from grand schemes or bureaucratic fixes. Welfare, to use the old cliche, means changing the world one life at a time. On this at least Macklin grasps the enormity of the challenge. “Social policy reform,” she says, “doesn’t have a ­finish line.”