Paxtons have gone but dole trap remains, The Australian

August 18, 2012

THERE was a time when nothing aroused the morally righteous quite like welfare.

A few choice pejoratives – dole-bludger, welfare cheat, benefit fraud – could spice up any tabloid story and cast just the right aspersions on the hapless target.

The Paxton family, pilloried by A Current Affair in the 1990s, was symbolic of the times. But something has changed. These labels are rarely heard today; refugees have replaced dole-bludgers as Australia’s comic-book villains.

The morality tale of Australian welfare is a long and complex one. It has been a favoured ideological battleground of the Left and Right and, when it comes to morality, both have got it wrong. For while the disappearance of welfare headlines suggests a happy balance, important questions remain.

The original post-war welfare state offered a novel approach to fighting disadvantage and vulnerability. Conventional wisdom had held that these afflictions were best addressed by private charity.

The distinct innovation of the welfare state was the socialisation of insurance. Its basis was that risk of unemployment, illness and old age was better managed collectively than individually. Its moral foundation was that society had a duty to care for its least fortunate.

In the 1970s, the Right began to attack this foundation. Led by American sociologist Charles Murray, conservatives argued that welfare was immoral because it forced the hard-working to support the indolent. The moral critique centred on personal responsibility: people were poor because they chose to take the easy street of welfare, rather than the harder but more rewarding path of self-reliance. Supply-side economics said there was ample work if you were willing to accept a low-enough wage. These arguments underpinned the Reagan-Thatcher attack on the welfare state.

They could not be more wrong. Unemployment is not a matter of choice, it’s a trap. Economic evidence shows unemployment correlates with parental joblessness and poor educational opportunity. Most unemployed would far prefer the self-esteem offered by work than the depressing environs of the Centrelink office. The Right’s arguments relied on the logical fallacy of extrapolation: if you can find one family of undeserving dole-bludgers, you prove that all welfare families are the same.

The Left’s response was a fierce defence of welfare, which overlooked a genuine moral weakness. While the Right had a flawed critique based on personal immorality, the Left missed a systemic immorality in the welfare state. Although it offered income support, the state created a crushing dependency by failing to provide the tools to move out of welfare.

Most of those who wished to move from welfare to work were simply ill-equipped to do so. While income support sustained life at the breadline, it did nothing to provide the unemployed with the literacy, people skills and resilience to get back to the workplace. This was a moral failure in its own right, leaving recipients ensnared in a welfare trap.

Recognising this dependency was the policy breakthrough of the Clinton-Blair generation of progressive leaders. Active labour market programs combined generous benefits with mandatory job-readiness schemes and Bill Clinton’s welfare-to-work reforms cemented these ideas into mainstream policy.

Moralists on Right and Left wrongly labelled this a carrot-and-stick approach, instead of a simple recognition that many jobless people could not escape welfare without improved employability.

Ongoing skirmishes merely distract us from three new moral challenges in the welfare system. The first is the shifting impact of the welfare trap from individuals to corporations. We’ve recognised that we can’t simply give individuals money without giving them the tools to escape dependence, but we continue to do this with industries that appear incapable of survival without state subsidies.

The automotive sector will receive $5.4 billion under this year’s New Car Plan, at a time of high employment, and when it shows little sign of returning to stand-alone profitability.

Are we justified in perpetuating this dependence when these funds might be better used in areas of greater need, such as the National Disability Insurance Scheme?

Second, we’ve extended welfare well beyond the disadvantaged and vulnerable. While Australian middle-class welfare is not as big as claimed, it still constitutes a significant flow of public money.

George Megalogenis recently noted that family payments exceeded payments to the needy for the first time in 2004, concluding that “any society that values its working families above all other beneficiaries in good times is asking for budget trouble in bad times”.

The final moral quandary concerns adequacy. While we’ve boosted middle-class and corporate welfare, we’ve let our basic unemployment benefit slip to just more than 20 per cent of average weekly income, the second lowest in the OECD. As Jennifer Westacott of the Business Council of Australia has said: “People can’t live on $35 a day. Entrenching them into poverty is not a pathway back into employment.”

A rich, morally aware society such as Australia can do better.