The existing labour market and welfare systems of Australia are as described in the first part of the title of this article.
Over a century ago, in the early years of the 20th century the Australian labour market and welfare system were described by Albert Metin, a visiting French scholar, as “socialism without doctrine” (Wikipedia 2017). The introduction of age and invalid pensions in 1910 coupled with the industrial arbitration system formed the basis for such a description. In the mid 1980s, at the height of the welfare state, our system was described by Professor Francis Castles as a “workers’ welfare state”. But in 2001, in a sad reflective article entitled “A farewell to the Australian welfare state” he described the erosion of the welfare system.
Insecure, casual, part-time, low paid, unsafe employment is increasingly becoming the new reality for many in the Australian labour market. Guy Standing (2011, 2014, 2016) has written a number of books detailing the rise of the precariat throughout the Western world. Tim Dunlop (2016) has described the gig economy here.
With full-time award-waged secure employment becoming scarcer, it might be assumed that Australian governments would boost the generosity and scope of the social security system to sustain workers confronted by unemployment or underemployment. However, governments of both Labor and conservative persuasion have tightened eligibility requirements and forced thousands of social security recipients from more generous social security provisions such as Disability Support Pensions or Sole Parent Payments on to New Start (a confusing name for a benefit once called Unemployment Benefit) which is paid at a far lower rate and has a range of government imposed obligations attached to it. As I write the Turnbull Government is attempting to legislate to move students and young unemployed people from New Start to the even less generous Youth Allowance.
Since 1987 governments have been obsessed with stamping out what they call the “welfare dependence” of social security recipients. It was once considered that those reliant upon continuing social security payments were simply exercising their rights as permanent residents of this country. The implied moral hazard which recent governments attach to receipt of social security has been imbibed by many employed Australians who resent their taxes going to unemployed people, single parents and those with severe disabilities. This process is aptly named downward envy and it has been consciously encouraged by all governments since John Howard became prime minister in 1996 (Tomlinson 1999). The intention is to divide the working class into employed and unemployed, to divide those who receive social security into a number of separate categories so that they won’t be able to build solidarity, let alone solidarity with the entire working class.
Possible alternative directions
One of many alternatives to the status quo is the implementation of a universal basic income paid at a level above the Henderson Poverty Line to each and every individual permanent resident irrespective of their marital, employment or other social status and one which ignores whether they live alone or with others.
Such a payment would not be able to be garnisheed by the government or by anyone else. This arrangement is necessary to avoid a fiasco like the Turnbull Government’s computer generated letters of demand. Some of the most financially vulnerable people who are not bureaucratically sophisticated have been sent a letter saying that up to six years previously they were overpaid social security. See (McKenzie–Murray, 2017, Stewart 2017) for a description of the emotional and mental health harm that demanding that people immediately repay a debt to the Commonwealth when the overwhelming majority were not overpaid social security in the first place.
A basic income would be paid to Gina Rinehart and every lesser mortal who permanently inhabits this wide brown land. In order to ensure that no-one presently in receipt of welfare assistance or social security is disadvantaged by the change to a basic income, the annual payment would need to be in the order of $500 above the single age pension which is pegged at 27.7 percent of the total average male earnings (National Commission of Audit 2017). In order to ensure that less affluent residents are not adversely affected by the introduction of a basic income many of the educational, health, housing, legal, veteran’s and particularly disability services would need to remain in place.
How would we pay for a basic income?
The Australian Budget has not been in surplus since the early years of the first Rudd Government, the current Turnbull Government has been unsuccessfully attempting to slash social security in order to balance the budget. Both Governments have run into heavy headwinds in the Senate. A basic income combined with leaving intact most of the educational, health, housing, legal, disability and veteran’s services would require much more funding than the existing social welfare/income support programs.
Having acknowledged this it is important to point out that is not the end of the matter. There are many things which could be done to find the extra money needed to pay for a real people’s welfare state undergirded by a basic income.
I would start with the tax system:
The changes in capital gains and negative gearing would help take some of the excessive heat out of the private housing market and if we were to combine that with reinvigorating the social and public housing systems we might seriously address homelessness and its associated despair.
The next thing I would concentrate on is business and farm subsidies. Well over $25 billion is provided in subsidies to business annually. A lot of the money is disguised as employment promotion schemes which would be unnecessary once a basic income was in place. There are a multitude of subsidies to rural industries which would no longer have the same imperative once a basic income underpinned every permanent resident. The idea of propping up the development of northern Australia by subsidising those who want to open up marginal enterprises would be laughable if it did undermine much of the ecology of northern Australia. Such pipe dreams should be sole prerogative of people with enough money of their own to pursue such ecocide. There may well be good reasons to subsidise renewable energy schemes like the wave generator off Bunbury and thermal electricity generation. Solar and wind technology may also need continuing subsidisation. Emerging forms of renewable energy could also be helped by subsidies but no more money should be put into diesel subsidies for mining industries. Coal should not get another cent. The myths about clean coal should be sequestered in disused mine shafts.
There are many other taxes which could be tweaked; such as transaction taxes on money transfers. All these changes whist quite momentous are not so far out of the ball park as to be not worth considering. Clearly we could afford to introduce a basic income without impinging on the wellbeing of Australians receiving up to average weekly earnings. It needs to be remembered that two-thirds of Australians receive less than average weekly earnings.
The one-third of affluent Australians earning more than average weekly earnings would be required to pay more than they are currently paying to Treasury and yes some of them will whinge that their wealth is not continuing to increase at a far greater rate than ordinary workers. But even though they might not immediately recognise it, they too will benefit by residing is a more egalitarian society (Pickett & Wilkinson 2009, Marmot 2016).
In 1991 the ACT Council of Social Services produced a monograph entitled The Super Tax Rort. At the time, Keating was foreshadowing the introduction of a privatised form of compulsory superannuation and the Council foresaw a number of potential pitfalls with his proposal arguing that low income earners, recently arrived migrants, casual workers, women and older workers would receive few benefits. The Council saw the potential for rich people to grab the bulk of the tax windfall.
Today we see that there are many rich people who receive, as a result of their superannuation investments, a greater financial benefit in foregone tax than do age pensioners. The superannuation schemes are riddled with inequities, risks, constant changes and contradictions.
There exists no clear equity argument to regard a dollar of superannuation any differently from a dollar of social security or a dollar of earned income or a dollar of unearned income received. Treating them in a different way in the tax and social security system is illogical and results in inequities.
Once a basic income was in place it would be important to tax monies received from superannuation in exactly the same way as money received from employment, investment, royalties and tax should be paid on each and every dollar received from any source. The basic income would not be taxed.
Australia uses the euphemism of “Defence spending” to describe our expenditure on equipment and salaries to maintain our war machine. We despatch troops around the world meeting nice people and killing them. Recently our governments have used the military to arrest asylum seekers arriving by sea, shipping them to Pacific Islands where they are incarcerated, slowly driven mad, raped and murdered by private contractors or local thugs.
We could save billions of dollars annually if we processed such asylum seekers on the mainland of Australian. We would save many more billions if we turned our foreign military machine into a true defence department and just safeguarded Australia from invasion.
These proposals do nothing to lower the corporate tax rate in Australia, they do nothing to attract business empires who need to be bribed with tax holidays, massive tax write offs or any of the other corrupt business inducements which have been part and parcel of the neo-liberal extravagance since the mid 1980s (Mays, Marston & Tomlinson 2016). These proposals are about addressing social justice agendas, about fairness, about the equity which all Australians should have in a decent Australian future.
The main purpose of a social security system is to provide emotional, psychological and financial security to people when they are prevented from adequately maintaining themselves. One hundred years of categorical means-tested income support has shown that only universal provision can guarantee the abolition of poverty. A major reason to have a tax system is to fund the welfare state and to provide necessary services and protections the populace requires. Under the proposals outline above we can do both. We don’t need to threaten and cajole the least powerful of our citizens. We can assist them by reinventing a generous Commonwealth of Australia committed to social solidarity and universal provision.
ACT Council for Social Services (1991) The Super Tax Rort. ACTCOSS, Canberra.
Dunlop, T. (2016) Why the future is Workless. Newsouth, Sydney.
McKenzie–Murray, M. (2017) Centrelink’s debt collection ‘pushed him over the edge’ The Saturday Paper. Hard copy pages 1 & 4. 18th February. https://www.thesaturdaypaper.com.au/2017/02/18/centrelinks-debt-collection-pushed-him-over-the-edge/14873364004249
Marmot, M. (2016) Fair Australia: Social Justice and the Health Gap. ABC, Sydney. http://www.abc.net.au/radionational/programs/boyerlectures/series/2016-boyer-lectures/7802472
Mays, J. Marston, G. & Tomlinson, J. (2016) Basic Income in Australia and New Zealand: Perspectives from the Neoliberal Frontier. Palgrave Macmillian, Basingstoke.
National Commission of Audit (2017) “Age Pension 7.1” http://www.ncoa.gov.au/report/phase-one/part-b/7-1-age-pension.html
Pickett, K. & Wilkinson, R. (2009) The Spirit Level: Why More Equal Societies Almost Always Do Better. Allen Lane (Penguin), London.
Standing, G. (2011) The Precariat: The New Dangerous Class. Bloomsbury, London.
Standing, G. (2014) A Precariat Charter: From Denizens to Citizens. Bloomsbury, London.
Standing, G. (2016) The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not pay. Biteback, London.
Stewart, E. (2017) “How Centrelink debt letters are harming Australians’ mental health.” ABC, Sydney. 12th January. http://www.abc.net.au/news/2017-01-12/centrelink-debt-letters-harming-mental-health/8169182
Tomlinson, J. (1999) “The politics of downward envy.” Union Song website
Wikipedia (2017) “Socialism without doctrine.” https://en.wikipedia.org/wiki/Socialism_with_no_doctrine
Originally Published in On Line Opinion on 23rd February 2017 under the title “Precarious, unsafe and socially inadequate.”
Copyright © 2020 John Tomlinson