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Submission
to
Reference Group
of
the Welfare Reform Review

 

From

Social Action Office
Conference of Leaders of Religious Institutes, Queensland

Catholic Justice and Peace Commission
Archdiocese of Brisbane

Congregation of the Sisters of Charity, Brisbane

Micah Inc., Parish of St Mary's, South Brisbane

 

December 1999

 

Table of Contents

1. Background
2. Socio-Economic Context
3. The Discussion Paper - What is Affirmed
4. Concerns and Critique
5. Mutual Obligation
6. The Ongoing Consultation Process
7. Conclusion
Bibliography

1. Background

This submission reflects the concerns of a coalition of Catholic Church-based organisations involved in social policy analysis, public advocacy and social service provision in Queensland namely:

  • Social Action Office (SAO), Conference of Leaders of Religious Institutes Queensland
  • Catholic Justice Peace Commission, Archdiocese of Brisbane
  • Congregation of the Sisters of Charity, Brisbane
  • Micah Inc, Parish of Saint Mary's, South Brisbane.

These organisations share a common vision of society which finds its basis in the principles of Catholic Social Teaching, some of which are relevant to the task of this welfare review process. These principles encompass the following:

The Common Good and the Role of Government

  • the role of government is to promote and safeguard the common good. The common good is realised when a society ensures that all citizens have the means to live in accord with their human dignity, with access to the goods and services they need for an adequate livelihood;
  • the common good also demands an equitable distribution of wealth to ensure that the growing inequality in our society is alleviated.

The Needs of the Most Vulnerable

  • the needs of the most vulnerable and disadvantaged in society require special consideration in government policy-making, as these needs and human dignity will often not be served by the market alone:

    There are many human needs which find no place on the market. It is a strict duty of justice and truth not to allow fundamental human need to remain unsatisfied. It is also necessary to help needy people to acquire expertise, to enter the circle of exchange, and to develop their skills in order to make the best use of their capacities and resources. (Pope John Paul II)

  • society must also recognise that different people contribute differently to the common good:

    Although all citizens, without exception, can and ought to contribute to that common good, ... yet it is not to be supposed that all can contribute in the same way and to the same extent. (Pope Leo XIII)

Work and the Role of Government

  • work, that human activity which seeks to add to the heritage of the whole human family (Pope John Paul II), is closely linked to the dignity of the human person;
  • governments must do all they can to ensure people have the right and opportunity to work:

    the obligation to earn one's bread by the sweat of ones brow also assumes the right to do so. A society in which this right is systematically denied, in which economic policies do not allow workers to reach satisfactory levels of employment, cannot be justified from an ethical point of view, nor can that society attain social peace. (Pope John Paul II)

It is on the basis of these principles that we make this submission to the Reference Group in anticipation of the forthcoming Green Paper on Welfare Reform. Because of the limited time available, it is not the intent to address all the issues in the Discussion Paper. Rather, we will comment mainly upon the assumptions and framework on which it is based and identity some omissions which we think should be integrated into a comprehensive welfare reform process.

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2. Socio-Economic Context

No reform of welfare policy can be undertaken in a socio-economic vacuum. Current socio-economic realities and trends in Australian society combined with an understanding of the structural causes of 'welfare dependency' must be taken into consideration.

In May 1999, the SAO and the Queensland Council of Social Service (QCOSS) released an issues paper entitled "People and Places - A Profile of Growing Disadvantage in Queensland". This highlighted a number of facts:

  • from 1981-82 to 1995-96 the rate and incidence of poverty increased steadily in Queensland so that we now face a situation where approximately 1 in 5 income units (or households reliant on an income to meet collective needs) is living below the poverty line;
  • sole parents continue to be the group most likely to be living in circumstances below the poverty line;
  • Queensland has consistently high unemployment rates in many regions - for example, in March 1998, out of the 40 highest unemployment Statistical Local Areas (SLAs) in Australia, 20 were located in Queensland;
  • as a proportion of total disposable local income, there is a high dependency (over 25%) on Department of Social Security (DSS) payments in many SLAs in regional Queensland;
  • one ABS Region in Queensland, the Wide Bay-Burnett Region, has the second highest DSS dependency in Australia (27.9% of total disposable regional income).

The report stated that the 'combination of demographical and geographical data presents a disturbing profile of growing disadvantage in Queensland.

Similarly, other social research conducted in recent years reflects growing levels of poverty throughout the Australian community combined with an increasing gap between the rich and poor. The Australian Local Government Association's annual State of the Regions report recently prepared and released by the National Institute of Economic and Industry Research presents a disturbing picture of the growing divide between 'regional haves' and 'regional have-nots' in which some regional areas are experiencing great financial insecurity while major urban centres flourish. A media comment on this report stated:

Regions relying on traditional agriculture and industry have missed out on the benefits of economic recovery, which have gone mostly to the globally competitive metropolitan centres of Sydney and Melbourne and a small number of resource-based regions in Northern Australia. Although there is evidence of employment growth in most regions, the benefits of the economic recovery remain narrowly based and many regions remain stuck in low-growth, low-income and low-skilled development paths. Increasingly employment and income disparities between regions have intensified. (The Courier-Mail, 29 November 1999)

There is much more research which will affirm a growing disparity in both personal incomes and in regional income across Queensland and Australia. A national debate about reforms to the welfare system cannot be carried out in isolation from this. There are real structural change issues involved in this growing disparity and this cannot be ignored. Many people are 'welfare dependent' because they lose jobs or because no jobs are available for them. This brings industry, regional development and labour market policies onto centre stage in this policy discourse. These matters are central to overcoming the negative effects of economic restructuring and reducing the number of people on welfare support.

The welfare reform process must incorporate this spatial dimension into its agenda.

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3. The Discussion Paper - What is Affirmed

While, from our perspective, there are omissions in Senator Newman's Discussion Paper, there are issues of common ground - things we affirm. We wish to identify these and endorse them, namely:

  • the statement that welfare recipients have the right to share in the benefits of economic growth. Clearly, we need to take measures via our taxation system and through government action to reduce unemployment that will reverse the current growth of inequality in Australian society (p. 6). As noted, this also means that industry, regional development and labour market policies should be integrated into this review process;
  • the commitment of maintaining the safety net and seeking to promote independence (p. 7);
  • references to new support services to assist the reintegration of recipients into the paid workforce (p. 6);
  • the promise that there will be no reduction in pension or allowance rates of assistance. However, currently the single unemployed are receiving $18 a week less than a single pensioner. There is no justifiable or objective reason for this anomaly (p. 9);
  • the promise to provide more tailored and individualised assistance for the diverse group of individuals and families on benefits (p. 10). There are some recipients who will require significant training to compete successfully in the jobs market and others will be disadvantaged because of their geograhpical location;
  • the commitment to having regular contact with sole parents so that they do not suffer a sudden and unprepared change in their situation when their child turns sixteen. Also, the offer of greater assistance for sole parents returning to the workforce is encouraging and endorsed (p. 21).

4. Concerns and Critique

In this section of our submission we explore our concerns about some aspects of the Discussion Paper and critique some of the assumptions on which it is based.

The Problem is Poverty not Welfare Dependency

The use of the term 'welfare dependency' suggests both that individuals are responsible for being poor, and that the government's only agenda is to reduce welfare spending. Instead, the government should talk about the challenge of providing people with alternative forms of income principally through increased employment opportunities, taxation, affordable education and housing and address other broad policies that influence welfare such as regional development. The Discussion Paper, in identifying 'welfare dependency' as the problem, lumps unemployed people, people with disabilities, sole parents etc together, in spite of the fact that the causes of their various situations are very different.

A further risk in the use of the term 'welfare dependency' is that it could lend credence to the myth that many Australians are 'rorting' the welfare system. 'Rorting' is a term with many nuances in the Australian language. One aspect is widespread fraud. The evidence is that the incidence of fraud by welfare recipients is extremely low. We need to guard against characterising the incidence of fraud in a way that becomes a sweeping attack on the integrity and social responsibility of the overwhelming majority of social security recipients, seeking to rise above their difficult circumstances. We should not forget that it was the structural change of the 1980s and 1990s that contributed on the one hand to increased prosperity, but on the other, to an increased number of victims of market failure legitimately seeking assistance from the State. The mistaken identification of the real problem gives rise to the suspicion that the government's intention is not to identify the causes of 'welfare dependency' and make the necessary changes, but rather to cut welfare costs by declaring some people ineligible for the benefits they currently receive.

Structural Factors Responsible for Unemployment

The focus of the Discussion Paper is on the individual welfare recipient rather than the structural factors which have led to their being on welfare to begin with. This is particularly significant in relation to unemployment. It gives the impression that the government believes that if those who are unemployed had more skills, motivation or support, they would be successful in their search for jobs. Yet, at the very time this paper was in preparation, in July 1999, there were 770,000 people unemployed and 73,000 advertised jobs. No matter how highly skilled, motivated or supported people are, the economy is simply not generating anywhere near enough jobs for all who want them.

The Absence of a Link with Employment Creation Strategies

A major focus of the Discussion Paper is preventing welfare dependency among people of workforce age. People who are unemployed make up the largest group of welfare recipients - around 30 percent. The most effective way of freeing these people of welfare dependency is to create jobs for them. Yet there is hardly any reference in the paper to employment strategies. Even if it is granted that there is a need for reform of the welfare system, such reforms should surely dovetail with an employment strategy such as that outlined by the National Council of Church's recently published position paper, A Covenant for Employment (Sept 1999).

A Tendency to Downgrade the Significance of Unemployment as a Contributing Factor in the Growing Incidence of Welfare Reliance

Senator Newman's Discussion Paper stresses the fact that unemployed people are outnumbered by all other welfare recipients taken together. She claims that most people on income support are not the unemployed (page 5). While this may be true, the unemployed are still a significant population group in receipt of income support from government with numbers exceeding other population groups. It is also important to consider the spatial dimension of unemployment figures. As well as considering overall national figures, the geographical location of these unemployed people is instructive for policy development.

Further, with the reference to a decline in unemployment since 1993 it could be argued from the associated graph that there was a similar decline in 1973, 1978, 1986 and 1989. In each case, however, these declines were followed by progressively higher peaks - to 2.4% in 1974, 6.1% in 1978, 9.9% in 1983 and 10.5% in 1989. No case is put forward that the present decline will not be followed by another peak in unemployment, and it is impossible to deny that the real trend in unemployment over the past 25 years is upwards.

Worklessness

The term "worklessness" is used on a number of occasions in the Discussion Paper. The use of this term is demeaning to those who are without jobs. Many of them work hard on valuable tasks ranging from self-development and education to child rearing and to volunteering in community organisations. The use of this term suggests that the author of the paper regards a paid job as the only form of work.

Further, there are many people in the community who are not in the paid workforce because they are carers or have a disability. They make a significant contribution to the social fabric of Australian society. In this context, the word "worklessness" is misplaced.

Supporting Parents who Want to Work

The Discussion Paper refers to the people in receipt of parenting payments and raises concerns about parenting responsibilities keeping those people out of the workforce for lengthy periods, in which time paid work skills are lost. The funding and provision of affordable and flexible quality childcare is critical in creating an environment in which sole parents can be assisted back into meaningful jobs and in overcoming this perceived loss of work skills.

Commenting on the increasing cost of childcare, Adele Horan has noted:

If the government is serious about preventing welfare dependency, if it wants to reduce the growth in sole-parent pensioner numbers without producing a nation of latchkey kids or backyard minders, it has to do something about these costs. (Sydney Morning Herald, 13 November 1999)

Any program for getting sole parents into the workforce must be balanced by responsiveness to family commitments. This is a factor for industrial relations policy - making work places more family friendly.

Cuts to Social and Labour Market Programs

Since 1996 the Federal Government has reduced funding to a number of social services including labour market programs and childcare. Most people defined as 'welfare dependent' rely on such programs and services and as a result of cuts in these areas have been cut adrift from opportunities to move out of long term reliance on welfare.

Contradictory Family Policy

While the Federal Government is providing incentives for one parent in higher income families not to work, supporting parents are being targeted to work under the proposed reforms. This issue was highlighted by Brian Toohey where he referred to government spending on family and youth support:

A key component of the changes entails lifting the tax-free threshold, again boosting the cost of middle-class welfare. Confusingly, the changes are partly intended to encourage women with children to stay out of the workforce- the exact opposite of what Tuesday's proposed welfare crackdown is supposed to achieve. (Financial Review, 13 November 1999)

"Welfare to Work" in the USA - A Case Study in Theory and Realism

Evidence from the United States regarding the Welfare to Work Program initiated by the Clinton Administration in 1996 indicate mixed success with these reforms. Studies conducted by the Urban Institute, almost three years after the radical overhaul of the nation's welfare system confirm that the numbers of people dependent on welfare have fallen more dramatically than anyone expected, but warns that many of those leaving welfare for the workforce struggle to afford basic life essentials. A report in The Washington Post on 3 August 1999 stated that:

The Urban Institute study included some sharp warnings about the precarious position of the poor at a time of general national prosperity, and suggests that many people who leave public assistance remain trapped on the lower rungs of the economy. In particular, most women who leave welfare are working in low-wage service jobs, and a significant minority says they have trouble providing food for their families or paying rent.

The study itself concludes:

More than a quarter (of low-income women) at work are on night schedules and over half are struggling with coordinating work schedules and childcare.

Unpublished analyses of welfare reform in the United States demonstrates the fact that the instability and low pay of many jobs available to welfare recipients and the conflicting demands of work and family make leaving welfare very risky. One such study sums up the situation:

The new rhetoric about "personal responsibility" has changed the framework of the relationship between government and welfare recipients in a positive way. Bur there are also concerns that, although many of these individuals are becoming self-sufficient and independent, they are simply joining the ranks of the the "working poor" and are really no better off than they were on welfare. (Rose, 1998)

In summary, two important considerations emerge here:

1. ensuring that children do not suffer adversely in the rush to get their parents off welfare;

2. ensuring that people are not simply recycled from welfare reliance into the ranks of the working poor.

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5. Mutual Obligation

Mutual obligation is in vogue in social policy discourse at present, at the highest levels of government.

In May this year at Australia Unlimited Roundtable the Prime Minister said:

The principle of Mutual Obligation needs to be further strengthened and greater personal responsibility fostered.

On the surface mutual obligation sounds reasonable. Mutuality is good. It is relational. It is co-operative. It is caring and reciprocal. It seems to be consistent with building a society based on the common good. However we need to look more closely and interrogate just what it means.

For example, in adopting the language of "mutualism" is the Government endorsing other key tenets of mutualist movement, namely that it:

  • acknowledges the inadequacy of both market and state socialist solutions to social problems and seeks an alternative path on mutual, reciprocal and equal social relationships;
  • responds to specific situations, especially enabling people themselves to establish suitable mechanisms to meet their own needs - cooperatives of all kinds, friendly associations and credit unions;
  • upholds the devolution of power and actively promote social inclusion;
  • upholds cooperation rather than competition;

and above all

  • is based on the freedom of the individual to choose, and not on imposed laws and coercion.

Is this the philosophical basis behind the adoption of "mutual obligation" as a key tenet of social policy formulation? Or, is this terminology simply selectively borrowed from the discourse of mutualism to serve a more pragmatic political objective? Namely, to satisfy middle Australia that the welfare dependent are not getting a free ride!

At first sight the policy of mutual obligation appears to be quite a reasonable suggestion. The individual does have responsibilities towards the community, as the community does towards the individual. But the Prime Minister and Senator Newman don't take this concept deep enough. For example, in the area of employment, the most important strategy for social welfare, the first obligation is on the community to create the sort of economy that will provide work for all who need it.

As well as Catholic Social Teaching, other internationally recognised bodies uphold the right to work:

Everyone has the right to work, to free choice of employment, to just and favorable conditions of work and to protection against unemployment. (Article 23, Universal Declaration of Human Rights)

There is an obligation on the part of society, and therefore of government, to ensure that there is work for all. Successive governments in Australia have clearly failed to fulfill this obligation, and that is why unemployed people receive an allowance. It is compensation for the prior failure of government to ensure jobs for all. If we are to talk about mutual obligation in relation to employment, this is where we should begin.

In recent years, it has become clear that maintaining high employment is seen as a price that the community has to pay for a low inflation rate. Of course, only those who are unemployed pay this price. It is simply not true for Senator Newman to suggest that some people on benefits believe that the taxpayer owes them something for nothing. The taxpayer in fact owes them something for the role they play in keeping inflation at levels we all enjoy, levels that the government takes credit for having achieved.

One further observation on mutual obligation is drawn from Aristotle who said:

There is nothing so unequal as the equal treatment of unequals.

We are not suggesting that people on welfare payments are intrinsically unequal. We uphold the dignity of all human beings and their intrinsic equality. However, our society is characterised by great divisions of economic and political power. If the poorest are having to meet social obligations which others, by virtue of their economic power, are not obliged to meet, then we would argue that this is unequal and unjust. One case is illustrative of this point. As a society we expect a middle-aged, long-term unemployed male to participate in a mutual obligation arrangement while, at the same time, we do not challenge the prevailing view among many employers that anyone over 40 years of age is not a desirable prospect for employment.

As we have argued, mutuality, by definition, involves more than one party.

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6. The Ongoing Consultation Process

The Green Paper process needs to be a comprehensive, broad-based process of consultation with:

  • people in receipt of social security payments;
  • representatives of community service agencies; and
  • other key stakeholders.

They all need to discuss and give feedback about proposed reforms and provide options and ideas which may not be included. The consultation process also needs to be adequately resourced, in time and money, to ensure the full participation of all stakeholders. For example, it is desirable that the body charged by the Government to engage in consultation, travel to regions of Australia to receive public submissions and meet with representatives of the groups nominated above. It is vital that those making recommendations to government have first-hand, direct experience of the life situations of the people on whom policy reform will impact.

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7. Conclusion

We support the process which seeks to reform the welfare system by moving away from reliance on the minimalist safety net to supporting policies which breakdown welfare dependency and give people greater independence. However, such a reform process must be based in reality and not be ideologically driven. The fact is that we are living in a society in which there are significant and increasing disparities in personal and regional incomes and, linked to this, a growing disparity in opportunity. Australian is much less equal now than it was several decades ago. We argue that the welfare reform process must consider the structural forces which have led to this situation and develop a comprehensive response accordingly.

With more time available, we look forward to receiving the Green Paper and commenting upon it in detail next year.

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Bibliography

Australian Centre for Industrial Relations Research and Training (1998)
Australia at Work - Just Managing? Prentice Hall, Sydney

Horin, A (1999)
It's Time to Put the Care Back into Childcare. Sydney Morning Herald, 13 November

Howard, John (1999)
Speech given to the Australian Unlimited Roundtable

Howard, Peter (1999)
Nation's Great Divide Widens. The Courier-Mail, 29 November

McInnes, Elspeth (1999)
Mutual Obligation or Mutual Respect and Support: Key Directions in Income Support Policies. Paper presented at the ACOSS Conference

National Council of Churches (1999)
A Covenant for Employment. Sydney

Papal Encyclicals:

  • Rerum Novarum (Leo XIII)
  • Laborum Exercens (Pope John Paul II)
  • Centesimus Annus (Pope John Paul II)

QCOSS and Social Action Office (1999)
People and Places - A Profile of Growing Disadvantage in Queensland. QCOSS

Rose, V (1998)
Welfare-to-Work: A Success? Website

Rosin, H & Harris, J F (1999)
Welfare is On a Roll: Working Poor Still Struggle. Washington Post, 3 August

Toohey, Brian (1999)
Better Sort of Bludger Supported. Financial Review, 13 November

 

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