Welfare Reform
Went to a CIS lecture by sociologist Peter Saunders, Welfare’s Not Working on Wednesday night.
Full of good stuff, but the opinion data was particularly striking. What became quite clear is that key aspects of the current welfare system do not have popular support. As with other areas of public policy (most notoriously, immigration and indigenous policy), much of what is going on in the public arena is trying to frustrate popular preferences (of the people who actually pay for it) by trying to eliminate such preferences from acceptable public discourse. (The normal power-through-gatekeeping and status-through-opinion issues.)
The lecture was part of the lead-up to the launch of Australia’s Welfare Habit - and how to kick it in Sydney by Lawrence Mead on 3 August, published by Duffy&Snellgrove. The CIS is one of those dreaded ‘right-wing’ (actually, classical liberal) think-tanks. The welfare reform proposals involved spending more money in the short-term so as to spend less money in the long-term.
Peter S. started with data on the current situation
· 3% of the working age population on government welfare payments in 1965, 16+% now,
· in 1965, 22 taxpayers for every working-age person on welfare; now, 5 taxpayers for every working-age person on welfare,
· in 1980, 2% of working-age population on disability pension, now 5%.
Clearly, an unsustainable trend. He summarised the clear evidence that, generally speaking, being on welfare for long periods of time is bad for you. This also true for children of people on welfare. He cited Bob Gregory’s evidence which showed, by tracking people, that single parent recipients tended to be on various forms of welfare for long periods - changing type of benefit rather than exiting the system.
Peter S. pointed out that there was no correlation between trends in income, income distribution or unemployment and welfare dependency - it was growing through autonomous processes. It was even more perverse when you looked at trends of generally rising levels of wealth and income. He explained that the debate about what constituted poverty was actually a debate about the future of welfare. If you thought poverty was large and growing, then clearly more money was needed (despite the conspicuous failure, on this view, for huge increases in spending to do any good: besides, current welfare payments are generally above the Henderson poverty level, except for single unemployed people, when they are slightly below). If you thought poverty was a small and specific problem, clearly funds should be concentrated on intensive help for that group. (Measures of the proportion of people in poverty ranged from 3% - on an experiencing-hardship measure - to 40%.)
Australia is middle-ranking taxer of income, has very high minimum wage rates and high rates of tax on high incomes by OECD standards. (An RMIT engineering academic mentioned that his bright students often cited Australian tax rates as a reason why they were planning to work overseas.)
The proposals were:
· raise the income-tax threshold so it was above the welfare payment level (eliminates churning and very high effective tax rates on recipients and low-income families),
· provide a flat $3000 payment for every child (not means-tested),
· cease single-parents benefit after youngest child reaches entering-school-age (which is the OECD norm),
· require full-time Work-for-the-Dole after 6 months (time-limits are the OECD norm: the experience is that Work-for-the-Dole concentrates minds, showing a propensity to result in successful job search and flushing out recipients with jobs),
· liberalise labour market to reduce joblessness.
According to the opinion poll evidence cited, the first four proposals would have overwhelming public support. (While no opinion poll data on labour market issues were presented on the night, I am reliably informed such polling supported more regulation - i.e. greater protection for labour market ‘insiders’ against competition from outsiders.)
Peter Saunders noted that, for his 30 years involvement in these issues, he had thought two things were irreversible - increasing welfare dependency and increasing crime. American experience had shown that both welfare dependency and crime rates could be massively reduced with the right policies.
There was more, but these are the highlights. A good night.
Full of good stuff, but the opinion data was particularly striking. What became quite clear is that key aspects of the current welfare system do not have popular support. As with other areas of public policy (most notoriously, immigration and indigenous policy), much of what is going on in the public arena is trying to frustrate popular preferences (of the people who actually pay for it) by trying to eliminate such preferences from acceptable public discourse. (The normal power-through-gatekeeping and status-through-opinion issues.)
The lecture was part of the lead-up to the launch of Australia’s Welfare Habit - and how to kick it in Sydney by Lawrence Mead on 3 August, published by Duffy&Snellgrove. The CIS is one of those dreaded ‘right-wing’ (actually, classical liberal) think-tanks. The welfare reform proposals involved spending more money in the short-term so as to spend less money in the long-term.
Peter S. started with data on the current situation
· 3% of the working age population on government welfare payments in 1965, 16+% now,
· in 1965, 22 taxpayers for every working-age person on welfare; now, 5 taxpayers for every working-age person on welfare,
· in 1980, 2% of working-age population on disability pension, now 5%.
Clearly, an unsustainable trend. He summarised the clear evidence that, generally speaking, being on welfare for long periods of time is bad for you. This also true for children of people on welfare. He cited Bob Gregory’s evidence which showed, by tracking people, that single parent recipients tended to be on various forms of welfare for long periods - changing type of benefit rather than exiting the system.
Peter S. pointed out that there was no correlation between trends in income, income distribution or unemployment and welfare dependency - it was growing through autonomous processes. It was even more perverse when you looked at trends of generally rising levels of wealth and income. He explained that the debate about what constituted poverty was actually a debate about the future of welfare. If you thought poverty was large and growing, then clearly more money was needed (despite the conspicuous failure, on this view, for huge increases in spending to do any good: besides, current welfare payments are generally above the Henderson poverty level, except for single unemployed people, when they are slightly below). If you thought poverty was a small and specific problem, clearly funds should be concentrated on intensive help for that group. (Measures of the proportion of people in poverty ranged from 3% - on an experiencing-hardship measure - to 40%.)
Australia is middle-ranking taxer of income, has very high minimum wage rates and high rates of tax on high incomes by OECD standards. (An RMIT engineering academic mentioned that his bright students often cited Australian tax rates as a reason why they were planning to work overseas.)
The proposals were:
· raise the income-tax threshold so it was above the welfare payment level (eliminates churning and very high effective tax rates on recipients and low-income families),
· provide a flat $3000 payment for every child (not means-tested),
· cease single-parents benefit after youngest child reaches entering-school-age (which is the OECD norm),
· require full-time Work-for-the-Dole after 6 months (time-limits are the OECD norm: the experience is that Work-for-the-Dole concentrates minds, showing a propensity to result in successful job search and flushing out recipients with jobs),
· liberalise labour market to reduce joblessness.
According to the opinion poll evidence cited, the first four proposals would have overwhelming public support. (While no opinion poll data on labour market issues were presented on the night, I am reliably informed such polling supported more regulation - i.e. greater protection for labour market ‘insiders’ against competition from outsiders.)
Peter Saunders noted that, for his 30 years involvement in these issues, he had thought two things were irreversible - increasing welfare dependency and increasing crime. American experience had shown that both welfare dependency and crime rates could be massively reduced with the right policies.
There was more, but these are the highlights. A good night.