Revisiting Henderson: Poverty, social security and basic income

By Peter Saunders

Reform of the system must recognise, respect and reinforce its profound impact on the lives and wellbeing of millions of Australians, not only during childhood and retirement but also when unexpected needs arise in-between. It is time for a fundamental reassessment of how the system can best promote social inclusion and encourage economic contribution in current and future circumstances.

This book brings together leading social security researchers and policy analysts to reflect on past trends, the key changes that the system must adapt to and what this will involve. Its contributors share a vision inspired by the groundbreaking work of Ronald Henderson, who argued for a debate that is grounded in evidence and informed by a coherent set of principles.

The book’s chapters highlight the weaknesses of the current system and propose viable alternatives, showing that there is no lack of new ideas on which to draw. One of these—the introduction of a basic income as Henderson recommended in the 1970s—is used to illustrate the need for a better understanding of what such reforms can offer today and how they might work in practice.

• Language: English
• Publisher: Melbourne University Publishing Ltd
• Release date: Apr 1, 2019
• ISBN: 9780522874976

Peter Saunders

Peter Saunders was born and educated in Croydon, England. He spent more than twenty years teaching sociology at the University of Sussex, where he still holds the title of Professor Emeritus. He also taught in universities in Australia, New Zealand, Germany and the United States. He built an academic reputation with major books on city life, home ownership, British politics, social inequality and meritocracy, but in 1999 he abandoned his academic career and went to live in Australia where he found work in public policy think tanks. In Australia, he continued to write on social issues such as poverty and welfare reform, but he also began commenting on current affairs in the press and on radio and television. By the time he returned to Britain in 2008, the Sydney Morning Herald hailed him as ‘the most prominent liberal intellectual’ in Australia. He is now developing a third career, as a fiction writer. The Versailles Memorandum is his first full-length novel.

Book preview

Revisiting Henderson

Poverty, Social Security and Basic Income

Edited by Peter Saunders

MELBOURNE UNIVERSITY PRESS

An imprint of Melbourne University Publishing Limited

Level 1, 715 Swanston Street, Carlton, Victoria 3053, Australia

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www.mup.com.au

First published 2019

Text © Peter Saunders, 2019

Design and typography © Melbourne University Publishing Limited, 2019

This book is copyright. Apart from any use permitted under the Copyright Act 1968 and subsequent amendments, no part may be reproduced, stored in a retrieval system or transmitted by any means or process whatsoever without the prior written permission of the publishers.

Every attempt has been made to locate the copyright holders for material quoted in this book. Any person or organisation that may have been overlooked or misattributed may contact the publisher.

Cover design by Phil Campbell

Cover image: Net Blow-up, Yokohama courtesy of the artists, Numen/For Use.

Typeset by J&M typesetting

Printed in Australia by McPherson’s Printing Group

9780522874969 (paperback)

9780522874976 (ebook)

Contents

Contributors

List of Tables and Figures

Foreword

1Introduction: Celebrating and Reviving Henderson’s Vision

Peter Saunders

2Social Security and Poverty Reduction: Cracks in the Post-war Policy Paradigm, Avenues for the Future

Bea Cantillon

3The Henderson Poverty Inquiry in Context

Sue Regan and David Stanton

4Fifty Years of Changing Families: Implications for Income Support

Matthew Gray, Lixia Qu, David Stanton and Ruth Weston

5Social Security Since Henderson

Peter Whiteford

6Conditional Welfare: New Wine, Old Wine or Just the Same Old Bottles?

Terry Carney

7Limitations of the Australian Social Security System

Greg Marston and Juan Zhang

8Measuring Income Poverty in Australia: A Review of Methods and Recent Trends

Francisco Azpitarte and Guyonne Kalb

9Poverty as Relative Deprivation: Application, Analysis and Implications for Social Security

Peter Saunders and Yuvisthi Naidoo

10 Housing, Housing Costs and Poverty

Judith Yates

11 Disability and Poverty

Jennifer Mays and Karen R Fisher

12 Gender, Social Security and Poverty

Kay Cook

13 Indigenous Poverty in Flux?

Boyd Hunter and Danielle Venn

14 The Experience of Poverty, Then and Now

Shelley Mallett and Diarmuid Cooney-O’Donoghue

15 Labour Market Policy and the Future of Work

John Quiggin

16 The Role of Social Insurance in Alleviating Poverty: Australian Prospects

Allan Borowski and Eric Kingson

17 The Principles, Benefits and Politics of a Basic Income Scheme for Australia

Troy Henderson

18 From Guaranteed Minimum Income to BI: What Would it Look Like Today?

David Ingles, Ben Phillips and Miranda Stewart

19 Looking to the Future

Alison McClelland

Index

Contributors

Francisco Azpitarte is Lecturer in Social Policy at Loughborough University, United Kingdom. Prior to that position, Francisco held the Ronald Henderson Research fellow position at the University of Melbourne and the Brotherhood of St Laurence. Francisco’s research is focused on the analysis of socioeconomic inequality, poverty, and the impact of poverty on child development and the transmission of disadvantage across generations. He has published work in highly regarded international journals including the International Journal of Epidemiology, Journal of Economic Inequality, and the Review of Income and Wealth.

Allan Borowski is Emeritus Professor of Social Work and Social Policy, La Trobe University, Melbourne, Adjunct Professor in the Department of Social Work, The Chinese University of Hong Kong, and a part-time lecturer in the School of Social Work, Ariel University, Israel. He is also a Fellow of the Academy of Social Sciences in Australia. His recent publications include ‘Israel’s Long-Term Care Insurance Law after a Quarter of a Century’ (Journal of Aging and Social Policy, 2015) and (with Karen Teshuva and Yvonne Wells) ‘The Lived Experience of Providing Care and Support Services for Holocaust Survivors in Australia’ (Qualitative Health Research, 2017).

Bea Cantillon is Professor of Social Policy and Director of the Herman Deleeck Centre for Social Policy at the University of Antwerp. She has acted as a consultant to, among others, the OECD, the European Commission, and the Belgian government. She is a Fellow of the Royal Belgian Academy and a member of the Belgian High Council for Employment and of the Commission on Pension Reform. Recent book publications include Reconciling Work and Poverty Reduction (with F Vandenbroucke) and Decent Incomes For All (with Tim Goedemé and John Hills), both with Oxford University Press.

Terry Carney AO is an Emeritus Professor at Sydney Law School and Visiting Research Professor UTS, Sydney. A Fellow of the Australian Academy of Law and past President of the International Academy of Law and Mental Health, he researches on social security and health law. His co-authored and sole-authored books include Australian Mental Health Tribunals: Space for Fairness, Freedom, Protection and Treatment?; Managing Anorexia Nervosa: Clinical, Legal and Social Perspectives On Involuntary Treatment; and Social Security Law and Policy.

Kay Cook is an Associate Professor at Swinburne University of Technology. She founded and directs the International Network of Child Support Scholars alongside Professors Christine Skinner and Daniel Meyer, and edited the Journal of Family Studies until mid-2018. She is an Australian Research Council Future Fellow, exploring the declining uptake and enforcement of child support, internationally. Her research interests include the governance of families, how ideologies inform social policy design and reform, and single parents’ experiences of welfare and poverty.

Diarmuid Cooney-O’Donoghue is a Research Officer at the Brotherhood of St Laurence Research and Policy Centre. His research interests include social security, the labour market and economic security.

Karen R Fisher is Professor at the Social Policy Research Centre, the University of New South Wales, where she leads the Disability Research Program. She is co-author of four books on Chinese social policy with a focus on disability and child welfare. Her research interests are the organisation of social services in Australia and China, including disability and mental health community services; inclusive research and evaluation methodology; and social policy process.

Matthew Gray is Professor of Social Policy and Director of the Centre for Social Research and Methods at the Australian National University. His research interests include economic and social policy, family studies, social security and tax, and research methods. He has undertaken major evaluations including of the family law system, place based interventions and income management.

Troy Henderson is an economist at the Centre for Future Work at the Australia Institute. He is completing a PhD on basic income as a policy option for Australia at the University of Sydney. He is co-author with John Quiggin of ‘Trade Unions and Basic Income’ in The Palgrave International Handbook of Basic Income and co-author with Ben Spies-Butcher of ‘Stepping Stones to an Australian Basic Income’ in Implementing a Basic Income in Australia: Pathways Forward.

Boyd Hunter is Senior Fellow at the Research School of Social Sciences, the Australian National University. He is President of the Australian Society of Labour Economics. Boyd has been the Managing Editor of the Australian Journal of Labour Economics and Australian Journal of Social Issues. His main areas of research and teaching involve the economic history of ‘The Indigenous Economy’ and the implications for contemporaneous social and economic policy. He is a contributor to The Cambridge Economic History of Australia.

David Ingles is an economist who has worked in various government departments, including the Department of Social Security and the Treasury. He was an advisor to ministers in the Hawke government. At the Tax and Transfer Policy Institute he worked on capital income taxation, land tax and social security policy with an emphasis on work and saving incentives. Previously he worked for The Australia Institute, specialising in tax and superannuation reform. His PhD is in public policy.

Guyonne Kalb is a Professorial Research Fellow at the Melbourne Institute: Applied Economic and Social Research at the University of Melbourne. She publishes widely in national and international refereed journals, including the Journal of Human Resources; Journal of Business and Economic Statistics; Social Science & Medicine; Journal of Health Economics; and Economic Record. Her research interests include the impact of social policy and of tax and transfers on labour supply decisions; and the subsequent impact on income distribution and children’s outcomes.

Eric Kingson, Professor of Social Work at Syracuse University, studies population aging, Social Security policy-making and generational equity. Co-founder and board chair of Social Security Works, he served as advisor to two United States commissions—the 1982 National Commission on Social Security Reform and the 1993–4 Bipartisan Commission on Entitlement and Tax Reform. Co-author of Ties That Bind: The Interdependence of Generations (1986, with Barbara Hirshorn and John Cornman), his most recent book is Social Security Works: Why Social Security Isn’t Going Broke and Why Expanding It will Help Us All (2015, with Nancy Altman).

Shelley Mallett is a Professorial Fellow in Social Policy at the University of Melbourne and Director of the Research and Policy Centre at the Brotherhood of St Laurence. She is the author of two books, Conceiving Cultures: Reproducing People and Place in Nuakata, Papua New Guinea, and Moving Out Moving On: Young People’s Pathways in and through Homelessness with Doreen Rosenthal, Deb Keys and Roger Averill. Her research interests include homelessness, health inequalities, employment and Australian social policy including social security.

Greg Marston is a Professor of Social Policy in the School of Social Science at the University of Queensland. His latest books are a co-edited collection Basic Income in Australia and New Zealand; Work and the Welfare State: Street-Level Organizations and Workfare Politics; and The Australian Welfare State: Who Benefits Now. His research interests include poverty and inequality, the politics of policy-making, welfare conditionality and social theory.

Jenni Mays is Senior Lecturer in social policy at the Queensland University of Technology. She is the lead author of Basic Income in Australia and New Zealand: Perspectives from the Neoliberal Frontier, with Greg Marston and John Tomlinson; and ‘Disability, Citizenship, and Basic Income, and Australia’s Disabling Income Support System: Tracing the History of the Disability Pension from 1908 to Current’. Her research interests include critical social policy, historical comparative policy, universal basic income and social protection.

Alison McClelland is a life member of the Brotherhood of St Laurence and Chair of the Board of Good Shepherd Australia New Zealand. Her main work has been directed to examining the impact of social and economic policies on the distribution of material well-being in Australia. She is co-editor of Social Policy in Australia: Understanding for Action. Alison was awarded a Centenary Medal and a Member of the Order of Australia for her work in social policy, research and education.

Yuvisthi Naidoo is a Research Fellow at the Social Policy Research Centre at the University of New South Wales. She is a quantitative analyst and social policy researcher whose focus is on social disadvantage and social indicators, specialising in poverty and inequality, deprivation and social exclusion, well-being, and ageing societies. Before joining the SPRC, Yuvisthi worked for the Australian Housing and Urban Research Institute on sustainable housing and support options for older people, and in research and marketing for the consumer goods conglomerate Unilever. She completed her PhD in 2017.

Ben Phillips is an Associate Professor of Public Policy at the Centre for Social Research and Methods and Director of the Centre for Economic Policy Research at the Australian National University. He is the author of a number of important economic modelling publications, including modelling of the 2014–15 federal Budget, several AMP-NATSEM reports including The Cost of Living in Australia, The Great Australian Dream: Housing Affordability in Australia, The Cost of Kids and The Cost of Childcare in Australia. His research interests include microsimulation modelling the distributional impacts of the Australian tax and welfare system, housing policy and modelling, and the income distribution in Australia.

Lixia Qu is a Senior Research Fellow at the Australian Institute of Family Studies. She is the lead author of Post-separation Parenting, Property and Relationship Dynamics after Five Years and a co-author of a number of papers on divorce. Her specialist research areas include family formation, the impacts of separation on financial living standards and personal well-being, post-separation parenting.

John Quiggin is a Vice-Chancellor’s Senior Fellow in Economics at the University of Queensland. He is prominent both as a research economist and as a commentator on Australian and international economic policy. He has written on many aspects of economic theory and on policy topics including climate change, micro-economic reform, privatisation, employment policy and the management of the Murray–Darling river system. His latest book, Economics in Two Lessons, will be published in 2019.

Sue Regan is a lecturer at the Crawford School of Public Policy at the Australian National University and Program Director of the Institute of Public Administration Australia (ACT). Previously, Sue was CEO of the Resolution Foundation and Associate Director at the Institute for Public Policy Research in the UK. She is author of Australia’s Welfare System: A Review of Reviews, 1941–2013. Her research interests include welfare reform, social security policy, public inquiries and the making of public policy.

Peter Saunders was the Director of the Social Policy Research Centre at the University of New South Wales between 1987 and 2007, where he now holds a Research Chair in Social Policy. His research interests and publications cover: poverty, social exclusion and social security; economic and social inequality; household living standards; and comparative social policy. He was elected a Fellow of the Academy of the Social Sciences in Australia in 1995 and was the first President of the Australian Social Policy Association between 2009 and 2012. He has been the President of the Foundation for International Studies on Security (FISS) since 2009.

David Stanton is an Honorary Associate Professor at the Crawford School of Public Policy at the ANU where he teaches and researches social policy. He has published in various journals and has a particular interest in social security history, policy and practice in both Australia and overseas. He was Director of the Australian Institute of Family Studies and worked for some years with the then Department of Social Security. David has worked as a consultant with international agencies. On Australia Day 2017 he was made a member of the Order of Australia (AM) for ‘distinguished service to public administration, to social policy development, and as an academic’ and in September 2017 he was elected a Fellow of the Academy of Social Science in Australia.

Miranda Stewart is Professor at the University of Melbourne Law School, where she directs the Tax Group, and is a Fellow at the Tax and Transfer Policy Institute, Crawford School of Public Policy, the Australian National University. Miranda was the inaugural director of the Institute from 2014 to 2017. Recent books authored or edited by her include Taxation, Social Policy and Gender, and Tax, Law and Development. Miranda teaches, researches and advises on a wide range of tax policy topics, including the intersection of tax and welfare systems, business and international tax law, and budgeting.

Ruth Weston is a Senior Research Fellow at the Australian Institute of Family Studies. She co-authored Evaluation of the 2006 Family Law Reforms and Post-separation Parenting, Property and Relationship Dynamics after Five Years. In the 2008 Australia Day Honours List, Ruth received an award of the Public Service Medal (PSM) ‘for outstanding public service as a researcher and contributor to policy development, particularly in the areas of separation and divorce, family law, family relationships, fertility decision-making and child support’.

Peter Whiteford is Professor in the Crawford School of Public Policy at the Australian National University, Canberra, and an Adjunct Professor in the Social Policy Research Centre at the University of New South Wales. He is a Fellow of the Academy of Social Sciences in Australia. He has previously worked at the OECD. Among his publications is ‘The Australian Tax-Transfer System: Architecture and Outcomes’. His work focuses on international comparisons of social security policies, and on inequality and redistribution.

Judith Yates is an Honorary Associate Professor in the School of Economics at the University of Sydney following a career of more than forty years in academia. Her primary research has been in housing economics, finance and policy. She produced background papers for the Australian Financial System Inquiry in the 1980s and the Australian government’s National Housing Strategy in the 1990s, and was a member of the National Housing Supply Council in the 2000s.

Danielle Venn is a Research Fellow at the Centre for Aboriginal Economic Policy Research at the Australian National University. She is a labour economist and has published journal articles on a range of topics including Indigenous employment, working time, employment regulation and the social determinants of health.

Juan Zhang is a Lecturer at the Department of Anthropology and Archaeology, University of Bristol. Prior to Bristol, she was a Research Fellow at the University of Queensland. Her research interests include transnational mobilities, borders, labour migration, and casinos in Asia. Her recent co-edited book is entitled The Art of Neighbouring: Making Relations across China’s Borders (University of Amsterdam Press, 2017). Juan serves the editorial board of the journal Transitions: Journal of Transient Migration.

List of Tables and Figures

Tables

Table 2.1: Poverty trends among the working age population, mid-90s to most recent data

Table 2.2: The poverty reducing capacity of social security: modus operandi, poverty reduction and drawbacks

Table 2.3: Gross minimum wage (MW), wage floor (net income on MW) and social floor (net income on social assistance) for household with lone parent with two children, percentage of the European poverty line defined as 60 per cent of mean equivalised household income

Table 4.1: The three basic household forms, 1976–2016 (%)

Table 4.2: Types of family households, 1966–2016 (%)

Table 4.3: Persons living alone: gender and age, 1976–2016

Table 4.4: Contribution of government benefits to gross household income by family type, 1984 to 2015–16 (%)

Table 5.1: Change in spending on social security cash benefits as a percentage of GDP by period of government, 1975 to 2013

Table 5.2: Real value of maximum adult rates of pensions and allowances for singles and couples (combined), selected years, 1965 to 2018 (2018 $pa)

Table 8.1: Comparing the Henderson and other equivalence scales

Table 8.2: Henderson poverty lines and budget standards, 1998 and 2016 (nominal $ per week)

Table 8.3: Income poverty rates (OECD 50% poverty line, in %)

Table 8.4: Shapley contributions to changes in poverty between 2014 and 2000 (in %)

Table 9.1: Support for items being essential and item-specific deprivation rates in 2014 (weighted percentages)

Table 9.2: Comparing the age profiles of income poverty and deprivation in 2014 (weighted percentages)

Table 9.3: Measures of poverty and deprivation among social security payment recipients in 2014 (weighted percentages)

Table 9.4: Measures of poverty and deprivation among selected social security payment recipients by socio-economic characteristic in 2014 (weighted percentages)

Table 10.1: Relation between before- and after-housing poverty by tenure in 2015–16

Table 18.1: Simple example of GMI with 50 per cent tax rate on private income

Figures

Figure 2.1: Levels of employment (%) for people with below upper secondary education

Figure 2.2: Household and employment changes for six countries, mid-90s to 2010, LIS and EU-SILC, ILO concept of employment

Figure 2.3: Change in GDP per hour worked, average wages on 2016 constant prices and real minimum wages, using 1992 as index year

Figure 2.4: Framework for social trilemma of adequate income protection, financial incentives to work, and gross-to-net welfare state effort

Figure 2.5: The adequacy of minimum incomes for household with lone-parent and two children, expressed as % of the European poverty line defined as 60% of mean equivalised household income, 2015

Figure 2.6: Total expenditure for active age (% in GDP), EU15, EU21, Australia, Canada and US

Figure 4.1: Families with dependent children: Proportion of mothers and fathers who are employed by family form, 1980–2016

Figure 4.2: Number of jobs among families with dependent children by family form, 1981–2016

Figure 4.3: Real value of private income, 1984 to 2009–10 (index 100.0 in 1984)

Figure 4.4: Real value of direct government benefits, 1984 to 2009–10 (index 100.0 in 1984)

Figure 5.1: Recipients of main income support payments, June 2016 (thousands)

Figure 5.2: Trends in spending on social security cash benefits, 1965–2014 (% of GDP)

Figure 5.3: Working age population receiving social security benefits, 1976–2017 (%)

Figure 5.4: Working age population receiving unemployment payments, Newstart and Youth Allowance (Other), 1978–2017 (%)

Figure 5.5: Working age population receiving Disability Support Pension, 1978–2017 (%)

Figure 5.6: Single parents on Parenting Payment Single or earlier equivalents as percentage of working age population, 1974–2017

Figure 5.7: Estimated coverage (%) of children by Family Tax Benefit Part A and related payments, 1975–2016

Figure 8.1: Movements in Alternative Updating Indices, 2000–14 (2000 = 100)

Figure 8.2: Poverty lines for single person families, 2000–14 (in 2014 dollars per week)

Figure 8.3: Poverty lines for different family types in 2014 (in 2014 dollars per week)

Figure 8.4: Ratio of welfare payments to Henderson poverty lines, 2000–14

Figure 8.5: Probability of financial stress and Henderson poverty lines (in 2014 dollars)

Figure 8.6: Income poverty rates in Australia, 2000–14

Figure 9.1: The logic of the consensual approach to deprivation

Figure 9.2: Degree of support for common items being essential in 2006 and 2010 (percentages)

Figure 9.3: The age profiles of poverty and deprivation in 2014

Figure 10.1: Growth in real dwelling prices, rents and wages, 1970–2015

Figure 10.2: Tenure trends, 1994–5 to 2015–16

Figure 10.3: Housing costs as a proportion of gross household income, 1994–5 to 2015–16

Figure 10.4: Incidence of before- and after-housing poverty by housing tenure in 2015–16

Figure 10.5: People in poverty before and after housing, 1990–2016

Figure 13.1: Trends in Indigenous income poverty

Figure 13.2: Year-to-year poverty transitions by Indigenous status

Figure 13.3: Population aged 15 years and over with government pension or allowance as main source of personal income, 2014/15

Figure 15.1: Labour Compensation as a Share of Nominal GDP

Figure 18.1: EMTR for Newstart (single) (2018)

Figure 18.2: Distribution of household wealth; by wealth, age and income of households

Foreword

My father Ronald Henderson had an inordinately large waste paper basket, which he used with flair and determination. A considerable proportion of his letters arrived in it unopened. He had similar disdain for rhetoric, jargon and for talk of action without consequent action being taken. His own writing and speeches were pithy and concise to the point being terse, and his lecturing style at Cambridge, cut from the same cloth, was consequently the subject of parody by the more sentient members of his seminar. It comes as a surprise, therefore, to discover a speech he made in 1984 which shares few of these characteristics. It was entitled, curiously, ‘What should we do?’

Ronald was a man of deeply held convictions as to the responsibility of each one of us to his or her fellow human beings. He was also, in the words of his friend David McCaughey, ‘a man with an offended conscience’. What Ronald witnessed and experienced in the Welsh mining villages in the aftermath of the Great Depression, what he uncovered in Melbourne in the mid 1960s, and again in the Commission of Inquiry into Poverty in the early 1970s, both appalled and angered him: ‘for some two million people, including over three quarters of a million children to be left in deep poverty in this rich country is a disgrace.’ (RFH, 1984)

Back then, as early as 1975, when the Commission’s report was submitted to the federal government, Ronald saw a way forward; not of piecemeal additions and alterations to a rapidly diversifying welfare net, but an overarching solution: the basic minimum income. Not his idea by any means, it had been mooted long before, but an idea he rightly perceived whose time had come. He was ignored, of course. Like so many visionary and forward-thinking people, his was a voice crying in the wilderness, and the less radical, more band-aid recommendations of the report trickled ever so slowly into public policy. Moreover, the report containing this simple if radical proposal, landed on the desk of a federal government in crisis, if not yet in its death throes, and the dubiously anointed incoming administration had other priorities and a callous disregard for such mundane matters: ‘life wasn’t meant to be easy’.

Forward to 1984, as the eager apostles of the burgeoning new cult of ‘economic rationalism’ joined in shrill chorus to persuade governments around the world to rein in the welfare state and embark upon the slash and burn strategy which became the dominant paradigm, and, whatever its much touted benefits, brought untold misery to the millions already at the bottom of the heap. On Remembrance Day of that year, Ronald gave a short speech to a rally on poverty, attended by welfare groups, churches and other NGOs tasked with cleaning up the mess. In it, he re-iterated what had been the central recommendation of the Poverty Inquiry, but in vastly more forceful and, for him, uncharacteristically political, terms:

We must do more ourselves … to help those in need, the frail, aged, the homeless and the hungry… But we must also speak out loud and clear to call on Governments to act, and act now.

We all have a right to a decent minimum income, to a fair share.

That is a clear responsibility of the Commonwealth Government …

Governments can afford to abolish deep poverty … One way, and in my opinion, the best, because it is the most comprehensive, is to have a guaranteed minimum income for all. This prevents people from slipping through the cracks between the various specific pensions and benefits as they do now.

Of course, this will cost us money as taxpayers, or in a reduction of the tax concessions which many of in the middle class now receive.

We have to say to our politicians and public servants: This blight of poverty is so disgraceful that we are determined to remove it; we will pay the bill to provide a fair share for all.

Will you in the churches join us in the welfare field in breaking through this conspiracy of silence about poverty, this refusal to face it and to tackle it head on? Rise up ye men of God!

The problems Ronald and his colleagues outlined in painstaking detail in 1975 and that he reiterated so forcefully here, are now far worse; the extent and magnitude of distress has reached new extremes and politicians from both major parties continue to sit on their hands as they shout insults at each other across the floor of the house. The oft-noted widening gap between rich and poor is merely the tip of a very large iceberg which floats largely unnoticed in the media and in Canberra.

‘Rise up’. It is time for a new generation of fair-minded Australians to be both angry and appalled and, more importantly, to point the way forward, in ways loud and clear enough for even Canberra to hear and take note and, again, vitally, to take immediate and effective action. There is so much to do, so little time to make proper redress before the gap becomes too wide.

If Ronald were a man ahead of his time, we are now a society now well and truly behind ours. On so many fronts, we are so clearly out of step with the civilized world of which we profess to be a part. The guaranteed minimum income may be only one solution to our clearly manifold problems but we in this book, like my father before us, believe it to be a worthy one.

I can now only re-iterate his call from 1984, from a speech which, consciously or unconsciously, echoes that of another offended conscience, and is now embellished by that of another reformer: Rise up, Men and Women of Australia, Rise up!

William Henderson

CHAPTER 1

Introduction: Celebrating and Reviving Henderson’s Vision

Peter Saunders

The impact of Ronald Henderson’s work on poverty in Australia has been profound and enduring. His contribution to the design and conduct of the Melbourne Poverty study (Henderson, Harcourt and Harper, 1970) and in chairing the Commission of Inquiry into Poverty (1975) put poverty on the national agenda and set a framework for Australian poverty research where none had existed. The core elements of that approach remain in place today, more than four decades after the release of Poverty in Australia. The period since then has seen important developments in the techniques used to estimate, examine, understand and respond to poverty, in data quality and availability, and in the infrastructure needed to support such activity. But the basic building blocks established by Henderson (and the team he brought together) have proved to be insightful, resilient and influential.

Concepts and ideas that were alien to most researchers at that time, such as the income unit, equivalence adjustment and measuring poverty before and after housing costs, have become the bread and butter of Australian poverty research. The treatment of housing costs—unique for its time—is now widely used internationally. Public concern about poverty remains strong, as does support for the idea that protecting people from poverty is a laudable and achievable goal. The vision that underpins Henderson’s path-breaking research reflects his commitment to improving the circumstances of those ‘who live as if they [are] poor [and] do so because they do not have the means to avoid it’ (Ringen, 1987, p. 162).

The title of the first book, People in Poverty, instead of the more obvious Poverty in Melbourne, puts the focus where Henderson wanted it to be—on the people affected by poverty rather than on the condition itself. Here and in other work, he displays a perceptive grasp of the nuances of poverty measurement, an acute awareness of the suffering it caused and an appreciation of what was needed to mobilise support behind a poverty alleviation agenda.

Henderson’s efforts were not driven by research for its own sake but as a way of raising community awareness of existing problems and mobilising support for change. He understood that even in the 1970s, Australia was a rich enough country to be able to afford to eradicate income poverty and that its continued existence reflected badly on existing policy settings. The Melbourne poverty study was based on the key idea that poverty is relative and thus needs ‘to be defined in relationship to the living standards typical of the community in which we exist’ (Henderson, Harcourt and Harper, 1970, p. 2). In practice, this involved setting the poverty line at the level of the basic wage ‘because of its relevance to Australian concepts of living standards’ (Henderson, Harcourt and Harper, p. 1) with add-ons for families with children and adjusting it over time to maintain its parity (while recognising that this relationship is not sacrosanct but would need to change to reflect changing social and economic conditions).

The reform recommendations proposed by the Poverty Commission were driven not only by its findings—important though these are—but also by three key principles: (1) that every person has a right to a basic level of security and well-being and all government action should respect the independence, dignity and worth of each individual; (2) that every person should have equal opportunity for personal development and participation in the community; and (3) that need and the degree of need should be the primary test by which assistance should be determined.

Although the focus of Henderson’s poverty research was on income, he recognised that poverty is not just a personal attribute, but ‘arises out of the organisation of society’ (Commission of Inquiry into Poverty, p. 1). This statement, in conjunction with the principles outlined above, provides the basis for an approach that seeks to maximise the well-being of those in poverty, and assesses reforms against that benchmark—a stark contrast with much of what passes for the poverty debate in recent times.

What is striking about Henderson’s approach is its refreshing, open-minded but optimistic tone. Some might look back and see this as naïve, set in a time-warp that has long past. It certainly grates with the neoliberal agenda that has come to dominate economic and social policy, which adopts a deficit approach to poverty that sees its causes as individual, reflecting a combination of poor choices, lack of planning and motivation and an unending appetite to live off the public purse. Bludgers. The term did not exist at the time, although Henderson was all too aware of the misconceptions that underpin it, noting that:

Our evidence suggests that community attitudes towards those out of work are often based on ignorance and suspicion. It is unjust to blame people for being out of work when there are no jobs, when the available jobs are inaccessible, when the jobs are not suitable for unskilled and semi-skilled workers, or when the health of the workers concerned is not good enough for them to hold a regular job. (Commission of Inquiry into Poverty, 1975, p. 132)

These words were written at a time when the unemployment rate (in May 1974) was 1.6 per cent, although it rose sharply to 3.9 per cent over the following year. But how much truer they ring now following a period of forty years with only one month out of 480 (August 2008) when the rate fell (just) below 4 per cent.

Henderson’s social security reform recommendations were being developed as the forces driving these changes were building up. The momentum for change was lost as the focus shifted away from how to improve the system’s performance in achieving its social objectives, and onto how to improve the government’s performance in achieving its budgetary objectives. These factors undermined his basic assumption that economic growth would generate the resources needed to address poverty. They also threatened the assumption that full employment would provide all workers with access to an adequate wage (under the wage setting system), leaving those unable to work to be protected by income support, with social services left to address important non-financial needs and promote community engagement and cohesion. This key trilemma—full employment, adequate income support and targeted social services—would allow everyone to contribute to, and share in the benefits from, a strong economy supported by effective social policies.

Henderson was all too aware that the system must adapt to changes in the social and economic context. The opening page of Poverty in Australia lists some of the areas where 1970s Australian society had failed to adapt to these broader structural broader changes:

Australian society has failed to adapt to the inflow of Aboriginal people from rural to metropolitan areas. It has failed to adapt to housing, information, language instruction and child care requirements of migrants ... [it] has failed to adapt to shifting geographic patterns of demand for labour ... [it] has failed to adapt to the needs of a large number of single parents and married women for part-time work and facilities for child care. (Commission of Inquiry into Poverty, 1975, p. 1)

Such adaption can only take place once the changes themselves have been recognised, their implications understood, and solutions devised, developed, tested and implemented. These tasks are complex and raise many challenges and there will often be no broad agreement on the best ways forward. Research can help to identify the better ideas (and discard the bad ones) but social policy choices also require value judgements to be made and these are often impervious to the evidence (and to the advice of experts).

Despite Henderson’s vision being rejected in the wake of the turbulent economic conditions of the 1970s, the basic approach it encapsulated remains relevant today. It experienced a brief resurgence in the 1980s when the Social Security Review revisited the system’s objectives and proposed a range of reforms designed to better align them with prevailing circumstances. But those reforms that were implemented at the time are now three decades old and no attempt has since been made to review the important ‘adaptions’ that Henderson saw as necessary if social security was to continue to be effective. Instead, recent decades have been characterised by a paternalistic ‘tough love’ approach characterised by the absurd slogan that ‘the best form of welfare is a job’ and an unending drive to tighten eligibility conditions (conditionality) and erode payment adequacy, invisibly through flawed indexation arrangements.

Gregory (2013) contrasts the period following the release of Poverty in Australia when government implemented reforms to standardise income support (IS) payment rates and index them ‘so that all IS recipients shared in community living standard increases’ with the period since the mid-1970s when the deliberate purpose of IS policy has been to:

... gradually undo the Henderson recommendations and, as community living standards increase, increase relative poverty of allowees back towards levels prevailing in the 1960s. (Gregory, 2013, p. 203)

The motivation for this turn-around—or what Gregory refers to as the ‘Henderson question’—has been to widen the gap between incomes in and out of work in order to ‘make work pay’. Has it worked? Gregory argues that government restrictions on data availability have prevented researchers from establishing how successful this policy has been in inducing the unemployed back into paid work—although any gains would have to be set against the increased poverty that the failure to index working age social security payments has undoubtedly created.

More generally, this process has seen the system drift slowly away from the bedrock of principles and objectives that were the focus of Henderson’s vision. The idea that the social security system is a fundamentally cohesive and empowering public institution designed to meet the needs of all Australians has been replaced by a divisive politics of blame which sees ‘them’—the victims of economic and social change—cast as a burden on ‘us’ taxpayers. Welfare reform has become a vehicle for devising new ways of coercing the unemployed and jobless into jobs that are increasingly insecure and poorly paid, providing no guarantee against in-work poverty, but making the alternatives increasingly unpalatable.

This process is eating away at one of the foundations of an Australian settlement that is needed, not only by those unfortunate enough to depend on its immediate provisions, but also by those whose lives are made easier by the knowledge that its entitlements extend to them too. The politics of blame has driven a wedge between those two groups, portraying the former as dependent on a welfare system that is paid for, but not used by the latter. The forces driving this process of incremental destruction need to be exposed, challenged, rebutted and reversed. The starting point for such an exercise must involve a return to the principles that Henderson espoused.

This ‘back to basics’ approach does not have to reinvent the building blocks of social security, only to rediscover, review and revise (that is, adapt) them. This is where the contribution of Henderson comes to the fore, since his articulation of the role, purpose and functioning of the social security system retains its relevance, despite the sweeping economic and social changes of past decades. Clarity is needed about what the system is trying to achieve, while recognising and adjusting to the constraints within which it operates.

It was the need for such a broad approach that led to the establishment of the Henderson Anniversary Project to commemorate the fiftieth anniversary of Professor Ronald Henderson’s work. The project was motivated by a need to review the fundamental changes that have taken place in Australian society and its economy and reconsider the extent and incidence of poverty in Australia, and the adequacy of responses to these changes. It also saw it as timely to reconsider the changes made to Australia’s system of social protection, especially to its social security system that has, in the past, had the reputation of being both effective and efficient in targeting assistance to those most in need. The system had become increasingly inadequate and demeaning in both the amount and manner in which support is provided. Disaffection with existing policies and how they are developed reflected a sense that policy-makers are disconnected from current realities, living in a vacuum unaffected by the day-to-day problems confronting ordinary people. Community concern about the seemingly intractable nature of poverty (and growing inequality) has also served to focus attention on the role of the social security system in alleviating and reversing these trends. This has led to a global resurgence of interest in an idea—given expression in the Australian context by Henderson—that some form of Basic Income (BI) scheme can and should become a necessary component of the social protection system.

The developments outlined above have galvanised public interest in an idea that seems better equipped to deal with the accelerating pace of technological change that is threatening the jobs and future livelihoods of many. The BI provides a new approach that many see as better equipped to guarantee income security when labour incomes and opportunities are more volatile and less certain. It can take many different forms, but all raise basic questions about the purpose of income support arrangements and their relationship with labour market earnings—a relationship that has been central to the Australian ‘wage earners’ welfare state’ since its inception (Castles, 1985). Above all, interest in the idea of a BI has been sparked because it raises fundamental questions about the role and purpose of social security—including the key question of who has a right to receive assistance and on what basis. These questions are central if the debate on social security is to provide the kind of blueprint for the 2020s that Henderson offered half a century ago for the 1970s.

In assembling the list of topics and contributors for this book, the aim was to provide a comprehensive and authoritative analysis of the role and functioning of the social security system that is unencumbered by ideological posturing that replaces facts and evidence by deception and assertion. The book thus begins by setting out the key challenges currently facing social security systems as a way of introducing key concepts and ideas. This is followed by a description of how the system has changed in terms of its content and purpose, before a series of more focused chapters capture the kinds of ‘adaptions’ that are now needed to root the reform agenda in existing economic and social conditions. They include reviews of the changing nature of poverty research itself and how this can affect the implications for reform; how poverty is actually experienced by those affected; and of changes in key dimensions that shape the form, context, causes and consequences of poverty in specific areas: housing, disability, gender, Indigenous Australians and the labour market. Finally, the book provides a discussion and analysis of broad reform options focusing on, but not restricted to, different variants of a BI. The goal is