Beating poverty is up to the Government

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'Poverty alleviation is a national goal that should be financed by the national government,' argues the Henry report. And with this short sentence the Report cuts through years of evasion and obfuscation. Poverty is back on the agenda, and it's the Federal Government's responsibility.

It's hard for many people to accept, but even though Australia is a rich nation riding on the back of a commodities boom, we still have stubborn pockets of poverty. In 2007 Catholic Social Services Australia and Jesuit Social Services released Dropping off the Edge, a report that identified areas of concentrated disadvantage in every state and territory of the country. The rising tide of prosperity has not lifted all the boats.

The Henry report argues that payments for single unemployed people should be increased. It points out that a single person relying on an unemployment allowance is well below the OECD benchmark for poverty. And for the declining number of Australians unable to find work, the situation has been getting steadily worse. While pensions are increased in line with increases in average male earnings, unemployment allowances are adjusted only for inflation. According to the review, if this continues, 'it is likely that by 2040 a single pensioner would be paid more than twice as much as a single unemployed person'.

Obviously this can't go on. The review notes that a 'continuous decline in Newstart Allowance against community standards would have major implications for payment adequacy and the coherence — in terms of horizontal equity — of the income support system.'

In 2008 Catholic Social Services Australia commented that 'While there is a growing awareness of the inadequacy of income support payments there is no credible standard of adequacy to guide decisions about the amount of support various groups of income support recipients ought to receive.' We argued for an Independent Entitlements Commission that would establish adequacy standards.

The predictable response to this is to argue that it's better to get unemployed people into work than to increase their allowance. By promising to do the former, governments hope to avoid a conversation about the latter.

And it's true that unemployed people are almost always better off in paid work. But even the most effective welfare to work programs don't help everyone. Some people are always left behind and end up relying on income support. Relying on inadequate income support payments to encourage work hurts those who are most vulnerable in the labour market.

Another response is to change the subject from poverty to social inclusion. As everyone acknowledges, social inclusion is about more than just money. In the UK this was the Blair Government's favourite tactic. As academic Ruth Lister observed in the late 1990s: 'counter-arguments that tackling poverty and social exclusion cannot simply be about extra money for those on benefit have shifted subtly to a position that it is not about better benefits period.'

The fact that social inclusion is about more than money does not mean that it's not about money. Below a certain level of income people are not able to achieve what economist Amartya Sen calls 'elementary functionings' — things like being able to appear in public without shame. People need a certain amount to maintain a way of life that's considered decent in their community.

Issues like work incentives and affordability are important but separate issues. Payments don't become adequate just because a government decides it can't afford to increase them or worries that they create disincentives to work.

The Henry report accepts that payments should be adjusted in line with community standards rather than in line with inflation alone. As the Report notes: 'What would have been seen as an adequate level of payment according to 'community standards' in 1950 might not be seen as adequate today, and what might be seen as adequate today might not be seen as adequate in 2020.'

An Independent Entitlements Commission would allow such determinations to be made based on evidence, rather than political expediency, in a process that would be transparent to all.

One of the most significant achievements of the Henry Review is to put poverty back on the agenda. Now we must repond.


Frank QuinlanFrank Quinlan is the executive director of Catholic Social Services Australia. The discussion paper 'An Australian Entitlements Commission' is available on CSSA's website.

 

 

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Existing comments

Frank Quinlan is right that we will always have some people left behind relying on income support regardless of the upsurge in the economy. And, as a civilised society we should not begrudge or marginalise those people adequate income support but enable them to live in dignity.

As taxpayers we should be encouraging government to sufficiently support people relying on income benefits and ensure that quality educational opportunities are available to all children so that they can make their own way out of the poverty trap. I hope government looks closer at the Henry Report in terms of income support through an Independent Entitlements Commission.
Helga Biro | 08 May 2010


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