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Where To For Welfare?

If you read my blogs you might come to the conclusion that I am reasonably opinionated. I certainly have shared with you opinions on some of the more controversial subjects such as politics and religion. But I must confess that there are areas where I feel frustrated that I can’t make up my mind. One particular area where I experience ambivalence is welfare.

In a modern prosperous society it is entirely appropriate that we should care for the needy. But the needy are many and varied and consequently it is often difficult to devise a formula that enables us to treat them all justly. And of course welfare comes at a significant cost to taxpayers. Government is therefore obliged to ensure that welfare is only directed to those in real need and that it is not wasted by bureaucratic inefficiencies and rorting by the recipients.
But as much as we wish to help the disadvantaged, welfare brings its own problems. Almost one in six Australians of working age is reliant on income support. Long-term welfare dependence, which is often coupled with drug and alcohol addiction, child abuse and domestic violence, is overwhelmingly concentrated in disadvantaged communities. Children of jobless parents are more likely to end up on welfare. If these problems are to be overcome, the cycle of dependence must be broken.
Forty years ago, only 3% of working age Australians depended on welfare payments as their main source of income. Today it is 16%. There used to be 22 workers to support each person on welfare. Now there are five.
Australians are wealthier than ever before, and with the right mix of tax and welfare policies most of us could look after ourselves with little help from the government. At the moment, high taxes penalise those who are working, and antiquated welfare rules allow hundreds of thousands of people who could and should be working to live off benefits.
Long-term dependency can have major social and economic consequences. It can lead to erosion of work skills, lower incomes, poorer health and risk of isolation from the community. Long-term worklessness and welfare dependency tends to reduce people’s opportunities to participate fully in society. This means that the productive capacity of the nation is not as great as it could be.

New evidence is also emerging about the impact of long term welfare dependency on the next generation. Research by the Department of Family and Community Services has shown that young people from income support recipient families are much more likely than other young people to leave school early, to become unemployed and to become teenage parents. About one in six young people from income support recipient families are themselves highly dependent on income support between the ages of 16 and 18.

The welfare “trap” is exemplified by the Melbourne Institute’s HILDA (Household Incomes and Labour Dynamics in Australia) survey. The survey shows that for those households that received more than 50 percent of their incomes from government payments in the base year (2001), 76% were in the same position one year later, 55% five years later and 45%eight years later.

Welfare dependence is also a serious issue for our indigenous community. Noel Pearson makes a compelling case that welfare has served to excise much of the indigenous community from the mainstream economy and removed incentive to engage meaningfully with the mainstream economy. We are now faced with the prospect of re-engaging these people after a couple of generations have been sacrificed.

There are many similar victims of welfare in the non-indigenous community. It is common to come across families where a couple of generations have not worked. We learn our social mores from significant others. Children who have not had role models to demonstrate that work can be worthwhile, and often stimulating and satisfying, are more than likely to gravitate to welfare.

Recent work in the field of evolutionary psychology shows that altruism is an evolutionary advantage. Not only that, researchers into human happiness and well being show that indulging in altruism promotes our personal sense of well-being. In many ways altruism is good for us. A desire to help the needy is a good and healthy trait of a developed society.

On the other hand, many of us are concerned about issues of justice and equity. Such folk are affronted when welfare is granted to those whose needs are questionable. They would want us to ensure that such people should at least contribute to the economy what they can, and I suppose that is not an unreasonable expectation. Indeed for many people making a contribution is self-affirming and helpful in contributing to the psychological health of the individual.

Also it seems inequitable that welfare can make some of our population better off than some of the poorest, taxpaying workers. Peter Saunders from the University of Sussex related that the Victorians called this the principle of “less eligibility”. In short this principle advocates that people who work should be better off financially than people on benefits. But additionally people claiming benefits should not enjoy better conditions than those who work.

I want to belong to a civilised society that cares for those who are disadvantaged. I don’t have much concern about paying my taxes to see that end realised. And it seems to me that it will always be difficult to get the balance right between looking after the genuine needy and not rewarding the not so deserving. I am also probably disposed to erring on the side of generosity rather than stringency. But there are many taxpayers in our society who are not as well placed as I am and to whom excessive welfare generosity must seem an injustice.

Maybe some of my readers who are wiser than I might suggest how we could get the balance right?

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  1. 8 Comment(s)

  2.   By Blake on Sep 9, 2012 | Reply

    Ted, Well done on another great blog, well supported with relevant research and statistics. I would be interested in the relationship/correlation of welfare recipients who suffer from mental illness. One of my family suffers from schizophrenia and was hospitalised s few years ago on an involantry treatment order. They did not wish to discose this to Centrelink and subsequenly had her (disbility?) payments stopped several times most likely due to non-communication/compliance. Good opportunity for a follow up – Welfare Pt 2?
    Cheers 🙂

  3.   By Pete Callaghan on Sep 10, 2012 | Reply

    Hi Ted .. This is a topic of importance to me too. As you point out – welfare in many cases spans several generations, the tax base for the delivery of ‘traditional’ welfare is expected to deteriorate even further as the population ages and paid employment seemms to be a substaintive ‘fix’ in the welfare stakes because of ‘wellbeing’ benefits work brings .. Governments of all persuasions across the globe have been responding in various ways including investment in social bonds (jointly with industry), social enterpise, regulation frameworks and various types of employment schemes .. Additionally, industry is also leading some responses including Fortescue Metals Group and BMA activities with people who are indigenous and people who experience disabilities .. Whilst promising, we will need increased effort as individuals in our society in order to break the cycle .. All efforts are appreciated .. Cheers Pete

  4.   By Greg Brown on Sep 10, 2012 | Reply

    Welfare as it stands now is a drug. Once on it for a while it is very hard to get off. It reduces self esteem which reduces confidence and the will move on. People on it often in the end manage to convince themselves that they are happy. I have heard it said that “work is for suckers”, which initially made me angry but in retrospect I now feel quite sorry for those in this situation. The challenge is providing welfare for those who genuinely need it for just long enough to bridge them through to independence if at all possible. If we spent as much money on support and guidance as we do on welfare we would have a much smaller number of people on welfare. The cost may be no less or it may even be higher but society would be better for it.

  5.   By Luke on Sep 11, 2012 | Reply

    Ted, in some of your posts I detect this hesitation you sometimes have, between wanting to be able to just step out and say something, as we ought to be free enough to, and a reluctance to offend unduly. I think overall you achieve some balance (and besides, can’t a person ask one thing one day and another another, well they could otherwise they’d be very set and opinionated, so Ted, maybe take some reassurance you’re not that opinionated!).

    (That, and you have some very good and generously spirited books to your name so at least consider that!)

    I had a stint on welfare, back in the day, and on and off knew many people on it for long periods. So I feel I have a lot of insight into some of these things.

    I also still hear a lot of anti-welfare comments around me, but these aren’t the same as asking fair questions, these usually come from people who are looking for someone to blame for something with no desire for deeper insight or solution. (Something we see played out in many areas these days I think).

    I did a course with Mission Australia at one point. It had such a profound effect on me that I wish I had been there well before I found myself unemployed. I felt useful, helpful, a part of something, it really helped me in a time where I was down on my luck on several things not just employment. I also got such a lift from being able to encourage others, some of these people appeared not to have had a word of encouragement and faith for very long. People need to be people not just “unemployed people” maybe it comes down to that!

    It helps to have a good teacher, too. People who had nothing to do with the course, office people, they’d stop and chat with the unemployed on a realistic human level, there was a genuine vibe about it. The staff appeared motivated by more than just having a government subsidise them, or reward them for placing people into jobs in a hurry. It ran deeper than that for some reason.

    It would be interesting to find out what that reason is, and harness that elsewhere.

    Compare with some places where they were all about shoving you into a new suit (which isn’t half bad), and getting you into interviews you’re not ready for or keen on, just so they could tick the box and make the paperwork look right for their business.

    What’s interesting to me now, after so long fully employed, is how this officious narrow pattern still matters within “functioning” businesses! We’re all about ticking the self-promoting boxes instead of doing what really works, what really matters, what really builds employees (and in turn, profit).

    And yet those people would often readily walk past the less well placed, and mutter something about their rorting the system. Hypocrites!

    To my mind, what unemployed people need is something tangible and participatory and done in the right spirit.

    I’m not sure “spirit” can be legislated. Maybe we could reward those places where the most participants report the best outcomes (rather than those “tick boxes”). I suspect that would tail into more sustainable employment in the long run as well. Maybe that answers some questions.

    Sincerely,
    The Breakfast Club
    😉

    PS. Some good literature would help as well, who knows Ted, maybe you’ve already helped people in this area and don’t even know it?

  6.   By tedscott on Sep 12, 2012 | Reply

    Hey Luke, I appreciate your comments and I can see from your comments that you have empathy for the needy as indeed I do.

    You probably misunderstand my hesitance to make definitive pronouncements on welfare. I find the topic quite difficult for the reasons I stated in my essay. As I wrote, I am happy to contribute to programs helping the needy, not only through the taxes I pay but to my personal contribution to organisations devoted to this end.

    But I suppose my prime concerns are (and there are others):

    1. We tax people whose situation is little better than welfare recipients to transfer part of their income to people who are sometimes less deserving.
    2. Some recipents of welfare rort the system to gain a benefit without making a commensurate contribution to our society.

    There are many richly deserving beneficiaries of welfare. I have no regrets about making my contribution to improving their welfare. There are also struggling folk whose tax contribution is needlessly high because of misplaced welfare.

    In summary then let us ensure that:

    1. Our welfare contributions go to those who genuinely need it, and
    2. That funding comes from those who are best placed to provide it.

  7.   By tedscott on Sep 12, 2012 | Reply

    Thanks Greg. Good comments as usual. But don’t get angry – it doesn’t help!

  8.   By Brian Turnbull on Sep 15, 2012 | Reply

    Hi Ted, once again your incisive mind has captured the essence of this problem.

    I suggest the solution lies in our ability within our democracy to give our polititians the courage to address the issue, to restore the equity your espouse. Populist politics has never built a great nation, it is a luxury afforded by affluence and entrenched interest.

    Brian

  9.   By tedscott on Sep 16, 2012 | Reply

    Brian it was great to hear from you again. I trust all is well. Your comment is a pertinent one. Politicians seem reluctant to make any decisions that might upset any part of their constituency. Consequently hard decisions are postponed or avoided which makes us all worse off in the long run. Thanks again.

    Peter, I should have acknowledged your contribution as well. Knowing you and your background your comments bear paying attention to!

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