John Falzon  ‘Welfare reform’ but where are the jobs?

Mar 5, 2015

If by “welfare” we mean giving assistance to those who don’t really need it and who are living off the public purse, then it is indeed time we had a comprehensive review of welfare.

Sadly, but not surprisingly, the McClure Welfare Review was given the task of cutting social expenditure to those who actually do need it. If only we devoted as much effort to welfare reform for the corporates and the rich as we do for the people who struggle! If only we were able to admit that our irrational spending on those who need it least has to stop. It’s time for a review of corporate welfare.

This, rather than blaming the unemployed for needing assistance, should be our focus. I suppose though that it depends on what you want to achieve. If, as a government, you are actually committed to ramping up inequality, then it will be no surprise that you cut social spending whilst leaving tax loopholes and concessions that benefit the rich largely untouched. If, on the other hand, with Oliver Wendell Holmes, you affirm that “Taxes are the price we pay for a civilised society”, then you will do all that is possible to put a civilised society for all ahead of profits just for some.

While we are on the subject, it’s interesting how whenever, as a society, we ask large corporations to pay their fair share of tax we are accused of being ham-fisted and threatened with a capital strike but when we cut spending for the people who struggle, we are painted as being fiscally responsible. It is deeply unjust to rip $1 billion from social services. It is not unjust to make large multinational corporations pay their fair share of tax. There is no place in a progressive country for putting the boot into people who are low-paid or on income support, whilst protecting corporate privilege. Social security for people who are aged, young, unemployed, with caring responsibilities, or living with a disability, is something we should be proud of. Welfare for multinational corporations or high-wealth individuals, via revenue foregone, on the other hand, is something we need to stop.

The McClure Review is not without some good ideas, but it was always predicated on two false assumptions: that we need to cut social expenditure and that unemployment is fundamentally a problem that is addressed at the individual, rather than the structural, level. By focusing, for example, on “encouraging” people to find work, there is an almost dogmatic assertion that people actually choose to be unemployed. By talking about making some of the requirements stricter or the compliance harder, we are merely emulating the US approach that unemployment is best addressed by threatening people with even deeper poverty.  Poverty is not a personal choice. Unemployment and underemployment are not personal choices. Forcing people off a social security benefit does not equate with employment: it equates with deeper poverty. You don’t help people into jobs by forcing them into deeper poverty.

What we are looking for is a plan for jobs. What we are left with is a long-term attempt to reduce social spending. Government will not create jobs by cutting spending. The people who use the social security system in Australia are people we should be investing in and supporting. The people who are unemployed are not the problem. The problem is that there are not enough jobs. With only one job available for every thirteen jobseekers (based on ABS data on labour underutilisation) it is clear that the starting point should be a jobs plan, including economic development in areas of high unemployment combined with access to high quality education and training. It also means addressing the clear inadequacy of the Newstart payment, which sits at only 40 per cent of the minimum wage and is so low that it has become an obstacle to participation.  We repeat our call for an immediate $50 a week increase to the Newstart payment and the indexing of all payments to wages rather than CPI. A good social security system is meant to prevent poverty, not to humiliate people.

The St Vincent de Paul Society supports an approach which actually invests in people and supports them so that they can participate in society and, where appropriate, in paid employment. We are concerned by the potential impact of the proposed tiered Working Age Payment. We are also alarmed by suggestions that support for people living in social housing could be undermined. As for the suggestion that people under the age of 22 should not receive independent income support, we are left wondering how they are meant to survive.

Life has taught us that an injury to one is an injury to all. Solidarity is our secret weapon in the struggle against inequality. We will win in our struggle against inequality by defending and extending the gains we have made in the areas of universal health, free education, and a social security system that keeps people out of poverty and supports them to live with dignity. We are also desperately in need of a national plan for full employment (remember the 1945 White Paper on Full Employment in Australia?), including an economic development component and, very importantly, a plan to ensure that no one misses out on social and affordable housing. Sticks on the backs of the unemployed will not create jobs. Neither, for that matter, will the carrot of encouragement. It is the role of government to allow society to achieve collectively what we cannot achieve individually. Governments must do what markets cannot. Markets are a very useful mechanism for generating profit, but woeful at guaranteeing equity and fairness.


Dr John Falzon is CEO, St Vincent de Paul Society, Australia.




(For an excellent analysis of our current jobs crisis, especially in terms of youth unemployment, see the work of Professor William Mitchell: )

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