The future of families

Social policies, and social policy outcomes, are different in different countries because they have been shaped over many decades by a diversity of values concerning the purposes of social policy—a diversity, which is continually affirmed, but occasionally, modified through political choice. What the welfare state does and is expected to do is, in other words, a reflection of a country’s ideas about social justice and how that end may be achieved. Such ideas differ. Generally, the character of a country’s social policy profile changes only slowly. For the most part, social policy systems are like ‘elephants on the move’, going forward ponderously one step at a time. Very occasionally, they move at a canter and change direction radically.

Over recent decades, Australia has been elephantine in certain respects and radical in others. We have been extremely slow in modifying our family policies to cope with the new realities of family life, but have moved much faster to remove key elements of the system of social protection that once made Australia unique. I would also suggest that our choices do really matter: that the way we structure our systems of welfare provision can have major consequences for the quality of the society in which we will live in the future. It follows that, if we care about families, we should choose carefully.

In examining the facts of social expenditure and family policy development across the OECD area, I have compared total social expenditure as a percentage of Gross Domestic Product (GDP) in 21 advanced Western nations from 1960–1998.

A first point to notice is that, contrary to the warnings of the globalisation literature, there has been no ‘race to the bottom’ in social spending, with OECD average expenditure rising by four percentage points of GDP over the past two decades. Contrary to the views of many domestic critics, Australia has been amongst the countries in which expenditure growth has been greatest in that period, increasing from 11.3 per cent of GDP in 1980 to 17.8 percent in 1998.

A second point to note, however, demonstrating the range of social policy choice open to us, is that differences between countries are huge. At one end of the distribution, we find countries like Sweden, Denmark and Switzerland, spending at and around 30 per cent of national income on the welfare purposes, and, at the other end, countries like the United States (14.6 per cent) and Japan (14.7 percent), spending less than half that figure. Despite recent expenditure growth, Australia remains, as it has always been, close to the bottom of the social expenditure league table, with only Japan and the US spending less.

In the arena of family policy, the story is very much the same. The Scandinavian countries score highest on all aspects of family-friendly provision. Once again, the United States is at the other end of the distribution on most counts, but here the US at least outscores Australia in one respect. We share with the United States the dubious distinction of having no public maternity leave schemes and almost no public provision of childcare places for the under threes, but the US does, at least, have ample access to private childcare for this age group. Australia does not.

There are clear distinctions in social policy responses among OECD nations. Social policy choices have been made on the basis of quite different conceptions of social justice.

What Gøsta Esping-Andersen calls ‘liberal’ welfare states (and I call the English-speaking family of nations) spend less, have weak maternity leave schemes (in general), and spend little on publicly funded childcare. The values expressed are a preference for market solutions, and for intervention
only in demonstrated cases of need and incapacity. This is generally described as a ‘residual’ approach to welfare. In line with the preference for market solutions, several countries, but not Australia, have large private childcare sectors.

At the opposite extreme from the ‘liberal’ welfare states in most respects are the ‘social democratic’ or Scandinavian welfare states, spending more on average than any other groupings, with excellent maternity leave schemes (and parental benefits as well) and large public (but not private) childcare access. The choice here is to use the social policy and taxation systems to promote egalitarian values. High levels of public childcare express a strong emphasis on free provision of services as an instrument of egalitarian redistribution and of gender equality in the labour market.

In between, are the ‘conservative’ welfare states of continental western Europe and southern Europe. These countries were the pioneers of high social spending, remain generally large spenders, with generous maternity leave schemes, but offering little in the way of childcare provision to the under-threes—neither private nor public. Esping-Andersen sees these countries as ‘conservative’ because their social security systems focus on replicating in the social policy arena, distinctions drawn from the world of work. The vast majority of benefits are earnings-related and contributory, while egalitarian service provision is no more prominent than in the ‘liberal’ countries.

Given these distinctions, can we simply classify Australia as a ‘liberal’ nation, preferring market outcomes and, in its means-testing of benefits, employing a characteristically ‘residual’ approach to social provision? I would argue that, for much of the post-war era (say from 1945 through to the early 1980s), this would have been an unfair characterisation of Australian social policy, given the existence of a wider system of social protection, which by controlling wages, border protection and migrant inflows succeeded in producing a high wage economy of a remarkably egalitarian kind. In my book The Working Class and Welfare (1985), I called this uniquely Australasian policy configuration ‘the wage earner’s welfare state’.

Its key features were high minimum wages, extremely low unemployment, easy access to owner-occupied housing and a selective system of welfare state benefits that was almost wholly non-discretionary in character. As Ronald Henderson, the author of Australia’s most famous poverty study noted, these were characteristics that led to low levels of poverty by international standards and poverty largely confined to welfare beneficiaries. Those in work were not poor because arbitrated wages were (at least, in principle) sufficient to support a working husband, a wife who stayed at home and at least two children. This was the other important feature of the ‘wage earner’s welfare state’. The presumption was that wage-earners were males and the prevailing pattern was an extreme version of what has come to be called the ‘male breadwinner state’.

The fact that Australia could, for a long time, be described as a ‘wage-earner’s welfare state’ meant that economic outcomes were more egalitarian than might be assumed on the basis of Australia’s low levels of social spending. This is now much less the case than it was in the past. Unemployment is now higher, home ownership less affordable and, above all, governments of both political complexions have moved to strip away the protections once afforded by tariff protection and arbitrated wage awards. In its heyday, the awards system protected the wage levels of around 80 per cent of Australian workers, that figure is now well below 50 per cent.

Recent changes to the benefits system—in particular, those described by the phase ‘mutual obligation’—have made entitlements far more discretionary than in the past.

These changes may not have been easily avoidable, they may have been forced on us by international developments in any case, but they have been deliberately embraced by politicians across the board as part of their agenda of ‘economic rationalism’. This is the radical change and the clear choice that Australia has made in recent decades. To the degree that the former wage earner’s strategy was a successful one—and it might well not have been successful under modern circumstances of global competition—the change has involved a reduction in the scope of social protection, with a much greater reliance on the mechanisms of a ‘liberal’ welfare state to guard against poverty and the extremes of inequality.

The increased emphasis on discretion is an instance of this.

While Australia has recently moved with daring speed to deregulate the economy, the same has not been the case in the arena of family-friendly public policy. It is easy enough to see how, in these respects, the legacy of a wage-earner’s welfare state might make us lag even behind other ‘liberal’ welfare states in this area. Who needs maternity leave and childcare when the basic assumption of the social policy set-up is that married women do not work? But that is a reality of a long-gone era. Our Prime Minister may believe in women being ‘home-makers’, and may choose to modify aspects of the child benefits system to make that alternative more enticing, but today’s economic bottom line is that most women, including most women with children, need to work to help provide their families with a decent standard of life. Just as importantly, very large numbers of women want to work: to have careers no less fulfilling than those of men.

The big changes in the structure of the family and in women’s aspirations are only marginally reflected in policy change. Despite major pressures from women’s organisations, Australia still has no publicly funded maternity leave. Public subsidies for childcare are so low that many women find that they are virtually working ‘for the joy of it’. Women are self-financing the preservation of their human capital, once the costs of the private provision of childcare are taken into account. Under these circumstances, it is hardly surprising that there is so much complaint about the difficulty of combining work and family and that Australian fertility rates are well below replacement rate and continuing to fall. In The End of Equality, Anne Summers notes that today traditionalists on family policy issues are increasingly using a fear of declining fertility to reinforce their call for women to forgo career aspirations and return to the home.

Finally, there is strong evidence that the choices countries make and the values imbuing their welfare systems really do matter and that, in particular, they matter for the future of Australian families. The level of a country’s spending in areas of social policy makes a huge difference to child poverty. Essentially, the higher is social spending, minus spending on the aged, the lower is the level of child poverty. Once the Australian wage earner’s welfare state might have protected children living in families in which there was a male head in employment. Today, in an era of greater wage ‘flexibility’, that is far less likely to be the case. If we want to do something about child poverty, we should be spending more on social programs.

Similarly there is a strong positive correlation between access to formal (private and public) childcare for the under threes and both female employment and fertility. The world, as the traditionalists see it, has been turned almost completely upside down. The best way of boosting fertility, of guaranteeing that there are families in the future, is not to encourage women to desert the labour force for the home, but rather to underwrite a widespread access to childcare, making it possible for women to do what so many appear to want: to combine satisfying long-term careers with family life. 

Frank Castles is Professor of Social and Public Policy at the University of Edinburgh and presented a version of this paper at the recent Families Australia conference, Globalisation, Families and Work in Brisbane. Frank is the author of The Future of the Welfare State: Crisis, Myths and Realities, to be published by OUP in July.

Photos by Bill Thomas.



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