ON LINE opinion – Australia’s e-journal of social and political debate
Posted Friday, 14 March 2008
Of all the issues which the 2020 Summit in Canberra needs to address the most pressing is modernising Australia’s social security system. The first Commonwealth social security legislation, providing for age and invalid pensions, was passed in Australia in 1908. Until that time, social welfare had been managed entirely by the states. The states inherited the British poor law system of financial assistance, but without work houses. The system was imbued with the poor law mentality of “lesser eligibility” whereby it was intended that any person assisted would always be better off working than receiving assistance.
Not surprisingly, the Commonwealth adopted a similar mentality to the states. The government of the day insisted that various eligibility criteria and means tests were incorporated into the legislation to ensure that only the very ill and financially distressed were assisted. This form of targeted assistance was a far cry from the widespread European tradition of social insurance and is even further removed from the system of Basic Income which is currently being considered in a number of countries.
During the first half of the 20th century, an applicant for a pension had to establish they were of good character. This requirement remained in place until 1973 when Bill Hayden ordered it be dropped. As late as 1972, I saw files where applicants for invalid pensions were advised, “That they were not deemed worthy to receive a pension”. The poor law system sought to erode citizenship rights of claimants whereas Hayden attempted to implement a social security system based on entitlement.
Stigma is embedded in every targeted welfare system, mainly because of the detailed inquisitorial nature of assessing who is and who is not “worthy” to receive the payment. The more discretion given to the dispenser of assistance the greater the danger of abuse by the assessor and the less certainty of eligibility there is in the mind of the applicant. In 1870, Charles Lamport, wrote of the British poor law system, “Society, before it yields what it dare not refuse, so embitters the morsel by contempt that neither giver nor receiver is blessed in the act”.
With the demise of the Whitlam Government, Australia’s social security administration retreated towards noblesse oblige until the late 1980s when the establishment of a moral entitlement was mediated through what came to be called “reciprocal obligation”.
In 1996, the incoming Howard Government pursued this policy relentlessly; renaming the process “mutual obligation” and insisting that if people were to be supplied with poverty-line income support “then it was only fair that they gave something back in return”. It was like throwing a dollar into a blind person’s cup and then threatening to take the dollar back if the blind person continued to refuse to see.
Howard (The Australian, May 4, 1999 and January 12, 2000) set out his plans for social welfare in this country; the social security system became more selective and targeted, and recipients were forced to meet increasingly oppressive requirements. Although the Howard Government claimed that its policies were aimed at getting recipients of income support back into work, the Brotherhood of St Laurence (PDF 263KB) and St. Vincent de Paul [Ziguras, Dufty and Considine (2003)] argued that the excessive obligations imposed on recipients (in return for payment) amounted to a policy of “welfare as work”.
The Howard Government rhetoric about obligation was at its shrillest during the Intervention into Aboriginal communities in the Northern Territory where all Indigenous recipients of social security living on communities had half their payments earmarked for approved purchases. Here was a perfect example of how the very poorest citizens of the nation were expected to make the greatest return to the Government for benefits that other citizens received without having to make an equivalent return. (Tomlinson 2008)
The Rudd Government has persevered with the Northern Territory intervention in relation to quarantining half of people’s social security payments, in the short term, although it has attempted to accommodate Aboriginal objections to other aspects of the intervention. Somewhat similar interventions have recently been embarked upon in several Indigenous communities in the Kimberlies and on Cape York.
However we look at “mutual obligation”, “reciprocal obligation” or the quarantining of welfare monies under such interventions, each of them amounts to a form of paternalism. In fact most, if not all, of the requirements imposed on social security recipients allegedly “to assist them to return to work” or to “rehabilitate themselves” are paternalistic in so far as government agents assert they are helping people who otherwise would not be clever enough to help themselves.
Why should governments be allowed to impose paternalistic obligation upon social security recipients just because they need the benefits to survive? Professor Guy Standing in his book Beyond the New Paternalism (2002) provides hundreds of reasons why we should trust social security recipients to celebrate their autonomy and why we should oppose income support policies which interfere with the liberty and initiative of social security recipients.
Governments since 1908 have maintained that targeted means-tested benefits are the “most efficient” (cheapest) way to help people avoid poverty and assist “the needy”. One hundred years of poverty traps and enduring poverty should be long enough to convince even the most obtuse that they are wrong.
There is a better way and that way is the provision of a Basic Income. A Basic Income would be paid to every permanent resident of Australia, as an individual, whether they live alone or with others, irrespective of their wealth or lack of it. It would be paid to those who engage in paid work as well as to those who are not remunerated for their labour.
A Basic Income is affordable. Australia is an affluent country which could easily afford to introduce a Basic Income paid to every permanent resident at a rate slightly above the age pension for single pensioners. An amount of $500 per annum above the age pension rate would be needed to cash out the tax deductibility concession currently provided to age pensioners who have additional income, if they are not to lose in the transition to a Basic Income. A Basic Income at this level would ensure that no current social security pensioner or beneficiary would be disadvantaged by the shift to a Basic Income while most low income earners would be financially advantaged.
Perhaps the clearest and most succinct refutation of the suggestion that Basic Income is unaffordable is put forward by Jose Iglesias Fernandez (2002). He argues for a Basic Income for Catalonia at a rate of half the per capita income of this region of Spain. He says that since the wealth needed already exists, the question is not affordability but willingness to redistribute that income. The proposal suggested here for Australia is a Basic Income of approximately 25 per cent of average weekly earnings which would involve considerably less redistribution than that suggested for Catalonia.
The existing system of social security is inadequate, unjust and maintains people in poverty. It is clumsy, difficult to administer, hard to understand, discriminates against people with partners, poorly assists people with disabilities and has survived at least 50 years too long.
Australia needs to move to a socially just, easily understandable Basic Income which would sustain people above the poverty line if they cannot gain other income and help low income workers to escape poverty altogether. It could free people to become more productive. The economy would expand because a Basic Income would free up entrepreneurial imagining, make it easier for mature workers to gain further training, provide opportunities for workers to engage in new occupations and remove many obstacles to technological innovation.
A Basic Income would ensure that people have access to money when they are in financial need. It does not interfere with incentives to increase income and it rewards self-help. It inculcates the young, reminds the middle aged and the old of the need to ensure that no one goes to bed hungry and in this way allows and encourages intergenerational transfers by underlining the importance of social solidarity. It stigmatises no one because it treats all permanent residents equally.
It converts meaningless phrases like “increasing community capacity” or “increasing social capital” or “ensuring social insertion /inclusion” into a substantial process by encouraging sharing while allowing an equal taking from society’s income pool. It is a universal program, and because it does all these things, it enhances the quality of community life. Above all, it is the decent thing to do.
Copyright © 2020 John Tomlinson