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The Australian Welfare State: Neither Egalitarian Saviour Nor Economic Millstone?

Published online by Cambridge University Press:  01 January 2023

Fred Gruen*
Affiliation:
Australian National University

Abstract

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Type
Review Article
Copyright
Copyright © The Author(s) 1995

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References

Notes

1. Saunders, Peter, Welfare and Inequality: National and International Perspectives on the Australian Welfare State, Cambridge University Press, 1994Google Scholar. The page numbers in brackets refer to page references in Saunders’ book.

2. Health, Education and Caring services (for the frail and infirm) and the provision of Housing are the major services involved. In Australia, the term ‘the social wage’ embraces these community services, though it also includes social security expenditures.

3. According to an 1993 OECD study of ‘Pension Liabilities in the Seven Major Economies’ by Paul Van Den Noord and Richard Herd (OECD Economic Department, Working Paper No. 142) the present value of future liabilities may exceed the present value of future income by a margin that exceeds, on average, 130 per cent of 1990 GDP (and range from 43 per cent of 1990 GDP in the case of the USA to 250 per cent of GDP in the case of Canada).

4. A corrollary of these gains by the bottom income groups is, of course, that the sixty per cent of ‘middle’ households from the fourth to the ninth deciles experienced real declines in their incomes (including the value of community services consumed).

5. To cite just one example, take the following post hoc ergo propter hoc reasoning from Fightback! ‘Australians are living with the consequences of a welfare explosion that began under the Whitlam Labor Government. Since 1970, the number of Australians living primarily on government benefits… have risen… from 8 to 16 per cent of (the) total population….The fact that about one Australian in three received some form of government benefit points not to the generosity of the system but to the fact that too many people receive welfare… By all the usual measures, more welfare has not meant a contented society. Divorce, suicide and crime has risen exponentially in the past two decades. Last year, Australians were two and a half times more likely to pass through the divorce courts than in 1971. In particular serious assault per capita has risen 288 per cent since 1973. In the same period robbery per capita has risen 74 per cent, breaking and entering by 52 per cent and fraud by 95 per cent’ (p. 19).

6. Bean, CliveAre Australian attitudes to government different?: a comparison with five other nations’ chapter 5 in Australia Compared Castles, Francis (ed), Allen & Unwin, 1991Google Scholar.

7. ‘Living Decently: Material Well-being in Australia’ by Peter Travers and Sue Richardson, Oxford University Press, 1993, p. 75.

8. ‘The Efficiency and Effectiveness of the Tax-Transfer System in the 1980s’ by Harding, Ann and Mitchell, Deborah, Australian Tax Forum, Volume 9, No. 3, 1992Google Scholar.

9. ‘The Efficiency and Effectiveness of the Tax-Transfer System in the 1980s - A Comment’ by P. Saunders and G. Matheson, Australian Tax Forum, vol.10 (1993) and A Rejoinder by Deborah Mitchell and Ann Harding, ibid.

10. A. Harding and D. Mitchell, 1992, Table 4 op. cit.

11. In this context ‘equivalent’ means that equivalence scales are used to reflect the fact that a family with, say, three children is worse off than a family with the same income and say no children or only one child.

12. P. Saunders and G. Matheson, 1993 p. 389 op. cit.

13. According to an unpublished Master of Public Policy research project - by Stephen Horn - which is a statistical examination of the debate, there are no less than ten important discrepancies between the way in which Harding/Mitchell and Saunders/Matheson have interpreted the basic data from the Australian Bureau of Statistics. These include differences in the family unit, in exclusions, in the way dependent students aged 15-20 years are treated, different definitions of adults/dependants, family aggregate weights, family type coding, median calculations, different ABS unit record files, different tax treatment and of negative incomes. It is doubtful whether an outsider can adjudicate in this matter.

14. See P. Saunders and G. Matheson, op.cit. Table 3.

15. This has been the method of updating since March 1981. The Henderson Poverty Line used to be updated using average weekly earnings, until it was pointed out that if there are real increases in taxes, the poverty line will rise relative to disposable average weekly earnings. Mitchell and Harding make a number of points against the use of HDYPC as an updating method.

16. ‘A rise in the incomes of all those in the upper half of the income distribution would, for example, cause mean income but not median income to rise. If the poverty line were tied to median income, such a change would thus have no impact on the poverty line and hence on poverty, even though the relative position of those on low incomes had clearly worsened. Such arguments have led the Department of Social Security in the United Kingdom to favour the use of mean over median income in its analysis of households with low incomes’ (228).

17. During the last twenty years the questions have been asked normally every February and July; during the sixties the question was normally asked only once a year.

18. ‘The consensual poverty lines were well above the conventional (Henderson) poverty line …for single people and childless couples, but increased much less as the number of children in the family increased….The implication is that “children are cheap”; a result consistent with the findings of others who have used the consensual poverty line approach’ (p.239).

19. From 1980 to 1988 the consensual poverty line is around 392 to 400 (1988 dollars); with two atypical peaks of 418 (1982) and 410 (1985). After 1988 there is a drop to 360/361 during 1992, 1993 and 1994.

20. Since Morgan asks his question in July and February, we have taken the percentage rise in the Minimum Income Question for the period (July 1989+February 1990) over (July 1981+February 1982).

21. According to Table 5.3 (p.144) this is the only decile which has significantly increased it’s share of equivalent net income.