The state of Australia: welfare and inequality

The fair go has been selectively reinterpreted as applying only to competitive opportunities for the economically productive. John Englart (Takver)/Flickr, CC BY-SA

In the lead-up to the budget, the story of crisis has been hammered home, but there’s more to a country than its structural deficit. So how is Australia doing overall? In this special series, ten writers to take a broader look at the State of Australia; our health, wealth, education, culture, environment, well-being and international standing.


Is Australia a good place to live in these days? On a range of economic indicators we are doing well, but who has and who has not benefited socially from our two decades of growth? Can we still call ourselves egalitarian now there are visible social fractures?

The measures of inequality are increasing, with the potential to damage social well-being. Progress, as such, is no longer used as a term to describe social change as the reforms of the post-war period, such as poverty reduction and gender equity, slow and even reverse.

How we’re doing now

Today’s policies tend to punish those who do not fit the new, leaner, economic model. There is no valuing of alternative social contributions: parenting, Indigenous traditional roles, volunteers who care for others. We turn back and punish boat arrivals who seek asylum. Recent data on social inclusion show visible flaws in our social cohesion as seen by newer arrivals.

In Australia’s last federal budget, 34.68% (A$138 billion) of the total spend was allocated to social security and welfare programs. Of this, 13.75% ($54.8 billion) went to assistance for the aged, 8.77% ($34.9 billion) went to assisting families with children, while just 2.4% ($9.55 billion) went to assisting the unemployed and sick.

In terms of welfare spending as a percentage of Gross Domestic Product (GDP), Australia ranks comparatively low compared to other OECD nations at 19.5% in 2013. This ranks behind countries such as France (33%), Sweden (28.6%) and the United Kingdom (23.8%). However, it is true that Australia’s welfare system is relatively efficient.

Despite doing much better in the recent financial crisis than other OECD countries, Australia is not necessarily a comfortable place to be for many people.

Australia’s welfare policies provide many examples of why some people are struggling. Sole Parent Allowances and Disability Support Payments have recently been tightened to ensure fewer people can claim them, despite no evidence that this increases workforce participation. People are being transferred to the inadequate Newstart payment. This locks the best part of one million people into penury and covers all those of working age who don’t fit respectable categories of payment.

These are mean changes, justified as “assisting” recipients to get jobs, but which mainly increase the numbers of forced job seekers for far too few available jobs. As both major parties support such changes, the gaps between haves and have-nots are increasing under the current government directions.

How we got here

Australians embedded in our early history the idea of a fair go, albeit omitting the original inhabitants. By the end of the 19th century, this gave rise to a new nation that offered possibilities of opportunities for all, not just the privileged.

Australia started well as one of the early adopters of the age pension, the vote for women and the basic wage, which showed commitments to ensuring public involvement in setting standards for “white men” at least. The legislated basic wage – which offered a decent living to a man and his dependents in 1908 – signalled a social contract that was clearly aimed at a fair go.

The post-war welfare state was devised to ensure quality public education, shorter working hours, national health services and diversity in a good society until the 1980s when social policy was overlaid by economic goals.

Social policy researcher Veronica Sheen in The Conversation summed it up last week:

The social contract – the suite of policies, legislation, programs, health care and social services – has served to ensure that every Australian is able to have a basic but decent standard of living. It has been carefully crafted over the 20th century since federation.

However, this implicit social contract has been gradually undermined since then as neoliberal policy models of a minimalist state started to displace more socially driven policy priorities. The decreasing inequality of the post-war welfare state, pushed by the Whitlam government but generally retained by the Fraser government, was replaced, initially slowly, under Hawke but very clearly through the 1990s. The fair go/mateship goal became about individualised competitive opportunities and the focus shifted from social change to economic growth.

Those whom society failed, and often discriminated against, were gradually redefined as the problem. This shows clearly this century as Welfare to Work under the Howard government was extended under the ALP. More controls and cuts were imposed, with current proposals including increases in compulsory income management and further cuts to entitlements.

The egalitarian concept of a fair go is selectively interpreted as applying only to the economically productive, but the change has never been openly discussed or even clearly acknowledged.

Tony Abbott’s declaration that Australia is ‘open for business’ redefines us as a corporate nation rather than a nation state that prioritises social well-being. David Crosling/AAP

What’s next?

The Commission of Audit may be designed as a Golem monster to scare the punters and make lesser changes in next week’s federal budget seem reasonable. However, it has created something of a firestorm because it has, for once, clearly articulated the gradual and now almost complete demise of the implicit social contract.

This has caused widespread negative reactions across the community. This includes many relatively conservative voters who value the more traditional approaches and see themselves threatened by changes they don’t like. Even if the Commission of Audit report suggestions are not taken up, the distrust of the government may remain high as the suggested changes have gone too far.

Undermining the idea of a universal health service by excluding the better-off from its services, proposing universal co-payments and decreasing the value of base pensions and the minimum wage all add up to a serious attack on the public role of the state. The report is seen as indicating the government’s intention to “wean Australians off the government teat”, which excludes all those not defined as truly needy. The idea of a partnership between community and state is identified as passé.

The rationale for such changes is clearly related to prime minister Tony Abbott’s mantra of Australia being “open for business”. We are redefined as a corporate nation – rather than a nation state – to suit the private sector.

The budget is likely to be bad for most families, the poor and the many who do not earn enough to pay for private services. It is possible that the current set of policy proposals may re-ignite discussion on what makes a good society. Can we re-invigorate the concept of public services as tax-funded options that serve us all well in areas that are not really appropriate for commercial providers?


Further reading: The State of Australia series

Editor’s note: thank you to everyone who participated in our Author Q&A. You can read our readers’ questions and Eva’s answers below.