Half a Citizen: Life on Welfare in Australia

By John Murphy, Suellen Murray, Jenny Chalmers and 2 more

What is it really like to be unemployed and on welfare? How do you make ends meet? Does the welfare system actually help people get back into jobs? Half a Citizen draws on in-depth interviews with 150 welfare recipients to reveal people struggling to get by on a low income, the anxieties of balancing paid work with income support, and how unstable housing makes it difficult to get ahead. By investigating the lives beyond the statistics, Half a Citizen also explodes powerful myths and assumptions on which welfare policy is based. The majority of welfare recipients interviewed are very active, in paid work, caring for children or for other family members, and they see themselves as contributing and participating citizens, even if they sometimes feel they are being treated as "half a citizen." These stories of resilience and passion bear no resemblance to the clichéd images of dependence, laziness, and social isolation which underpin social policy and media debate.

• Language: English
• Publisher: Allen Unwin
• Release date: Oct 1, 2011
• ISBN: 9781742693194

Book preview

2008

1

The receiving end of welfare

You’re treated as crap and the scum of the Earth, but also it’s questionable whether you’re actually half a citizen.

—Chloe, aged 42, DSP

It was Chloe who gave us the idea for our title, Half a Citizen. A wafer-thin woman, she had considerable work experience as a community worker. But her health had deteriorated, and she was now on her own after her marriage had fallen apart. She was living in a small public housing unit, and for more than five years had been receiving Disability Support Pension (DSP). She talked about her experience of being on the receiving end of the welfare system:

I tend to think that people aren’t even—theoretically they may be, but in practice they’re not—considered a citizen. They’re completely undeserving for it, and because they don’t contribute any taxes and [take] everything off the system, then they don’t even qualify as a citizen who is entitled to basic rights (Chloe, aged 42, DSP).

Chloe’s was a forceful statement of a common sentiment among the people we spoke to. Many talked about how they felt they were treated without dignity, of how they were reminded they had no real entitlement to support and of how their self-respect was undermined and eroded.

Chloe is one of the 150 people we interviewed who are on the receiv- ing end of the transaction of welfare in Australia. That her experience was widely felt is a reflection of how our income support system works, and of the values and principles that sit behind that system and that inform public debates. Any system of welfare support encodes values and ideas about who is entitled to what, about what conditions should be attached to this support, and about what sort of society we want to live in. But many of these ideas and values are in fact contested; some place greater emphasis on self-reliance and on requirements that welfare recipients show they are not dependent on others, while others place the emphasis on egalitarianism and on the idea that all citizens should have rights to a basic level of support. As discussed further below, Australia has a relatively weak tradition of the idea of rights to welfare support; the period during which we were conducting our interviews (2007 to 2009) has seen any notion of rights further weakened as the emphasis of government policy and public discussion has shifted to the perceived problem of welfare dependency, and to a policy agenda to push people from welfare to work.

This agenda has been based on claims about a rise in rates of welfare ‘dependency’, which has been a Commonwealth government concern at least since 1999 when the then Minister [for Family and Community Services], Jocelyn Newman, stated that the main point of welfare reform was ‘to reduce welfare dependency among people of workforce age’.1 A particularly strong statement of this view was put forward by the Centre for Independent Studies’ Peter Saunders in a book that was fulsomely endorsed by The Australian newspaper.2 Saunders equated welfare dependency to drug addiction, claimed welfare spending was escalating out of control and was defended by a ‘social policy establishment’ of academics and commentators, and declared that ‘the spiral of dependency is choking the spirit of self-reliance’. ‘It is time for Australia to kick the welfare habit.’3 Leaving aside the deliberate exaggeration of equating income support with a drug addiction, this argument sets up clear and simple oppositions between welfare and employment, and between dependence and self-reliance. Such views have contributed to the stigmatisation of the very idea of ‘welfare’, but in this book, rather than avoid the term, we use it in its original, non-pejorative sense of being about the welfare of citizens in a civilised society.

Discussions about welfare often assume behavioural explanations for why people are on welfare, and ‘focus on what is wrong with poor people and on their bad decisions, rather than on what might be wrong with the context in which those decisions have to be made’.4 Cultural explanations for the persistence of poverty often begin by arguing that the poor have values that reinforce their disadvantage. The source of the problem then lies with the poor themselves: their attitudes are too fatalistic, they have poor social organisation, their family relationships are too fragile, and their values reproduce a cycle of poverty. An influential theorist in this approach is American writer Lawrence Mead, who argued that living and growing up in poverty produced a culture of dependency on welfare, which he claimed is also passed on to children, as ‘inter-generational dependency’. Mead argued that welfare systems—particularly if they provide income support without conditions—produce perverse incentives to remain dependent and passive.

Mead’s approach has been dubbed the ‘new paternalism’ because he explicitly claimed to be prodding the poor into action for their own good. Importantly, he claimed to reject the view that ‘the poor are fundamentally flawed or opposed to work. I see them rather as dutiful but defeated.’ But if the poor will not help themselves to self-reliance (by finding work), the state must implement policies of both carrots and sticks to make them do so.5 As he put it: ‘programs that support the disadvantaged and unemployed have been permissive in character, not authoritative. That is, they have given benefits to their recipients but have set few requirements for how they ought to function in return.’6 From this starting point, Mead’s solutions included ideas to make welfare more conditional, including contractual requirements to work for income support.

In Australia, Mead’s approach has been very influential within Commonwealth government policy circles since the mid-1990s, and has informed ideas about welfare reform on both sides of politics. The Howard Coalition government’s interpretation of Mead’s philosophical position lay behind the following statement in a 2002 Department of Family and Community Services (FaCS) discussion paper about welfare reform:

A purely voluntary approach to participation does not work to maximise self-reliance. The most effective strategies to increase employment and reduce reliance on income support combine assistance and good work incentives with clear and fair expectations that people on income support who can work should seek to become more self-reliant.7

As a different Peter Saunders, from the University of New South Wales, commented, the resulting Welfare to Work policies have involved a significant shift in emphasis:

Rather than work being seen as a means to an end—a step towards financial independence—work is now regarded as an end in itself, at times irrespective of its effect on income . . . The solution rests . . . in replacing choice by compulsion based on the assumption that work is desirable on virtually any terms, at least in the longer-term.8

Australian developments indicating the influence of this shift towards compulsion have included the ‘mutual obligation’ regime imposed on the unemployed, Work for the Dole required of some unemployed people, and the complex system of penalties in the breaching system which are designed to send signals about expected behaviour. Senior Canberra bureaucrats spoke of such policies as ‘shaking the trees’, catching out those who were not prepared to work, and who were in fact—in a much older terminology—the ‘undeserving poor’.

But the research emerging about jobseekers’ experiences of mutual obligation requirements is that they are unhelpful at best, and humiliating at worst. In addition, public support for more compulsory regimes has been modest, while significant majorities continue to be concerned about a growing gap between rich and poor.9 In late 2010, the Salvation Army released the results of an opinion survey they had commissioned from Roy Morgan Research. This research found that 53 per cent of Australians thought that taking action to reduce poverty was ‘a very high priority’, while another 41 per cent thought it was ‘important, but not a high priority’. When respondents were asked if they agreed or disagreed with a series of statements about poverty, the results were as follows:

• 17 per cent agreed or strongly agreed with the sentiment that ‘people who are living in poverty have generally brought it upon themselves’—50 per cent disagreed and another 21 per cent strongly disagreed

• 28 per cent disagreed or strongly disagreed with the sentiment that ‘just about anyone can find themselves living in poverty—all it takes is some bad luck’—47 per cent agreed and another 18 per cent strongly agreed

• 44 per cent agreed or strongly agreed with the sentiment that ‘there are plenty of opportunities in Australia—nobody needs to live in poverty’—36 per cent disagreed and another 8 per cent strongly disagreed

• 28 per cent agreed or strongly agreed with the sentiment that ‘nobody who has a job can really claim to be living in poverty’— 52 per cent disagreed and another 11 per cent strongly disagreed.

These results indicate a degree of polarisation of opinion about poverty and its causes. While seven out of ten disagreed with the view that the poor had ‘brought it upon themselves’, four out of ten thought Australia was a land of opportunity and ‘nobody needs to live in poverty’. In an indication of recognition of the relatively new phenomenon of the working poor, more than six out of ten agreed that you could have a job and live in poverty..10

Some of these sentiments also suggest that the sort of experience Chloe reported, of being treated like ‘the scum of the Earth’ and feeling like ‘half a citizen’, is not really what ordinary people intend should be the outcome of the welfare system created in their name; yet it was too common a refrain in our interviews to ignore. That in turn suggests that the way the welfare system operates has become more punitive, and less generous than many people expect. But the views and experiences of those receiving welfare in Australia are not often heard in public debates, and those outside the income support system have little knowledge of what it is like on the inside. This point was brought home to us in interviews with people who for the first time in their lives had needed to deal with Centrelink and spoke of their shock at how people were treated.

The context: The Australian welfare system

The income support payments our 150 participants relied on are part of a relatively robust, but often quite stigmatising, system of welfare benefits which have been developed, modified and re-fashioned over the course of the twentieth century and into the twenty-first. This system of income support plays a significant role in supporting the incomes and living conditions of some two million people. The Age Pension supports an additional two million people, although some of the latter are only on a part pension, often in order to gain access to supplementary benefits and concessions. As at June 2007 (around the time our research was conducted), across Australia, roughly 715,000 people were receiving Disability Support Pension (DSP) (a little over half of them male), another 418,000 were unemployed and receiving Newstart Allowance (almost two-thirds of them male), just under 400,000 people received Parenting Payment Single (PPS) (almost all of them female), 116,600 people caring for a parent or child were receiving Carer Payment (two-thirds of them female), and over 330,000 young people received Youth Allowance (in roughly equal numbers of male and female)..11

The historical development and modification of these income support schemes provides a context for understanding the current regulations, norms, supports and constraints under which our participants lived..12 The first element of our system of income support was the introduction of the first Old Age Pensions in Victoria and New South Wales in 1900, which were later replaced by the national Old Age Pension in 1908. Eligibility was based on age and residency requirements, as well as a means test that directed the pension only to those without other income, and the pension was paid from general revenue. While advocates of the aged pension hoped it would be seen as a right, the means test, along with tests about ‘character’, still meant the pension had some of the flavour of charity for the ‘deserving poor’. The combination of means testing with funding from general revenue set Australia on a distinctive path, unlike the insurance models that were being developed in Europe, and later in America..13 In 1910, an Invalid Pension was added, largely for those who were no longer able to work but were not old enough for the aged pension. This Invalid Pension is the origin of today’s Disability Support Pension, renamed in 1991 as part of a package of reforms that were intended to shift the focus to the assessment of ability to work and to preparation for employment. To be eligible for the DSP, claimants must be assessed as having a long-term physical, intellectual or psychiatric condition that limits their ability to work. Until mid-2006, the criteria was that the person was assessed as unable to work 30 hours per week; since mid-2006, it has been reduced to unable to work fifteen hours a week.

Unemployment Benefits were introduced, along with Sickness and Special Benefits, by a Labor government in 1945. As well as a means test, the Unemployment Benefit has always included a ‘work test’ to require people to look for work, and this has been progressively tightened since 1989. A major review of the social security system during the Hawke Labor government, conducted by Professor Bettina Cass, reflected the ‘activation’ approaches to unemployment which were becoming popular across the developed world. This focus meant integrating benefits with retraining and labour market programs and signalled a corresponding push for recipients to find and accept work..14 Reflecting this trend, the Unemployment Benefit was renamed Newstart Allowance in 1991, but Commonwealth government commitment to labour market and retraining programs was largely discontinued by the Howard government from 1996. In 1998, a new Youth Allowance replaced a range of payments for young people (below the age of 25, depending on whether they were looking for work or studying). Youth Allowance is a low level of payment, and eligibility includes a test on parents’ income as well as that of the recipient.

In 1973, the Supporting Mother’s Benefit was added to the income support system to provide for mothers without partners, again with a means test. This was a significant development recognising the need for mothers’ independence from former male partners, even if in some sense transferring that dependence to the state. In 1977, the Fraser Coalition government extended it to sole fathers, renamed the Supporting Parent’s Benefit, though the vast majority in receipt remain women. In 1987, it was restricted to those whose youngest dependent child was under sixteen, and in 1989, was renamed the Sole Parent Pension. Since 1998 it has been called Parenting Payment Single, while Parenting Payment Partnered is mostly paid to partners of income support recipients with dependent children. In 1984, a Carer Payment was introduced for carers of a spouse with disabilities, and between 1996 and 1999, this was progressively expanded to include carers of adults or of children with disabilities.

These welfare benefits have always had three features in common: they are paid from general tax revenue, they are targeted by tests on income and assets, and they are flat-rate (rather than payments that reflect previous earnings). This makes our system quite unlike the social insurance model, where employers and employees pay compulsory levies, and also unlike the Scandinavian model, which has little or no targeting..15 The combination of funding from general taxation and of means testing to the poor has made the moral character of the transaction different from in Europe (where you are eligible if you have paid your dues for insurance covering unemployment, sickness etc.), or the Scandinavian model (where all citizens are entitled to benefits without income tests, paid from higher rates of taxation). Despite these differences in how income support systems are funded and in how they are delivered, there has nevertheless been a common emphasis on the ‘activation’ agenda across much of the developed world, especially in terms of both the unemployed and sole parents, which has produced some convergence between the different models since the mid-1980s..16 Brian Howe, the Minister for Social Security who initiated the Cass Review, has suggested the ‘active society’ theme has bifurcated into two pathways, namely, the punitive ‘sticks instead of carrots’ approach of Welfare to Work, and the focus on assisting with transitions across the life course that is associated with writers such as Gunther Schmid..17 In this framework, the more punitive and compulsory approach has dominated in Australia.

Arguably, the Australian model of means tests has meant that welfare support has always been efficiently targeted to those most in need, and that this accounts for the low level of expenditure on welfare in Australia..18 But it may also mean it has consequently had lower popular legitimacy, because a means-tested welfare system is only ever about others. It can be too easily seen as a system in which taxpayers pay for other people compared with an entitlement to what you have put aside in compulsory insurance, or to benefits to which we all contribute in a system in which we support each other. To some extent, the contemporary concern about the ‘taxpayer’ signals a retreat from ideas of collective provision, replaced by the principle of assistance for those who are deemed deserving. Hence it is now the taxpayer’s privations that must be balanced against the gains of those who receive income support. Chloe’s comment above that she was treated as someone who didn’t contribute taxes suggests this transaction, and we will see later that many of our participants framed their views about the welfare system in terms of a reminder that they had paid a good deal of tax before they needed income support, and in many cases were still paying tax.

There is also a significant difference in our system between ‘allowances’ for those who can (and should) be working, and ‘pensions’ for those beyond working age, or unable to work. Arguably, the Age Pension has always had the highest community support, while unemployment benefits have had the least. The DSP, Carer Payment and the PPS have the advantage of being classed as pensions, and one consequence is that their level of payment keeps pace with increases in the Age Pension. The single pension has been indexed, since 1997 at 25 per cent of male total average weekly earnings. Pensions also generally have a more generous ‘free area’ of earnings before income support begins to reduce and a lower ‘taper rate’ (the speed at which income support reduces relative to earned income). These settings were based on the assumption that pensioners could only work part-time and the lower rate would not penalise them, whereas recipients of allowances ought to move straight into full-time work, so the higher taper rates would not matter..19 These assumptions are increasingly outdated when we consider changes in the labour market, particularly the growth of part-time employment. Nevertheless, taper rates have been somewhat lowered (for pensions in 2000, and for allowances in 2006) as a way of reducing the disincentive to take up part-time employment.

‘Allowances’—Newstart Allowance and Youth Allowance—also have a different moral inflection; you cannot feel as entitled to something called an ‘allowance’ compared with a ‘pension’. To some extent, this reflects the continuing, if often unspoken, distinction between those who are deserving and those who are not, which in turn accounts for greater or lesser concern about how adequate the payments are. Allowances are not linked to the rate of the Age Pension, and so Newstart Allowance and Youth Allowance are adjusted to inflation, but otherwise remain static. While politicians and media commentators can be very sensitive about stories of the poverty of elderly pensioners, there is clearly little community enthusiasm for lifting the unemployed out of poverty. The Salvation Army research previously cited found that popular support for increases in payment levels was high for aged pensioners and disability support pensioners (77 per cent and 76 per cent respectively), but that support dropped away for sole parents (42 per cent were in favour of an increase) and for the unemployed (only 31 per cent favoured an increase in benefit)..20

One consequence of the different status of pensions and allowances, and of the different ways they are adjusted, is that there is now an increasing gap in the adequacy of income support between the two. Over the decade to 2008, the real value (after inflation) of a single person ‘allowance’ remained static; by comparison, the real value of a single pension grew by roughly 2.1 per cent, and that of a single parent with two children by about 2.5 per cent.21 That assessment was made as of mid-2008, and the gap is now even wider as a consequence of the Rudd government increasing ‘pensions’ in the mid-2009 budget, while leaving ‘allowances’ untouched. Income support for the unemployed is now well below the poverty line, as we will see in Chapter 2, and this appears to be where Australians think it ought to be. Levels of payment are based on an historical and increasing divide between ‘pensions’ and ‘allowances’ rather than actual living costs, and the gap is growing. This divide is increased by the pattern of who gets the benefit of supplementary payments, such as concessional rates on pharmaceuticals and Medicare services, and state government concessions for expenses such as car registration, utilities and public transport. These concessions are not generally available to Newstart recipients.22 Issues of the growing gap between pensions and allowances, and the complexity of who receives what, have contributed to the long-standing advocacy for reforming the income support system into one common base payment for all working-age recipients, with supplements to reflect specific circumstances, such as disability, family structure, remote location, educational expenses, and so on.23

In the past two decades, the obligations placed on some income support recipients have been tightened, especially for the unemployed. In 1989, the Hawke government replaced the previous ‘work test’ with an ‘activity test’, and in 1996, the incoming Howard Coalition government introduced the principle of ‘mutual obligation’, which increased participation requirements to remain on the benefit. In the following year, the Department of Social Security (DSS) was split up to create a service agency later called Centrelink, while the remainder of DSS became FaCS. These changes effectively created a split between service delivery (Centrelink) and policy development, which was shared—or as often contested—between FaCS and the Department of Employment and Workplace Relations, which had primary responsibility for policy relating to working-age payments and unemployment policy. Over 1997–98, the Commonwealth Employment Service (CES), the government agency first developed in the 1940s to assist with job placement, was abolished. It was replaced in 1998 by the Job Network, in which private for-profit, community and church agencies tendered for contracts to manage the job searching of the unemployed.

This model of service delivery, with its features of competition and payment by results, was introduced in the belief that it would produce better value for money, and be more effective in service delivery than the government-run CES. Early evaluations were contradictory on both these issues24 and, more recently, criticisms have included that the system has inbuilt financial disincentives to help those who most need genuine, and thus costly, assistance, leading to what Michael Horn described as the ‘parking and churning of highly disadvantaged clients’.25 In addition, the excessive administrative requirements imposed on Job Network providers (JNPs) meant that resources and effort were ultimately focused more on administrative micro-management than on the front-line staff providing a direct service to recipients. Similarly, a Brotherhood of St Laurence assessment found that while the Job Network worked to match the ‘job ready’ in a booming economy, it was not set up to help the most disadvantaged jobseekers.26

In mid-2009, the Job Network system was renamed Job Services Australia. Most of our research for this book pre-dates this change, though it is fundamentally a similar model based on contracting out the management of the unemployed to agencies that are paid for helping unemployed people find paid work. One difference is that previously separate intensive support for the most disadvantaged has been ‘mainstreamed’ in the form of the Employment Pathway Fund. The types of assistance available through the Employment Pathway Fund are training courses, work-related clothing and equipment, and relocation costs. There are tailored services for the mature-aged unemployed (55 years or older), as well as for young people through the more intensive Youth Connections program. At this stage, there is very little formal evaluation of whether the new streaming system and suite of services available will be more effective in addressing the needs of different groups. Some parts of the policy and program suite are very similar to what existed before, as is the case with the Work for the Dole program which was introduced under the former Howard government and has since received bipartisan support. Many of the people