Smoke Signal

The smoke and mirrors of welfare system reforms

AAP Image/Tracey Nearmy

With recent talk of proposed reforms to the welfare system, the government quite clearly has welfare beneficiaries in its sights.

Various agencies reported that Kevin Andrews, Minister for Social Services, has warned the public that Australia’s social welfare system is ‘unsustainable’ and that ‘large, urgent changes’ must be made to the disability support pension (DSP) and the dole.

Welfare must be reined in as ‘Dole, DSP recipients soar’ claim various headlines.

Is our welfare system really in serious trouble or is the government just in crisis-manufacturing mode again? The trigger for the minister’s comments was the release by the Department of Social Services of a ten-year statistical analysis of income support recipients. The figures show that from 2002 to 2012 the total number of recipients rose from 4.85 million to a little over five million, an increase of just 3.5 percent. In the same period, Australia’s population increased by nearly 17 percent. In other words, adjusted for population growth, beneficiary numbers actually dropped, and by a significant amount.

What about the DSP and the dole, the areas where numbers are supposedly soaring and where Andrews is calling for action? His own department’s analysis shows an increase in numbers of 13.5 percent over a ten-year period, also less than the general population growth.

The DSP was reformed as recently as 2011 when the Gillard government tightened the eligibility criteria by introducing much stricter impairment tests. This was in response to valid fears that the benefit was being abused. In the two years from 2011 to 2013 the number of DSP recipients rose less than half a percent, equivalent to a decline in real terms given the population growth in that period.

Hardly soaring – hardly unsustainable.

And herein lies the problem. Social welfare is a major cost in the budget and it is entirely appropriate that it should be subject to regular review. There are legitimate concerns about the potential for benefit fraud and creating disincentives for people to enter and remain in the workforce. Given that context, why does the government undermine the process of review and reform by framing it in an alarmist manner? This approach just creates antagonism and political noise, thereby diverting attention away from the real policy issues. This has become an unfortunate feature of political discourse in Australia over the last decade, and guilt exists on both sides of the political divide.

Employment Minister Eris Abetz has adopted a similar approach with his claim in a recent speech that Australia risks a ‘wages explosion’.  The reality is that wages growth is currently subdued and declining.  Wage restraint  is a very relevant issue at a time when Australian manufacturing is under pressure, but sensationalist claims by the Minister do nothing to foster a sensible debate.

One worry is that we are seeing the first steps in a campaign to demonise welfare beneficiaries. In opposition, the Coalition made enormous political capital out of demonising asylum seekers. If you can convince some people that asylum seekers are responsible for traffic congestion in Western Sydney it will be a breeze to convince them that ‘dole bludgers’ are responsible for the nation’s economic problems. Better that the working poor direct their anger at the unemployed and the disabled than at the government – although it is difficult to imagine that even a focus on benefit fraud will distract the electorate from the government’s absurdly generous paid parental leave scheme.

Kevin Andrews’ claim that our current welfare system is unsustainable may be right in one respect. The rapid growth in one class of beneficiaries stands out – old-age pensioners. Their numbers ‘soared’ more than 25% over the ten-year period and projections reveal continued rapid growth. Furthermore, they make up nearly half of total beneficiary numbers. But after acknowledging that ‘a rapidly ageing population…places pressures on the economy’ and saying that ‘it’s prudent for the government to look at welfare,’ Andrews specifically excluded the age pension from the current review. Remarkably the largest and fastest growing benefit is the only one that is out of bounds.

Andrews realises that if his review encompassed the age pension, the Opposition would howl endlessly about an attack on the elderly and that that message would drown out all others. Elderly voters are too numerous, and too crucial to the Coalition in particular, to take that risk.

Many people will think the right outcome has been achieved – that the age pension should be off limits. But this highlights another major flaw in today’s politics. Some policy areas have become too dangerous for politicians to go near, let alone analyse and discuss in a meaningful way. There are many different aspects to age pension policy including rates, age of entitlement, means testing and indexation. It is a complex area and one where it should be possible to conduct regular reviews.

Australian politics has developed too many of these policy ‘no go’ areas. Industrial relations is another obvious example. It has become so electorally toxic for the Coalition that most elements of it are essentially off the agenda now. Superannuation is a vast and complicated area ripe for reform yet with accusations of ‘class warfare’ the Coalition has largely succeeded in making it a no go zone for the ALP. Similarly, the ALP’s attacks before the last election have effectively made it impossible for the Coalition to reform GST. Whatever your views in these different areas, permanent paralysis can hardly be a desirable outcome.

A 24/7 news cycle, governments that do nothing but campaign, oppositions that do nothing but oppose, and citizens who are increasingly demanding and suspicious have all combined to create an unhealthy narrowing of the political agenda in Australia. As more and more policy issues become deadlocked, we will eventually reach the point when governments only feel safe attacking asylum seekers, recipients of foreign aid, the unemployed and the disabled.

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  2. Joe said:

    excellent and thought provoking. I have often wondered what the smoke and mirrors of the current welfare system would unveil. We are headed for tuburlant times.

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