Welfare Cheats Are In The Eye Of The Beholder


You’ve got to hand it to Kevin Andrews: he really knows how to mix a metaphor.

Earlier this week, the Minister for Social Services was out and about announcing a new welfare review, to be headed by respected former Mission Australia CEO, Patrick McClure. The review is necessary, Andrews claimed, because Australia’s social security system was becoming “unsustainable”.

“This is not about tossing people off welfare who are there at the present time,” he told journalists. “It's about recognising the reality that the population is ageing … and that means that in the future there will be more people who are dependent upon income support payments and also means that we see a very substantial shrinkage in the growth of the work force.”

Given these remarks, you might think that Andrews will be reviewing the ballooning cost of the age pension. For instance, an older Australian can currently access the pension despite owning a multi-million dollar home and liquid assets of $192,000. Similarly, many so-called "self-funded" retirees are still eligible for big discounts on health and transport costs.

But no, Andrews has specifically ruled out any discussion of the age pension in the new review.

That’s okay, because there’s plenty of welfare to go round. Perhaps the review will consider Australia’s bloated superannuation system? After all, the government extends billions of dollars of tax concessions to the top five per cent of earners. Superannuation tax breaks will soon cost the Treasury more than the age pension itself — an “unsustainable” trend if any there was one.

The Coalition has also pledged to introduce a remarkably generous paid parental leave scheme, in which some highly-paid mothers will be paid $75,000 over six months by the taxpayer. The cost of this scheme is expected to run above $4 billion a year, although it will be partly paid for by a levy on big business. Could that be considered “unsustainable”?

Perhaps it could, but the welfare review led by McClure will not be examining superannuation or paid parental leave.

Then there’s corporate welfare. Left-wing types point out that the government extends special diesel tax rebates and depreciation allowances for big mining companies, not to mention the coming “cash for pollution” bonanza represented by Greg Hunt’s direct action policy. Of course, these are well outside the purview of the Coalition’s definition of “welfare”.

Instead, the welfare review will focus on Newstart and the Disability Support Pension, government benefits that support the unemployed and those unable to work because of disability.

The two programs represent large annual outlays to the public purse. But they are also tightly targeted and strictly means tested. Time and again, international comparisons of Australia’s welfare system have found that we have a relatively stingy welfare state. Despite this, our welfare system is highly effective at reaching those in genuine need.

The real advantage of such a focus on the unemployed and disabled, of course, is that politically, these are the groups least able to speak up for themselves. While in government, Labor pushed approximately 80,000 single parents off the parenting payment and onto Newstart. The savings to the budget ran into the hundreds of millions, but at a cost of genuine hardship for those affected. Despite a vocal campaign against the welfare cuts, Julia Gillard went through with the decision, supported in Parliament by the Coalition.

It seems fairly clear that what Andrews has in mind here is an opportunity to reshape the welfare system towards a less universal and more punitive model. Carers and single parents also look to be under the gun. Tightening benefit conditions saves the budget money. It also gives Andrews the added opportunity for populist political attacks against dole bludgers and welfare cheats, which always plays well with the tabloid newspapers.

To buttress his arguments about “unsustainability”, Andrews argued this week that Australia risked ending up like “some of the European countries at the moment where their welfare system has become unsustainable.”

Like so many of the strange utterances that emanate from this strange man, this one was spurious, or just plain wrong. Australia has nowhere near the sort of welfare burden shared by European countries like Greece, Italy or Spain. To begin with, we haven’t suffered from the worst economic downturn in 70 years. Many of the southern European nations also have cripplingly low levels of tax revenue, owing to lax enforcement and a rampant culture of tax evasion. Australia, by contrast, has a far more robust tax system.

Most importantly, Australia’s welfare system is totally different from that of most European countries. While European nations have a system of social insurance, in which the unemployed are paid a percentage of their former wage, Australia has a flat rate of unemployment benefit that is exceptionally tightly means tested. The Newstart rate is so low that even the Business Council of Australia acknowledges that it condemns jobseekers to poverty.

Unfortunately for the Coalition, Andrews is not the most adroit of political operators, as his chequered career in John Howard’s government suggests (remember Mohamed Haneef?). He lacks the kind of killer instinct for political opportunism shown by Scott Morrison or Abbott himself.

If further evidence were required, Andrews furnished it today with a foolish announcement about a plan to provide a “marriage counselling” bonus to prospective nuptials. In a splashy “drop” to the News Limited tabloids, Andrews revealed today that newlyweds would be offered a $200 voucher for marriage counselling.

The sanctity of marriage has always been a special hobby horse for the Social Services Minister, a committed Catholic and the author of a recent book entitled Maybe ‘I Do’: Modern Marriage and the Pursuit of Happiness.

Quite how the federal treasury can afford to give away $20 million worth of marriage counselling at a time of fiscal stringency is beyond me. But then again, as Andrews told the Courier-Mail today, “Australian research also consistently finds that marriage and relationship education assists committed, married, engaged or cohabiting couples to move through the phases of their relationship with improved relationship skills, strengthening relationships for up to five years.”

Unsustainable welfare, it turns out, is in the eye of beholder.

Ben Eltham is New Matilda's National Affairs Correspondent.