Published in: Carlson, Ellen (Editor). Path to Full Employment, The. Callaghan, NSW: University of Newcastle, Centre of Full Employment and Equity, 2002: 227-236.
Australia has experienced almost continuous economic growth throughout the three terms of the Howard Government, yet it has only succeeded in decreasing the officially recognised unemployment level by two percentage points. This Government has attempted to decrease the level of unemployment by continuing to rely on economic growth, imposing labour market flexibility, watering down unfair dismissal legislation and discouraging unemployed people from applying for benefit. The main tactic, which this Government has utilised in ‘solving’ the unemployment problem, is to attack the social reputation of unemployed people. This paper considers the ethical justifications provided by the Howard Government for the manner in which it handles the unemployment problem.
This paper will conclude by briefly discussing an alternative to the Howard Government’s unemployment policy; namely the Government becoming an employer of last resort in association with the provision of a Universal Basic Income.
When the Keating Labor Government lost office in 1996, the officially recognised unemployment rate stood at 8.6%. By March 2002, that rate had only declined to 6.6%. Throughout most of the period of the Howard Government unemployment has hovered around 7.0% and in some states and Territories unemployment has remained over 8%. Estimates of ‘real’ unemployment levels, if underemployed and discouraged unemployed people are taken into account, are in the region of 20%. In most of Indigenous Australia, if the Community Development Employment Program (CDEP) is properly recognised as a form of ‘work for the dole’, rather than employment, the ‘real’ unemployment levels for Indigenous Australians are in the order of 50 –80% (HREOC 2002 Ch.2, ATSIC News 2001 pp.1-31).
Many alternatives, to the present Government’s approach towards unemployment, have been presented during the last decade in Australia: Langmore and Quiggan’s (1994) Work for All, the Keating Labor Government’s 1994 Working Nation, Boreham, Dow and Leet’s (1999) Room to Manoeuvre, Stilwell’s (2000) Changing Track, at this and at all previous eight National Conferences on Unemployment. Yet, in spite of overwhelming evidence to the contrary (Omerod’s The Death of Economics 1994, Kelsey’s 1995 The New Zealand Experiment, Goodin, Headey, Muffels and Dirven’s The Real Worlds of Welfare Capitalism 1999, Jamrozik’s Social Policy in the Post Welfare State 2001, Hutton’s The World We’re In 2002), the present Government perseveres with the economic fundamentalist line that growth (coupled with berating the unemployed for failing to find non-existent work) will abolish unemployment.
Perhaps the first thing to ask is how did this country get to this sorry state? Australia has never been wealthier yet, over the last couple of years; the Government refused social security to more poor people than ever before. This refusal to pay benefits is achieved by breaching (ACOSS 2001, 2002), imposing unconscionable ‘mutual obligations’ (Goodin 2001, Hammer 2002, Kinnear 2000, Schooneveldt 2002, Tomlinson 2001[a], 2002), extended family means tests and by further tightening eligibility requirements. The short answer is that Australians swallowed the economic fundamentalist prescription hook, line and sinker. Whether one endorses Susan George’s (1997) explanation of the reasons for the rise of economic fundamentalism or prefers a less conspiratorial account (Hutton 2002), it is clear that (within the Australian social welfare system) there has been a major ideological shift from a social democratic noblesse oblige to a compelled conservative compact.
The present Prime Minister has never attempted to disguise his social conservatism. In May 1999 and January 2000 Howard spelt out his prescription for Australia’s unemployed. Minister Newman (1999) elaborated the Government’s position in her paper entitled The Challenge of Welfare Dependency in the 21st Century, which was issued to guide to the McClure Committee’s deliberations.
The McClure Report (2000) obsequiously recommended that not only were unemployed people be compelled ‘to participate’ but that single parents and people receiving Disability Support Pensions should also be compelled ‘to participate’. The 2002/3 Budget foreshadowed transferring 180,000 Disability Support Pensioners, who worked 15 or more hours a week, to an unemployment benefit paid at $52 a fortnight less than the pension. This is allegedly being done as a way of helping them back into employment. Such a claim flies in the face of the fact that there have been no net full-time jobs created in Australia in recent years (ABC 2002, Gregory 2000) and that anyone, who has a significant impairment, makes a substantial contribution to society and the economy by managing to work the equivalent of 2 full days each week. The Budget proposal blithely ignores the fact that income received by pensioners is more generously means tested than income received by unemployment beneficiaries. Introducing such a change would decrease the financial incentives for people currently receiving Disability Support Pensions to maximise their hours of work. The extra “mutual obligations”, reporting responsibilities and the present breaching regime imposed on unemployment beneficiaries would invariably lead to many of these 180,000 Disability Support Pensioners experiencing increased income insecurity.
The Government rationalises its reliance on growth in a number of ways:
At last year’s Conference I set out the main ethical distinctions between universal and utilitarian concepts of rights (Tomlinson 2002). O’Connor (2001) has described some of the origins of the concept of ‘welfare dependency’ as interpreted by the present Australian Government. Kinnear (2000) and Hammer’s (2002) work has substantially added to the debate. Robert Goodin (2001) provides a sustained articulate analysis of the failure of ‘mutual obligation’ and increasingly targeted income support to achieve justice for the least affluent Australians.
Goodin (2001) points to the propensity of governments to assert an implied consent, for changes in income policy between welfare recipients and the State, through the widespread use of the language of the social contract. He conjures the image of a highwayman declaring that even if one had parted with one’s money in return for one’s life no court would enforce such a contract. He goes on:
The proposition that the welfare worker is putting to her putative ‘client’ is: ‘Agree or starve.’ That is the same, in all essentials, to the proposition the highwayman puts to his victim: ‘Agree or die.’(p.191).
Just as we still have an obligation to feed people even after they have committed heinous crimes so too we have an obligation to not let people starve even if they have committed mortal sins against the labour market …Welfare recipients have not agreed to those new arrangements at the macro-level; and such consent as they give at the micro- level, in ‘agreements’ negotiated under effective duress with welfare caseworkers, has no moral standing (p.195).
If we seriously believed that work is good for you and that it is the state’s legitimate role to force you to do it, then we would have no grounds for confining our paternalism to the poor. Paternalistically speaking, it would be equally important to make the rich work too (p.198).
There has been a concerted effort at least since Daniel Bell’s (1965) The End of Ideology to present the argument that the socialist challenge has failed and the West prevailed (Fukuyama 1992). Some would date this effort as commencing with Hayek’s (1944) The Road to Serfdom. The backers of the rise of economic fundamentalism have clearly played a part in this quite successful attempt at mystification (Hutton 2002, George 1997), as have many of the ‘public choice’ theorists (Stretton and Orchard 1994). In addition, post modernism – particularly with its end of grand narrative and moral relativity – has played a part in creating an intellectual climate in which defence of left analyses is presented as quaintly old fashioned (Windschuttle 1994). In such a climate, Blair’s ‘third way’ and Latham’s (1998, 2001) social entrepreneurs attract adherents. In Australia, this has led to a conflation of the concept of social entrepreneurship with Howard’s ideas (1999, 2000) about ‘mutual obligation’ in the writings of Pearson (1999). With rare exceptions such as Cook, Dodds and Mitchell (2001) critique this conflation is unthinkingly applauded.
Running in parallel with economic fundamentalists’ obsessive denigration of socialism, altruism, humanism and any form of Freirian (1972) liberation has been a conservative attack on welfare provision and human rights. An early articulation of this position was provided by Culpitt (1992, Ch. 1). Howard (1999), in his round table address, clearly sets out his amalgam of economic liberal and social conservatism. The fervour with which human rights and universal welfare provision are attacked by the right wing ‘dependency’ ideologues is only matched by almost religious attachment to market ‘liberty’. They have to some extent succeeded in convincing many that the market should be the ultimate determiner of fairness, social justice and good taste (Pusey1991, Rees, Rodley & Stilwell 1993, Stilwell 2000). There is remarkably little recognition of the central contradiction in relation to ‘liberty’ inherent in economic fundamentalism. That is – the increased liberty (enabling the rich to pursue their market desires) denies, weakens or ignores the social and economic liberties of poor people.
It would count for naught if the struggle only impacted at a conceptual level – it doesn’t. It has long been acknowledged that low income, unemployment, and the associated stress have adverse social stability and health outcomes (Turrell 2001, Feyer and Broom 2001, Watts 1997, Patton and Donohue 1997, Dury, Creed and Winefield 1997). The imposition of ‘mutual obligation’ coupled with a harsh breaching regime has intensified the pressures upon unemployed people. It has dramatically increased the likelihood of homelessness and social dislocation (ACOSS 2002, Schooneveldt 2002). Evidence is emerging which establishes that having one’s social security reduced or removed creates increased health difficulties for the children of beneficiaries who are breached (Cook, Frank, Berkowitz, Black, Casey, Cutts, Meyers, Zaldivar, Skalicky, Levenson and Heeren 2002).
American style globalisation, ‘free trade’ rather than fair trade, privatisation of public assets, business deregulation, labour market flexibility, enforced self- provision, ‘mutual obligation’ and lowered taxes all impact adversely on workers and unemployed people. It has led to grossly unequal outcomes between rich and poor nations and to increasing inequality between rich and poor people within all of the English speaking developed countries (Hutton 2002). In Australia and elsewhere, this has led to increasing income insecurity for those relegated to the fringes of the labour market. About 30 percent of workers are now engaged in some form of precarious employment (Stilwell 2000, Jamrozik 2001, Tomlinson 2001[b] Ch. 4). As Castles (2001 p.31) notes:
From the time of the Hawke Labor government onwards, the situation of welfare beneficiaries has been changing for the worst. There has been increasingly more policing of benefit eligibility, with the strongest element of forced compliance an unemployment work test which has become increasingly onerous to fulfil. Under the Howard government, the conditions of this test have become extremely strict, with an increasingly explicit moral justification that recipients must return something to society in return for their benefit.
In an attempt to justify the economic fundamentalist onslaught on social security recipients, academic and political apologists for ‘mutual obligation’ have mounted a ceaseless tirade against what they call ‘welfare dependency’ (Selbourne 1994, Mead 1997, Green 1999, Newman 1999, Pearson 1999, McClure 2000, Sullivan 2000).
Such denigrators of poor people ignore the reality that in Australia:
The welfare dependency explanation for the persistent unemployment since 1975 fails when confronted with the evidence. With the Unemployment to V acancy (UV) ratio averaging around 11 since that time, it is a fallacy of composition to consider that the difference between getting a job and being unemployed is a matter of individual endeavour. Adopting welfare dependency as a lifestyle is different to an individual, who is powerless in the face of systemic failure, seeking income support as a right of citizenry (Cook, Dodds and Mitchell 2001 p.24).
Using long-term panel studies, Goodin, Headey, Muffels and Dirven (1999 pp.260-261) have demonstrated that the overwhelming number of poor people – in Germany, Netherlands and the US – do not remain poor indefinitely and that the Dutch welfare system, which is the most generous of the three, is:
The lesson which Australians should take from this study is one that we once knew – but, since 1986, have forgotten. That is that Australia can have a generous welfare system, social stability, humanitarian inclusion and economic efficiency simultaneously.
Governments in Australia since 1975 have relied mainly on economic growth strategies to create jobs and such a strategy has not created sufficient work for all who want it. As Cook, Dodds and Mitchell (2001 p.1) succinctly state “The pro-market agenda has failed to restore full employment.” In the face of 27 years of governments’ abject failure to create full employment, the Howard Government has a choice. It could:
or it can persevere with its present strategy of continuing to denigrate unemployed people – thereby hoping to continue defusing the electoral problem which high levels of unemployment creates.
Governments, most famously that of Maggie Thatcher, would like the public to believe in ‘TINA’, that is, There Is No Alternative to the one which the government is presenting. On the contrary there are sensible, practical and affordable alternatives to the Howard Government’s compelled conservative compact which imposed on some of Australia’s poorest citizens an estimated 386,946 breaches in 2000/2001(ACOSS 2002, Schooneveldt 2002).
For over 40 years critics (Tomlinson 1975) have railed against the prevalence of noblesse oblige in social security policy because of its elitism, moral judgementality and the arbitrary nature of decision-making. Y et a system of noblesse oblige is preferable to the present ruthless disregard being shown for the well-being and even the survival of many of Australia’s most vulnerable citizens. “Aristocracy contained the notion of noblesse oblige – literally, ‘nobility obliges’ …their privilege (is) subject to their recognition of their obligations to the social whole (Hutton 2002 p.69)”. Howard (2000) has inverted the notion that the affluent are obliged to assist, by asserting that ‘mutual obligation’ means that if people without access to income are assisted, then they are obligated to give something back to the Government. Kinnear (2000 p.23) declares:
The policy of Mutual Obligation is a distortion and a reversal of the basic values of reciprocity. It could also be argued that the call of those in a position of advantage for those less advantaged to nevertheless make social repayments under threat of the withdrawal of their only means of support is itself evidence of the moral crisis of ‘taking without giving’.
On any day there are thousands of Australians enduring reductions in, or total cancellations of, social security payments because of some minor breach of conditions – such as being late for a Centrelink interview. The Howard Government has been very successful at convincing the electorate that it has no obligation to pay even poverty line income to people who fail to meet increasingly punitive ‘mutual obligations’. Kinnear (2000 p.23) points out that “taking without giving” utilises the mechanism of downward envy to justify such thinking. This phenomenon has moved well beyond social security recipients. Recent cutbacks to public liability, medical negligence and workers compensation insurance jeopardise the financial security of any victim of misadventure. What started as an attack on the social security eligibility rights of young unemployed people has expanded, within 6 years, into a full-scale assault upon the social and economic rights of all Australian people.
It is clear that Australia has become a less equal society since the 1970s and moved closer to the US work/welfare arrangements (Watts 2001[a]). More and more Australians are engaged in precarious, part-time, casual, low paid employment (Boreham, Dow and Leet, 1999, Jamrozik 2001, Stilwell 2000, Watts 1997). Howard has promoted the concept of our becoming a nation of shareholders in line with the US. Australians would be wise to note Hutton’s (2002) research into that share owning society:
64 per cent of American households own less than $5,000 worth of shares (p.124). [The] richest 1 percent of the population holds 38 percent of its wealth (p.149). [Increasingly many are working long hours in low paid jobs] – Americans, in short have created a treadmill for themselves and hailed it as an economic miracle (p.169).
If Australia is able to escape from a mentality that is: untrusting, socially divisive, anti-Indigenous, lock-up the refugees, xenophobic, increasingly constrained, downwardly envious and anti-welfare (which has descended upon this country like a mist since 1996) citizens might be able to give serious consideration to constructing a liberating, inclusive, humanitarian and just social policy agenda.
There are far more exciting alternatives to the present Government’s policies than a return to noblesse oblige; namely the introduction of a universal Basic Income for all permanent residents of this country (Tomlinson 2001[b]). Ideally such an incomes policy would operate in association with a commitment to:
I have written extensively about Basic Income (Tomlinson 2001[b]), as have many others (BIEN and NZUBI websites). Surprisingly many consider the concept recent and radical. On the contrary, the first English language full- length book devoted to entirely to State provided universal income guarantees was published in England in 1920. Dennis Milner wrote it. Basic Income is essentially about the provision of an above poverty line universal payment to all permanent residents. Whilst this runs counter to prevailing Government views, there is nothing radical about the idea. President Nixon and the conservative economist, Milton Friedman, promoted compatible ideas in the1970s, as did the Liberal economist Lady Rhys-Williams in 1943 (Tomlinson 2001[b] Ch. 9).
The introduction of a universal Basic Income would not abolish unemployment. It would simply provide a sound social and economic basis from which to develop full employment. It would however forever abolish the moral aberration of ‘mutual obligation’ because people could no longer be compelled to do anything in return for the payment of the social security pittance. Their entitlement to at least poverty line income would be a right of their citizenship.
Van Parijs (1992 p.229) claims that because a Basic Income is paid, irrespective of all other sources of income, it can be used by those who desire work as a wage subsidy; yet, because it provides sufficient income on which to live, it does not compel any potential worker to work under conditions which that worker finds unacceptable. He concludes that “Whereas a rising means-tested benefit makes it increasingly difficult for unskilled people to find a job, a rising basic income makes it increasingly feasible (Van Parijs 1992 p.229)”.
At last year’s Conference, Martin Watts (2001[b]) considered both the job guarantee and Basic Income proposals. He concluded the job guarantee superior on the grounds that “It is a collectivist solution in that the government assumes direct responsibility for employment and income generation (p.27)”. The introduction of a job guarantee might take many forms but would presumably take a couple of years to fully implement. A job guarantee for all who wanted work might in the short term require a shortening of the working week. Though the introduction of a 35 hour week in France did not create as many new jobs had been predicted – it did create over 200,000 and it did not result the economic downturn the economic fundamentalists predicted (Flutter 2001, Lichfield 2001). Guaranteeing every person who wanted paid employment the opportunity to work would significantly alter Australians’ perception of unemployed people if for no other reason than that it would amount to an admission by the Government that the past policies did not create enough jobs for all those seeking work. Beyond that it would involve recognising that “The loss of production through unemployment is the single greatest source of inefficiency in our economy (Committee on Employment Opportunities 1993, p. 1)”.
A universal Basic Income paid at above poverty line levels would ensure every individual, irrespective of her or his connection with the labour market, sufficient income on which to survive. A Basic Income provides income security for all – those who can work and those who can’t. I consider that once such an income base was in place that even a government as ego centred and anti- altruistic as the Howard Government would recognise the advantage of doing all in its power to find work for all without employment in order to boost production. In some ways this is a chicken-and-egg debate. Australians need a universal Basic Income and full employment as well as improved health, education and community services. Because when Australia is compared with other OECD countries it is clear that Australia is currently among “the countries least supportive of the welfare needs of their citizens. If the burden of the welfare state is a factor in unemployment, it is a very limited burden indeed in the Australian context (Boreham, Dow and Leet’s 1999 p. 53)”.
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