Farewell to welfare careerism

A truly compassionate approach to welfare aims to minimise those trying to avoid work. By Nick Cater.

No matter what the new level of the JobSeeker allowance, it was never going to satisfy the welfare industry and its soft-hearted chums at the ABC.

Last week’s announced increase of $50 a fortnight was the equivalent of “less than an extra cup of coffee a day”, scoffed one ABC reporter on PM last Tuesday. Maybe so if you want a hand-crafted soy latte at Soma, a hipster cafe across the road from the ABC’s Ultimo studios, which promises not just coffee but “a unique coffee experience”. Those on a tighter budget might prefer to shop at Coles where a 500-gram tin of International Roast works out at about 4c a cup.

Those who argue most passionately for higher income assistance tend to mix in circles somewhat remote from the real unemployed. The archetypal downtrodden creature staring helplessly at the pleading eyes of his hollow-cheeked kiddies exists only in their minds.

The real unemployed sit on a spectrum between those spending every waking hour looking for work and those who are trying to avoid it. A truly compassionate approach to welfare aims to maximise the number in the first category and minimise those in the second.

Which is why there is no right answer to the question of how high the JobSeeker payment should be. No welfare system has yet found a way to overcome Charles Murray’s law of unintended rewards: “Any social transfer increases the net value of being in the condition that prompted the transfer.” Or to put it another way, the higher the welfare payment, the greater the disincentive to pick fruit.

South Australia has the highest unemployment in the country. It rose to 7.1 per cent in January, bucking the national downward trend. Yet citrus farmers are watching the fruits of their labour rot in front of their eyes. They are pleading with the government to ease quarantine restrictions on flights from the Pacific islands to allow seasonal workers into the state.

The Department of Agriculture reports that 2491 fruit pickers have flown in from the Pacific islands so far this season. Meanwhile, the Department of Social Services tells us that about 862,000 able-bodied Australians have signed on for the dole, 344,000 of whom are under 35. Go figure.

Doubling the amount of income support with the introduction of the COVID-19 supplement early last year was the right thing to do. Everyone whose livelihood was put at risk by government restrictions on social interaction deserved to be compensated, particularly those in jurisdictions where the restrictions were cruel and unnecessary.

Yet against almost all expectations, the job market is bouncing back almost everywhere. Emergency levels of welfare can no longer be justified as an economic stimulus. It is time to return to the thankless task of welfare reform that successive social services ministers, including Scott Morrison, have been quietly working on since 2013.

The Coalition government has been more successful than it cares to admit in moving Australians off welfare and into work. In 2018, 73.8 per cent of people aged 15-64 were employed, Australia’s highest-ever annual average employment-to-population ratio and one way above the OECD average. The challenge only begins to become apparent when you separate those on income benefit between the temporarily unemployed and the welfare careerists.

Disturbingly, more than a third of a million Australians have been claiming a working-age benefit for four years or longer, 177,000 of whom have no medical barrier to full-time work. For the long-term unemployed, the list of associated miseries is long. The longer a person remains on working-age benefits, the less likely it becomes that they will ever leave. Their health becomes poorer, the likelihood of domestic violence increases and the chances that their children will also become welfare careerists increases considerably.

One of the biggest achievements of the welfare reform initiatives that began under Tony Abbott is that the number of people on the Disability Support Pension has declined from a peak of 802,000 under the Gillard government to 668,000 in 2017 thanks to tougher qualification requirements. A surprising number of those who lost DSP left the welfare system altogether. Many others, however, migrated to JobSeeker, adding to the stock of long-term recipients.

The fiscal impact of long-term unemployment is not inconsiderable. In June 2018, the nation’s future liability for the 1.2 million Australians receiving working-age payments was estimated at $888bn in the government’s audit of lifetime welfare costs. The biggest problem, however, is not the burden welfare places on future budgets, but the mess it creates with people’s lives.

On the eve of an election year, with unemployment levels higher than our historical comfort zone, the Morrison government is understandably wary of introducing more of the tough-love reforms that will be required to encourage more people to find work. Welfare reform should, however, become a priority for a fourth-term Liberal government, and indeed a fifth term if it were to win one, for constructing a perfect welfare system will forever be a work in progress.

Welfare groups were lining up last week to tell sympathetic journalists how heartless the government had been. Their frequent criticism of so-called neo-liberals, that there is more to life than dollars and cents, appears not to apply when it comes to their appraisal of poverty. Poverty, in their books, is all about income.

Anglicare and others accused the government of pushing people below the poverty line, using a narrow definition of poverty as income less than half the median wage.

A broader definition of poverty should acknowledge that an absence of moral self-worth, hope and fulfilment is the true measure of an impoverished life.

Work remains the best and most reliable route out of poverty. The evidence around the world is clear about the damaging consequences of long-term dependence on benefits. There is all the difference in the world between helping someone down on their luck and giving them a cash incentive to stay there.