Reforming The Welfare State

Historically, in both Britain and Australia, welfare provision as been perceived as the moral responsibility of the state. While some have considered assistance as the right of those less fortunate, government welfare policy has shifted away from this perception towards one of the mutual obligation of citizen and state. While this position might seem entirely reasonable, its expression through recent policy has arguably not always been in the interests of either welfare recipients or Australian society. Given the churches crucial role in social justice (both through local programs and denominational agencies) the outcomes of policy have a direct impact on the operation of welfare and church organisations.
This article draws on Reforming the Australian Welfare State (Australian Institute of Family Studies, Melbourne, 2000), edited by Peter Saunders, previously the research manager of the Australian Institute of Family Studies. This book contains a variety of contributions written from various perspectives and drawing on various research and organisational and academic perspectives. In particular, reference to British and United States examples serve to contextualise Australian policy within the broader social and economic climate. The aim of this article is to present some current issues in welfare provision, especially in the area of labour force participation, and the implications this has for recipients of welfare and for society. Some likely effects on the churches and other charitable organisations will also be explored.

Culture of Dependency?

One argument driving welfare reform is that the welfare state, through its provision of support to the needy, has resulted in passivity and a culture of dependence. That is to say that the jobless lack the motivation to acquire and maintain a job. As they will ‘receive a cheque either way’ the rational choice is not to seek work which would otherwise improve their condition (Dawkins, 2000). Particularly in Britain and the United States there has been a belief that the welfare state has eroded the family by making single parenting a more attractive option. Britain’s rate of lone parenthood (just under one quarter of families) is three times higher than that of Australia with almost 60% of single mothers unemployed. A line of argument among some sociologists is that joblessness among males makes them unattractive partners so more women are raising children on their own (Buckingham, 2000, p.76). The result is an underclass of men who lack work, permanent relationships, family and responsibility for anyone but themselves. This lack of stake-holding represents an exclusion from society and is increasingly being linked to the rise of violent crime by males. At the same time, there are increasing numbers of well-educated, career-oriented women who are not finding suitable partners.

The concern about passive welfare and the dependency culture among Aboriginal people is addressed by Noel Pearson in this book (Pearson, 2000). The picture Pearson draws bears a resemblance to Trudgen’s (2000) assessment of the impact of welfare on Aboriginal communities in Arnhem land. Pearson’s view is that the imposition of government welfare assistance over recent years has robbed people of their traditional roles and responsibilities in work and family. It has rendered people powerless and the result has been the loss of choice and control over life. It has created a culture in which people have seen themselves as victims (Pearson, 2000, p.142), and it has contributed to the grog epidemic and the widespread drug problems among Australian people (Pearson, 2000, p.145).

Pearson argues that poverty ‘needs to be overcome via the development of real economies for our society’ (p.151) and that ‘reciprocity and responsibility must be built into all government-financed programs’ in remote Aboriginal communities (p.153).

The issues of exclusion and loss of control are reflected in British welfare policy which assume unemployment is the result of a lack of education, training and workplace experiences. These are seen to act as barriers to prevent people finding work. The British programs, stemming from ‘The New Deal’ policy, aim to address exclusion through promoting civic responsibility and a sense of being a stakeholder in society (Buckingham, 2000). The New Deal policy is similar to the former Australian government’s ‘Working Nation’ scheme implemented by Keating in the mid 1990s.

The response in the United States is quite different however. It largely assumes that people do not want to work. They require motivation. Forcing people into the work-force in order to survive, the ‘tough love’ approach, is seen as being in the long-term benefit of people. The Clinton administration addressed the issue of the increasing number of single mothers on support by major reform to their assistance program. The total period during which anyone could receive welfare was changed to 5 years and mothers were forced to return to work after between 12 weeks to 12 months after the birth of a child (depending on the State). The States also funded work counselling and day care to facilitate their return to work. This system decreased their case load substantially (Saunders, 2000, pp.36-37).

Wisconsin, which has the harshest regulations requiring women to return to work 12 weeks after the birth of a child, has experienced a 40% drop in the number on welfare and among the black American population and an 18% drop in the number of ex-nuptial births (Saunders, 2000, p.37 and Buckingham, 2000, p.75).

Lawrence Mead, the author of chapter 2, argues that years of racial discrimination and the decline of the manufacturing industry are to blame for much of the US culture of dependency. He suggests that a combination of ‘help’ and ‘hassle’ will encourage people to return to the workforce, even if it is to low paid jobs, in order to improve their circumstances. In turn, it is argued this will enable them to take responsibility for their lives (Mead, 2000, p.59).

The Australian Approach: Mutual Obligation & Active Unemployment

Australian statistics indicate that there has been a considerable increase in those receiving welfare assistance compared to the 1960s. In 1998, 18% of Australians of working age were receiving income support payments compared with 3% in the early to mid 1960s. Removing those part-time and low paid workers for whom support ‘tops up’ their income, 14% or one in seven Australians relies heavily on income support. Around 18% of lone mothers are not employed (Saunders, 2000, p.15).

Reform has been a major focus of the various Australian governments governing over the past ten years. Alan Buckingham (2000) suggests the Australian approach to welfare reform is partly grounded in the British assumption that welfare recipients are barred from the labour force through external barriers and partly on the US approach in which recipients are perceived to be lacking in motivation and being pushed into the workforce is good both the unemployed and society.

Australia’s current approach is designed to shift welfare recipients from ‘passive’ to ‘active’ unemployment through Mutual Obligation which the Prime Minister, John Howard, has defined as: “Asking people to give something back to the community in return for assistance in times of need” (quoted in Raper, 2000, p.260).

Mutual obligation as expressed through the ‘Work for the Dole’ program is the replacement for the former government’s ‘Working Nation’ strategy. In the former strategy, the government had a commitment to finding the long term unemployed a place in education, training or work. In return, the young, long term unemployed were required to undertake training and community work in return for their entitlement and the government’s commitment to finding work. Some refer to these types of policy as a carrots and sticks approach.

However, since the introduction of Work for the Dole, employment assistance funding and resources have been downgraded considerably – by $1.2 billion since 1995/96 (Raper, 2000, p.266). At the same time, the obligation of the unemployed to meet certain requirements has been increased. Critics suggest a major shift in emphasis has occurred. Rather than the focus being on individual-targeted assistance aimed at getting people back into the workforce, it is now on passing a series of administrative hurdles and ‘giving something back’ irrespective of whether those activities will directly improve future employment prospects (MacDonald & Siemon pp.220). Moreover, unlike targeted vocational training, community work may not be of relevance or assistance to the person in preparing for the area of employment suited to them. Failure to meet requirements leads to penalties in the form of major cuts to assistance.

The ‘Work for the Dole’ program has been expanded to include more welfare recipients. When introduced in 1997 it included those aged 18-24. In 1998, it was stretched to include those school leavers unemployed for 3 months. In 1999, persons unemployed for 12 months and aged 25-34 were included (Raper, 2000, p.264). The 2000-2001 Federal government budget further extended Work for the Dole to include those aged up to 39 years. Unemployed persons aged 40-49 years are expected to do some part time or community work or study, although not as part of the Work for the Dole Program. Reforms to the Parenting Payment require parents whose youngest child is 13 to undertake 6 hours of ‘back to work’ activities per week and those with children aged 6-12 are required to attend annual interviews ‘to help them prepare for re-entry to work in the future’ (Commonwealth Budget 2001-2002).

State of the Market

Inherent in these reforms is the assumption that the government understands what is best for welfare recipients and that by forcing them to ‘give something back’ they are helping them to move ‘move beyond reliance to self-sufficiency’. However, research from the Brotherhood of St Lawrence (MacDonald & Siemon, 2000) indicates policy aimed at helping families attain this often falls short due to individual, social and economic factors outside the control of either the welfare recipients or social security.

A major factor is the state of the labour market. According to the Australian Council of Social Services (ACOSS) there were more 6 unemployed people for each job vacancy in 2000. The average had been 10 people per vacancy through the previous decade (Raper, 2000, p.266). An interesting approach to this problem is to look at the number of job vacancies per person over a fifteen day period. Using mathematical probability, the chances of the ‘average’ person remaining unemployed decreased significantly with each time period that elapsed until it was found that ‘it is a greater than even chance that our average unemployed person will be employed before 6 months is up’ (Dawkins, 2000, p. 245). This finding was considered to provide optimism in terms of the unemployed re-entering the workforce!

Some people believe that intense job seeking, with inherent workforce deregulation, will lead to increased workforce participation. This, in turn, will increase industry demand for products and services and lead to more employment.

However, at a basic level, this rationale fails to take into account the fact that unemployed people are not always located in the areas where jobs are available, and do not always hold the qualifications and experience for the work that is being created.

Another aspect of labour market reform has been the relative decline in permanent full-time employment. Often available work is temporary or casualised with little security. For instance, between 1995 and 1997 half of all new jobs were part time and a further 62% were casual. Data from the Australian Bureau of Statistics indicates that chances of finding secure full-time work after a period of unemployment were quite limited (MacDonald & Siemon, 2000, p.216).

The nature and impermanence of today’s market is just one of the reasons that the chances of career advancement are reduced compared to the 1960s when only 3% of the population received welfare payments. In that era, an inexperienced 15 year old person found a low skilled and low paid job in a mail room and gradually worked their way up. Today by contrast, a person can go off unemployment, take several low paid, unskilled part time jobs, gain little professional development, be put off and return back on benefits. This cycle can continue until the person is too old to be considered for such work. Critics of the current system suggest it is wrong, if not cruel, to punish people who are already marginalised, for not meeting current job seeking obligations in such a climate.

However, despite these social trends, the current policy of Mutual Obligation:
Encourages the view that unemployment is in some way due to unemployed people not trying hard enough, through laziness or lack of a ‘work ethic.’ In short it promotes the view that unemployment is a result of individual failure. (MacDonald & Siemon, 2000, pp.220-1).

Certainly this stance is reflected in the US where prominent reformer, Newt Grichting commented that reform would:
Correct those individual behavioural dysfunctions – such as moral laxity, inadequate work discipline – which are seen as the cause of poverty but more importantly as a consequence of the welfare system (Raper, 2000, p.265).

Closer to home, a recent comment by Australian MP, Tony Abbott was that: ‘We can’t abolish poverty because poverty is a function of individual behaviour’ (Age 11/7/2001). Certainly, Australian welfare recipients have already been divided into the ‘deserving’ and ‘non-deserving poor,’ with higher weekly payments, fewer obligations and work penalties (level of drop in payment per dollars earned) for those receiving pensions as opposed to other allowances.

Poverty and Exclusion

One view of unemployment is that people do not want to return to work because they ‘have it too good’ on welfare benefits and they earn more by doing nothing than they would in wages from a low paid job. Thus some reformers suggest the difference between money received on welfare payments and through minimum wages should be increased to reduce the ‘replacement rate’ or those who prefer to take welfare payments rather than work for wages. However, Australia already has low replacement rates according to OECD studies (Raper, 2000, p.259) as shown in the graph on p.10.

The highest replacement rates were among couples with children who, during the 1980s and 1990s, had been given ‘in work’ incentives such as tax breaks. Single unemployed people by contrast had the least incentive to remain unemployed and stood to double their income through paid employment (Raper, 2000, p.260).

In stark contrast to the view that welfare support payments are high, many payments are equal to or below the poverty line. In 1996, 11% of the population was living below the poverty line compared to only 6.4% in 1975 (Raper, 2000, p.254, see figure below).

For fathers, particularly, the struggle to find work and ‘provide for their families’ can result in the decision to ‘buy’ work by starting a business using what little money or assets they have. For some, the cost of this self-sufficiency is working a 60 hour week with little remuneration. Others do not succeed in creating viable businesses, sometimes losing the assets, such as the family home, they used in the attempt to attain self-sufficiency (MacDonald & Siemon, 2000, p.217).

Lack of skills and education, combined with the costs of child care, present major barriers to workforce participation for many lone parents (MacDonald & Siemon, 2000, p.217). Close to poverty line level payments and, as in the USA, the obligation to seek work, only punishes people who are already struggling. Such a policy also implies that while parents in a couple relationship can choose whether or not to stay home based on what they believe is best for the child, lone parents forfeit that right (MacDonald & Siemon, 2000, p.218). This sort of policy demonstrates a paternalistic approach that assumes the government knows what is best for its citizens. Moreover, according to research conducted by the Brotherhood of St Lawrence, there is no evidence that compulsion to work will improve the quality of life for children or parents in unemployed families (MacDonald & Siemon, 2000, p.221).

The low rate of assistance to single and particularly the young unemployed means that many cannot afford to participate fully in obligatory job seeking activities. For instance, those aged over 21 years receive $163 per week or $201 with full rent assistance. Those aged 16-20 receive $133 per week or $171 with rent assistance (Raper, 2000, p.257). These benefits would barely cover the cost of shared accommodation, food and utilities let alone medical costs not covered by Medicare or healthcare cards, entertainment or presents for Christmas and family birthdays. Job seekers also require money for public transport to attend job interviews, suitable shoes and clothing and other personal presentation items such as hair cuts. Such benefits definitely do not allow for participation in short TAFE courses in computer skills, for example, that would otherwise be of assistance.

At a broader level, poverty is a form of social exclusion which prevents people from participating fully in a society which emphasises consumer choice. Unemployment limits both mobility and the maintenance of social networks. Lack of money means people cannot afford to socialise with friends and increasingly stay at home (MacDonald & Siemon, 2000, p.211). The result is general isolation, loss of identity and subsequent impacts on health. Compounding this, because many jobs are gained by ‘word of mouth’ and through networking – ‘it’s not what you know but who you know,’ a vicious circle develops. This leads to a polarisation of families and communities: the ‘work-rich’ compared to the ‘work-poor’ (MacDonald & Siemon, 2000, p.214).

Implications for the Church and Welfare Agencies

Current trends in welfare reform have enormous implications for the Churches and welfare agencies. With more than one in ten Australians living below the poverty line the demand for extra assistance increases. This is compounded by the slightly less than two in ten Australians who are receiving income support which is close to, if not under, the poverty line. Current government welfare is far from adequate in providing a safety net against poverty.

Income payments are not likely to cover the costs of basic living let alone support required job seeking activities. These requirements are hard to fulfil. A recent report indicated that 43% of the unemployed and student welfare recipients were penalised by Centerlink for failing to fulfil their obligations (The Age, 2/07/01). As ‘Work for the Dole’ is progressively implemented among the older age brackets, there is a risk that increasing numbers of people will find themselves living on reduced payments or none at all. Given the culture of dependency that can develop, or rather, an appropriate work ethic, motivation and faith in the future may fail to develop (Saunders and Stone, 2000, p.131), these people will be even more marginalised than the former group and likely to need intensive assistance.

Cuts to programs of targeted assistance for individual long term unemployed persons are unlikely to enhance the overall situation. It is questionable whether ‘giving something back to the community’ by planting trees by a freeway is going to be of the same assistance for many of those seeking to re-enter the workforce given current trends in the labour market.

The underlying consequence is that people will, and are already, increasingly turning to charitable organisations for extra financial assistance.

An area not discussed in Saunder’s book is the impact of unemployment and welfare policies on those with mental illness. One in five people suffer from mental illness at one time or another in their lives. The predicted life expectancy of chronic sufferers is just over 50 years due to poor standards of living: factors such as housing, access to health professionals who take them seriously and job prospects. The notion of welfare dependency is inappropriate for this group. Rather, assistance programs to help them toward recovery are needed.

With more than six unemployed persons per job (not considering whether they qualify or live close to any of those jobs), many of these people will have to live with the stigma of the ‘failure’ to find work or will find work that has little security. Exclusion from the work force in Australia’s consumer-based society results in a lack of ‘choice’ and control over lifestyle.

Assisting people to deal in constructive ways with issues and adapt to the new environment is crucial. Moreover, these needs will be intensified given the emergence of ‘job rich’ and ‘job poor’ communities which increase the divide between the haves and have-nots. Already, the loss of social networks due to unemployment, isolation and loss of identity experienced by many is resulting in a rise in emotional, mental and general health problems. At a psycho-social level this presents a myriad of issues particularly within healthcare.

A key issue for church welfare agencies is to what extent can they take on what was largely a state function? How should they respond? The privatisation of job seeking agencies has seen an enlargement of church organisational roles. Similar trends are evident within health and particularly the aged care system. This has already recently raised issues regarding training and capability and the role of church-related organisations in these sectors (see the following article).

Moreover, with the overall decline of numbers in the churches the issue of sustainability arises as many churches cannot support a minister let alone a wide range of welfare programs. In many cases, church-based organisations look for support in the wider community and some have become quite independent of church structures.

Closely connected with this is the issue of developing appropriate types of programs. As is often argued, charitable assistance programs are capable of creating cultures of dependence. Alternatively, facilitative programs can return to people a sense of choice and control with the actual aim of the phasing out the programs after people have been equipped.

Targeting and facilitating change at micro levels is unlikely to succeed at the macro level given the broader social and economic inequality entrenched in society. At a basic level, what is needed is re-education that invokes attitudinal change regarding social justice, change that spills down into behaviour and finally public policy.

Sharon Bond

References
The Commonwealth Budget 2001 – 2002: Budget Priorities,
www.aph.gov.au/budget/overview/html/glossy-05.htm

Gordon, M and Gray, D (2001) Abbott view stirs debate on poverty, The Age, Wednesday 11/07/01.

Trudgen, R (2000) Why Warriors Lie Down and Die. Aboriginal Resource and Development Services Inc. Darwin.

Welfare: Quarter fail ‘Mutual Obligation,’ The Age, 2/07/01.

Chapters in Peter Saunders, editor, Reforming the Australian Welfare State, Australian Institute of Family Studies, Melbourne, 2000.

  1. P. Saunders, ‘Issues in Australian welfare reform’.
  2. L. Mead, ‘Welfare reform and the family: lessons from America’
  3. F. Field, ‘Welfare dependency and economic opportunity: a response to Lawrence Mead’
  4. A. Buckingham, ‘Welfare reform in Britain, Australia and the United States’
  5. F. McCoull and J. Pech, ‘Trans-generational income support dependence in Australia: early evidence’
  6. P. Saunders and W. Stone, ‘Australian youth and the dependency culture’
  7. N. Pearson, ‘Passive welfare and the destruction of indigenous society in Australia’
  8. A. Yeatman, ‘Mutual obligation: what kind of contract is this?’
  9. L. Sullivan, ‘A sorry tale: welfare against the family’
  10. F. MacDonald and D. Siemon, ‘Families, work and welfare’
  11. P. Dawkins, ‘Labour market issues in welfare reform’
  12. M. Raper, ‘Examining the assumptions behind the welfare review’

Thanks also to Dr Joan Clarke of Prahran Mission for her insights into welfare reform and the role of the churches.

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