Crikey



Kevin Andrews, don’t pick on the disabled and those on the dole

The Abbott government plans to crack down on disability payments and the dole, but is it targeting the wrong welfare recipients? Experts have called for the age pension — which costs almost five times as much as the dole — to be wound back first.

Social Services Minister Kevin Andrews recently flagged big changes to the welfare system via his regular bulletins in The Australian. He described the system as “unsustainable … the two big areas are Newstart and the DSP [Disability Support Pension] in terms of ensuring the viability and sustainability of welfare in the future”.

Crikey asked four experts about this plan and found none thought it was a good idea. So we crowned them minister for the day and asked how they’d reform welfare (and perhaps save some cash). The most popular response was to wind back the age pension or target superannuation concessions. Some suggested making the disability support program and dole work better, rather than cutting them back.

By way of background, Andrews has hinted the May budget would tighten eligibility for new recipients for the DSP and the dole, with more changes later. The government has a couple of reviews reporting back soon. While Prime Minister Tony Abbott has talked about banning the dole for people under 30, and a Nationals MP recently said people on the dole were out to “screw the system”, the only concrete proposal is to stop allowing people on the dole to refuse a job if it’s more than 90 minutes away.

Andrews has ruled out changes to the age pension — and why not, given that older people tend to vote for the Coalition? At the September federal election the Coalition nabbed 51.8% of the primary vote from the over-50s (Labor got 31.1%). Among the 18-34 age group, the major parties polled about the same (36.6% Coalition, 36.1% Labor).

The dole (aka Newstart) is $501 per fortnight (plus up to $124 rent assistance if eligible, and other top-ups). The DSP is $751.70 per fortnight (plus a supplement of $61.70 if eligible), the same as the full rate for the aged pension.

Here’s what our experts would do about welfare …

If government wants to slow the growth in welfare expenditure, the age pension is the main game.”

Cassie McGannon, fellow at the Grattan Institute: wind back the age pension

If government wants to slow the growth in welfare expenditure, the age pension is the main game,” McGannon told Crikey. It costs $36.4 billion a year, 10% of the federal budget. The dole costs $7.6 billion. McGannon’s issue with the age pension is generous indexation and changes to rates and eligibility, making it “relatively untargeted”. Older households with million-dollar assets may still get part of the pension. “These people are relatively wealthy, they’re doing a lot better than a lot of the people on DSP and Newstart,” she said.

Grattan wants the government to include owner-occupied dwellings in the pension assets test, and the institute calculates this would save $7 billion a year. Households in this situation but with low cash incomes could get the pension but would accumulate a debt to the government against their property (like a reverse mortgage). Grattan has also suggested lifting the age pension and super age to 70.

McGannon says it “seems shortsighted” for Andrews to rule out changes to the age pension; “you’re really limiting your options”.

Chris Richardson, economist and partner at Deloitte Access Economics: cut middle-class welfare

Richardson says the welfare system needs reform, but “I’d focus more on middle-class welfare”. Industry welfare and top-end tax breaks should be reined in, too.

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Categories: Australia, Economy

54 Responses

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  1. But the disabled and vulnerable are the perfect targets to fund tax cuts to rich corporations

    by The Pav on Jan 24, 2014 at 1:21 pm

  2. Yes, target the poor and disabled, they don’t vote Liberal. Lets face it, one of the first things the government did was drop the superannuation changes for the rich - ok to exent welfare to them!

    by SusieQ on Jan 24, 2014 at 1:25 pm

  3. There is absolutely nothing unsustainable about the state of our welfare currently, in fact, the payments currently made are too small, as they don’t allow recipients to meet their non-discretionary spending needs.

    I’m amazed it took less than 6 months for this government to show their true colours, they have never been about fiscal responsibility or budget surpluses, from the start they have been about cutting government spending to those they see as undeserving. They are followers of a sick and diseased ideology, and the sooner we can excise them from Australia forever, the better off we will be as a nation.

    by Jimmyhaz on Jan 24, 2014 at 1:43 pm

  4. Jimmy,

    You have said it in one. Out esteemed PM is over in Davos sprouting the lie of free trade and business unfetterd by Government regulation.
    Hold on, was’t the world almost bought to the brink in the GFC by free marketeers and lack of banking regulations, governments letting big business have a free hand?

    by MJPC on Jan 24, 2014 at 2:24 pm

  5. Interesting observations in the comments. I asked Essential to crunch some recent numbers for you which might give more insight into Coalition policy pressures re income and age. Based on their online polling in December and January:

    * the primary vote among people earning less than $600 per week (which would include people on the dole and DSP) is 33% Coalition, 42% Labor,

    * among people earning over $1600 per week, it’s 47% Coalition, 35% Labor.

    Essential also did some more work on voting by age bracket (the Newspoll results are in the article). Among the over-65’s, roughly the age at which the pension kicks in, Essential found the Coalition at 56% and Labor at 30% (primary, December to January). So the Coalition has a very high level of support among voters of pension age.

    Thought you might find this interesting.

    by Cathy Alexander on Jan 24, 2014 at 2:42 pm

  6. I’m amazed by the third of the under $600 a week group that voted coalition, it kind of reminds me of the gay hardcore republicans that I met in LA. I guess the Republican party and the LNP have something else in common, an ability to make people vote directly against their own interests.

    by Jimmyhaz on Jan 24, 2014 at 3:14 pm

  7. I don’t know, Jimmy, I suspect that quite a few Coalition voters earning under $600, would’ve probably swallowed the talkback and tabloid Kool-Aid, that their jobs have been taken by those queue jumping refugees.

    by Electric Lardyland on Jan 24, 2014 at 3:20 pm

  8. Ooft, you’re right, I totally forgot about all those cushy yet high-paying jobs being stolen by the illegal boat people. While we’re here, can you point me to the queue for these jobs? I have two skiing trips at the end of this year that aren’t going to pay for themselves.

    by Jimmyhaz on Jan 24, 2014 at 3:44 pm

  9. Some say the old age pension should be cut by 30% and supplemented by food stamps to make up the 30% cut. Just like what happens in the USA. This would cut needless and wasteful expenditure by pensioners on poker machines and tatts-lotto. Additionally to create more employment by the job creators the diesel fuel levy to miners and other extractive industries should be increased by 30% to create extra employment by being more competitive in world markets

    by Bill Hilliger on Jan 24, 2014 at 3:51 pm

  10. Given our economic system is predicated on a certain level of unemployment, i.e. it’s designed that way (witness the panic in the financial press when unemployment gets “too low”), surely we can treat those who are unemployed a bit better. And as for work for the dole, people on it are either displacing paid employment, hence increasing the unemployment rate, or doing meaningless work, in which case it’s purely a mean-spirited punitive scheme, punishing people for being part of a group of people (the unemployed) who are created by design.
    I think the dole should be at least doubled - it’s disgracefully low at the moment.

    by Bob the builder on Jan 24, 2014 at 3:53 pm

  11. While the DSP has shown big growth (particularly in nebulous illnesses like stress and PTSD - part of the medicalisation of life I guess), it’s well known that the old-age pensioners have been the big welfare recipients. Numerous articles on macrobusiness.com testify to the overly-generous payments made to those who are asset-rich. While the DSP is a problem, and confines people to a life of dependence and ill-health (payment for illness is associated with a likelihood of never getting better), the pension is the one they should go after. It’s common sense, but with a voting-bloc as powerful as the grey army, I doubt it will ever change. Making the family home assessable would be a great start and it makes no sense economically to exclude it, but the vested interests are just too strong: cue the outraged relatives waiting to get their hands on the family home, and both sides of politics desperate not to offend pensioners. It will never happen. The DSP is, as the author states, an intractable one to solve - the number of medical conditions rises each year - perhaps a time limit before a hard-core review might work, or a requirement to undergo treatment while claiming the benefit - but, if someone tells you they are ‘stressed’, and meet all the requirements for a diagnosis of ‘stress’, it’s hard to say ‘no money for you’.

    by Pete Simpkins on Jan 24, 2014 at 3:57 pm

  12. Sadly, it is just predictable that Abbott would go this way. Its only about where the votes are for him. Well I’m one who will soon be in the Super / Aged Pension age range - I didn’t vote for him this time, and I won’t next time! I can’t handle the greed, lack of vision, and expediency.

    by Gillh on Jan 24, 2014 at 4:22 pm

  13. Hands off the OAP! As a Boomer who had free school milk, free education the, just in the nick of time, free uni then a life of luxury wallowing in wastage of the planet’s finite resources, I am entitled to go out the way I came in, feather bedded the whole way! Damn the future, they shoulda been smart enough to be born earlier.

    by AR on Jan 24, 2014 at 4:34 pm

  14. How is “stop allowing people on the dole to refuse a job if it’s more than 90 minutes away. calculated? By HST? Chauffeured Comm car? Taxi?
    As noted below, who are the <$600 who vote tory? On tuther hand, how do the 17% over 50 vote and why? Not a bunch of old hippies are we…err.. they?

    by AR on Jan 24, 2014 at 4:42 pm

  15. @Bob

    You’re absolutely right. Employment is directly created by government spending, and therefore people on the dole are put there by the fiscal policies put in place by those in power. For the government to demonise a group of people it has created and grown by reducing government spending and therefore aggregate demand is utterly reprehensible.

    I don’t think I’d take the panic of the financial press seriously when it comes to unemployment though. Full employment significantly increases the bargaining power of labour (not the political party), and it isn’t difficult to see why that would scare them.

    by Jimmyhaz on Jan 24, 2014 at 4:50 pm

  16. @Jimmyhaz
    “I don’t think I’d take the panic of the financial press seriously when it comes to unemployment though. Full employment significantly increases the bargaining power of labour…”

    Yes, that was my point. Unemployment is not a policy failure, its a policy success. The only time it fails is when unemployment gets “too low”.

    The moral bankruptcy of demonising people in a situation systemically created by the economic elite is ….. words fail me!

    by Bob the builder on Jan 24, 2014 at 4:58 pm

  17. Hmmm, Jimmy; cushy, high paying jobs that will pay for our skiing trips? Well, maybe we could trash our own moral codes and become right wing media opinionistas? There does seem to be quite a high demand, these positions do seem to be very well paying and it would seem that the only qualification is the ability to sanctimoniously regurgitate somebody else’s regurgitated rant.
    Actually, no; I doubt if either of us could sleep at night.
    Also, on the subject of people voting against their own interest, one recent book that I would recommend, is Pity The Billionaire, by Thomas Frank. It’s a very interesting account of how post-GFC, the right wing ideologues of the the Republican Party who largely caused the GFC, founded the tea party movement: a movement that was angry with practically everyone, except for the right wing ideologues of the Republican Party who largely caused the GFC.

    by Electric Lardyland on Jan 24, 2014 at 5:03 pm

  18. @Pete Simpkins - The problem with requiring people to undergo treatment for their illness is that it may not be available for those with Psychiatric problems - if they can’t afford to see a Private Psychiatrist and none are available under the Public System then they can continue to take the Pension.

    by Shaniq'ua Shardonn'ay on Jan 24, 2014 at 5:08 pm

  19. And corporate welfare gets off scott free… just as it should, of course!

    by Yclept on Jan 24, 2014 at 5:28 pm

  20. Chris Richardson mentions that people who have spent a few years on the dole end up on a DSP. Having spent some time on the dole about a decade ago, I’m lucky I finally got a job or I’d be either dead or incapable of looking after myself. The way that Centrelink treat you is like you’re not worth anything and that it is all your fault for not finding a job. They put you on all these senseless programs that do nothing to improve your job eligibility. My problem was simply that I wasn’t a 20 year old. There’s a lot of discrimination out there against older workers.

    I got a job by my own efforts (and with support from my partner), absolutely no help from Centrelink or their stupid and senseless programs. I went to TAFE (My wife supported me) and got some qualifications and worked like a trojan at volunteer work until I was deemed suitable enough for a trial at real work. If I didn’t have a wonderful partner who supported me financially after I stopped my dole payments I would now be toast. A decade later I’m still working and putting away super at a crazy rate, hoping to avoid having to go on the age pension (If it still exists when I’m deemed old enough to retire…70? 80? 90? 100?). I don’t want to have anything to do with any more of their “caring” or “welfare”. I couldn’t take any more of their “support”.

    If ever I were unemployed again (god forbid!) I’ll steal or sell drugs or anything rather than go on the dole. I couldn’t take any more of their “encouragement back into the workforce” as Julia Gillard called it. I hate to think of the suffering that we, through our government, put asylum seekers through, merely as a “deterrent to other illegals”. Actually we could save billions by allowing asylum seekers to live and work in our community while processing their asylum claim. Imagine how much we’d save on counseling and lawsuits alone! It’s also more humane than threatening some poor doley with starvation.

    These people are evil. No they’re not. Actually it is the system which is evil and allows people without a conscience to do well in the political system and in the upper levels of our government bureaucracy.

    I’d suggest cutting the diesel subsidy, cutting any spending to private schools (including all religious schools) and dumping the ridiculous childcare welfare to middle class well-off women. I’d also call for a review of the corporate tax system to make those b@stards pay at least the same rate as PAYE taxpayers. I’d also use a rotating committee of unemployed people to oversee remuneration of our parliamentarians and their pig trough, sorry, expenses.

    Sh#tting on the unemployed always is a vote winner for Labor and liberal governments. The rich think they’re lazy scum and the ordinary workers think the unemployed are bludging off their hard work. Unemployed people don’t have a voice and can’t defend themselves. If they even try to do so they’ll be starved into submission. You don’t get time to organize when all your time is micro-managed by Centrelink. Fail to jump through a hoop and you’ll be cut off, you’ll starve.

    Social security actually means a secure society. Society stays secure when you pay an adequate allowance to those unfortunate enough to be unemployed. Otherwise society will be destabilized by a mob of hungry people and hungry people are desperate and angry.

    by Zeke on Jan 24, 2014 at 5:30 pm

  21. @ Cathy A… I am interested in the one third of voters earning <$600/week, who vote for the Coalition. Have you thought about those women with young children, where the family income is high enough that they don't really need to work? Those who typically work part time (maybe a couple of days/week), who like to 'keep their hand in' until they decide to return full time, or retire from the workforce. In my experience, there are a lot of nurses, teachers and others who do this. I am assuming that the figures you gave apply to part time workers as well? These women may be on a 'low income' but be traditional conservative voters perhaps.
    Guess the same pattern might apply to stay-at-home fathers, where the mother's income is greater. Just a thought!

    Agree with the comments above regarding the LNP choice of cutting welfare to the less well off. Crazy stuff! There are a lot of other places where they can find much more revenue - negative gearing and high-end super, for example. However, I do agree that taking another look at who is eligible for the aged pension is not a bad idea. Since the cost overall is mind-blowing, and it can only increase in the future, there is an argument to be made that it could become unsustainable.

    by CML on Jan 24, 2014 at 5:46 pm

  22. @Electric

    I don’t think that there is a sum of money in the world that could make me become an Alan Jones or Andrew Bolt. Cognitive dissonance and intellectual bankruptcy make my head hurt, and the amount required to hold their jobs would probably give me a permanent migraine.

    I’ll check that book out though, the Tea Party has been an object of interest to me pretty much since its’ inception.

    by Jimmyhaz on Jan 24, 2014 at 5:59 pm

  23. Pushers like Howard, Cosjello, Abbott, Andrews et al hooked the middle classes on welfare-for-votes, it’s up to Andrews and Abbott to wean them off.

    by klewso on Jan 24, 2014 at 6:40 pm

  24. I don’t know Jimmy, I suspect that there’s a bit of Bolt and Jones in all of us…but luckily for most people, our digestive systems do a good job of processing and expelling those bits.

    by Electric Lardyland on Jan 24, 2014 at 8:10 pm

  25. I reckon that the eligibility for the pension should be looked at, mostly going after those people who hide assets in order to qualify. The family home is problematic because few voters of any age would support it. Raising the retirement age is a real option

    The attractiveness of targeting the dole and the DSP is that these benefits are paid to people mostly of an age where many of them could enter the workforce. This is why both governments have been loath to increase the amount paid. It simply locks people into welfare dependency and encourages bleeding heart lefties coming on sites like Crikey complaining about 90% effective tax rates.

    There are over 700,000 unemployed Australians and over 800,000 people on the DSP. That’s 1.5m people of working age. It is reasonable for a government to attempt to shift some of this number from benefit receiving dependents to taxpaying contributors. Bang on about Labor voters if you like but driving this number down would be good for everyone. Good for the people involved, good for taxpayers, good for the economy and good for the permanently disabled who might then be able to get more.

    by David Hand on Jan 25, 2014 at 12:10 am

  26. @ David Hand
    Your analysis neglects to deal with the fact that unemployment is deliberately, structurally designed. It’s integral to the economy.
    It’s not bleeding heart to give the people who happen to be the ones unemployed a fair go.

    by Bob the builder on Jan 25, 2014 at 1:14 am

  27. When I lived in New Zealand in the early 70s, unemployment was nil. Zero. The country did very well through its trade with pre-EEC Britain. So Bob, this notion that unemployment is deliberately, structurally designed is bullshit. Classic class warfare. you’ve been watching too many evil corporation movies.

    You’ll utter that absurd, undefined much loved word of the left “neo liberal” next.

    by David Hand on Jan 25, 2014 at 3:46 pm

  28. When I lived in New Zealand in the early 70s, unemployment was nil. Zero. The country did very well through its trade with pre-EEC Britain. So Bob, this notion that unemployment is deliberately, structurally designed is bullsh*t. Classic class warfare. you’ve been watching too many ev*l corporation movies.

    You’ll utter that absurd, undefined much loved word of the left “neo liberal” next.

    by David Hand on Jan 25, 2014 at 3:47 pm

  29. @ David Hand

    There are 700,000 unemployed and there are only 100,000 jobs for them. Are you good at Maths? What happens to disabled people who are kicked off the DSP onto the lower “newstart” and forced to jump through the cruel and nasty Centrelink compliance hoops? I suppose suicide would thin out the numbers considerably. Is this Andrews’ plan? What a cynical and nasty bunch this current government is turning out to be. They’ve obviously won the race to the bottom over the Labor government

    by Zeke on Jan 25, 2014 at 5:53 pm

  30. Zeke,
    According to the Australian bureau of statistics, there was a net positive migration to Australia, that is the number arriving indefinitely to live in Australia less the number leaving indefinitely of 244,400 people in the 2012 13 year. This has been pretty constant for quite a long time. They are absorbed into Australia’s economy quite well. If you say that 1 in 3 immigrants seeks to enter the workforce, Australia’s economy absorbs 80,000 workers a year. Every year.

    This makes your notion that there are only 100,000 jobs fanciful. Australia’s economy is dynamic and when it is growing jobs are being created all the time.

    1.5m people of working age not working is too big a proportion of our population to be sustainable. It’s bad for their wellbeing as well.

    by David Hand on Jan 25, 2014 at 11:12 pm

  31. Both Australia’s unemployment rate and population growth are fairly constant, job creation and the amount of people entering the workforce offset each other.

    Australia could not employ all currently unemployed members of the public, the government is setting its fiscal policy to decrease demand, and therefore depress employment, median wages and labour bargaining power.

    by Jimmyhaz on Jan 26, 2014 at 12:25 am

  32. According to the Australian bureau of statistics, there was a net positive migration to Australia, that is the number arriving indefinitely to live in Australia less the number leaving indefinitely of 244,400 people in the 2012 13 year. This has been pretty constant for quite a long time.

    Of course. The leaders of this country have been running a ponzi scheme for decades. All those immigrants help to keep the property bubble inflated and wages suppressed.

    They are absorbed into Australia’s economy quite well.

    No, they’re not. Real unemployment is in double figures. Underemployment even higher. Millions of people in Australia want to work more, and can’t.

    Neoliberal economics specifically aims to keep a certain percentage of the workforce unemployed to suppress wages and ensure employees are bargaining from a position of inherent weakness. That is one of its many economically broken and morally bankrupt tenets.

    You can’t feed 3 dogs with 1 bone. Unless you’re a neoliberal, then you put the three dogs into a cage and make them fight for it, and blame the two who don’t get to eat for being lazy and weak.

    by drsmithy on Jan 26, 2014 at 12:47 am

  33. @ David Hand,

    It’s not so much people hiding assets to get the age pension, it’s more the high levels of wealth people can have and get a part pension and the health care card coupled with the generous superannuation tax concessions given to people to amass much wealth well beyond that needed to avoid the age pension.

    These policy settings are driving the structural deficit much more than Newstart & the DSP yet so far, appear out of bounds for reform by the current Federal government.

    Taxpayers should help people acquire enough super to generate enough retirement income so they don’t qualify for the pension & health care card, albeit with the aforementioned high levels of wealth related cut offs being questionable.

    That taxpayers have to assist people to amass high levels of investments beyond the pension and health care card replacement levels is more an institutional rort come electoral bribe than anything to do with equitable and sustainable social and economic policies.

    The Fraser - Howard government of the late 70s and early 80s raged against the profligacy of the Labor Whitlam government yet, the Fraser deficit was about the same percent of GDP as it was under Whitlam. The only change was its spending and taxing priorities, Also the Fraser - Howard government for all their spin about fairness failed to address tax rorting and indeed oversaw an unprecedented outbreak of it.

    It will be the May Federal budget that defines the current government. Will be like the Fraser - Howard government or will it live up to it’s rhetoric and put the Federal budget, the Australian economy and our society onto a sustainable path? A path that also builds an Australia fit for the the future.

    by Roy Inglis on Jan 26, 2014 at 3:27 pm

  34. It’s not so much people hiding assets to get the age pension, it’s more the high levels of wealth people can have and get a part pension and the health care card coupled with the generous superannuation tax concessions given to people to amass much wealth well beyond that needed to avoid the age pension.

    Exactly.

    A couple can live in a multi-millions dollar house with a million dollars in the bank - filthy rich by nearly anyone’s standards - and still qualify for a part pension.

    It’s madness.

    The limit for liquid assets needs to be significantly lowered, and the value of the PPoR over some amount (say, the median for the postcode) needs to be included in the assets test.

    by drsmithy on Jan 26, 2014 at 5:31 pm

  35. A sustainable future for Australia is one in which we have a deficit of >50 billion. This ‘structural deficit’ that the LNP bang on about is what is known as a trade deficit, i.e an outflux of Australian dollars overseas, increasing overseas demand, but lowering local, and requiring a public deficit so that their is not a private one.

    The may federal budget should see public spending pick up so that the economy does not continue to weaken, but it won’t happen. Apparently the LNP (and unfortunately, the majority of the public), didn’t get the memo regarding economies post-1930.

    by Jimmyhaz on Jan 26, 2014 at 6:11 pm

  36. The pig ignorance/moral myopia of people like OneHand is almost as astounding as their lack of self awareness.
    NZ in the 70s was the ultimate agrarian socialist paradise, featherbedded by taxes (on imported manufactured goods, given that NZ made nowt but… err.. can anyone remind me?) and sending lamb & butter to the Home Country which repaid such subservience by joining the (then) EEC and, reluctantly banning NZ imports. A period of falling living standards and Everest like deficits led to David Lange & Rogernomics.
    Mind you, they did tell amerika to shove its nukes, something HawKeating hadn’t the balls/brains to do.

    by AR on Jan 26, 2014 at 6:42 pm

  37. OK.
    Just so I understand.
    Let’s tax pensioners, put up with a neo-liberal plot to keep 1.5 million working age people on benefits and run a $50bn a year deficit.

    Yep the ideal set of policies for a fringe micro-party.

    by David Hand on Jan 26, 2014 at 9:00 pm

  38. Let’s tax pensioners, put up with a neo-liberal plot to keep 1.5 million working age people on benefits and run a $50bn a year deficit.

    No, let’s tax the wealthy, pay the unemployed to build infrastructure and at least get something for our $50bn deficit.

    Yep the ideal set of policies for a fringe micro-party.

    Actually, taxing the wealthy and a policy of full employment were considered mainstream, centrist policies half a century ago in most of the western world.

    That they’re now considered far-left “fringe” politics is incredibly depressing.

    by drsmithy on Jan 26, 2014 at 9:17 pm

  39. You see drsmithy, it all went pear-shaped for the big government interventionist tax and spend economies between about 1975 and 1982. That was when the Australian and New Zealand economies finally could no longer sustain a centrally planned, government owned, regulated and protected socialist economy.

    The Europeans have staved it off for a few decades with their increasingly ridiculous customs wall but they’ve finally come to the end as well.

    The problem was and is that for large numbers of people to be supported by taxpayers, the proportion of wealth-creating tax payers to beneficiaries has to be sustainable and industry must be efficient and profitable. You guys call it neo-liberalism. The rest of us call it a market economy.

    I agree that older affluent people shouldn’t get the pension and I believe many of them arrange their financial situation in cohorts with their children to get it. But generally, they are not likely to become taxpayers again, unlike many of the 1,500,000 people on the unemployment benefit and the disability support pension. Most of them are of working age.

    Measures that encourage them to enter the workforce a positive.

    You guys should lay off the self-righteousness. It’s a lefty disease where you see those who have a different view as morally flawed and/or evil. you know, the sort of views that make you ashamed to be Australian.

    When you come from that judgemental world view, the contest of ideas becomes impossible.

    by David Hand on Jan 26, 2014 at 11:20 pm

  40. No david,

    Let’s have a deficit of 50bn a year so that we have full employment, a rising standard of living, falling social inequality and a highly competitive workforce.’

    Ironically, deficit hawking is the fringe policy in the economic world, there is no academia or research backing it up. The only people that put it forward refuse to accept empiricism, and have financial backers that make their motivations seem incredibly suspect.

    by Jimmyhaz on Jan 26, 2014 at 11:23 pm

  41. Also, you don’t understand socialism. At no point in their history have Australia or NZ had a socialist economy, nor has any state in Europe.

    Again, taxpayers don’t support anybody, tax exists to drive demand for the Australian dollar, and to reduce inequality. Money that the government brings in through taxes is destroyed (which is another reason we should never have a surplus, a smaller amount of money chasing an expanding amount of goods and services will lead to deflation, as you can plainly see from the US).

    I don’t see your viewpoint as evil, just fundamentally flawed and empirically wrong. You can draw the correct conclusions, but if you start from an incorrect premise then the conclusion is meaningless, and that’s what you are doing at the moment.

    by Jimmyhaz on Jan 26, 2014 at 11:32 pm

  42. He (Chris Richardson) says the DSP could be looked at, particularly eligibility requirements, and says it is concerning that people who stay on the dole for a few years often end up on the DSP.”

    This is exactly what should happen. To qualify for the DSP you have to have a disability that has stopped you from working for at least two years, and medical opinion is that the disability is permanent. So people with an acquired disability spend two years (or longer, if you can’t get the medical specialists to agree) on Newstart (sickness benefit) before they are eligible for the DSP. You can’t get the DSP as your first benefit.

    by Monicas Wicked Stepmother on Jan 27, 2014 at 3:49 pm

  43. Any mirrors in Bernardi’s Cave………?

    by klewso on Jan 27, 2014 at 4:18 pm

  44. When I lived in New Zealand in the early 70s, unemployment was nil. Zero.

    As it was in Australia.

    However, it’s not the ’70s anymore. In the early ’70s, Governments still pursued policies of full employment.

    No longer. Now we must respect the sadism of NAIRU.

    So Bob, this notion that unemployment is deliberately, structurally designed is bullshit.

    Then where are the contemporary Governments supporting full employment policies ? Where are the Governments who think 5% is an unacceptable level of unemployment ?

    by drsmithy on Jan 27, 2014 at 7:14 pm

  45. The problem was and is that for large numbers of people to be supported by taxpayers, the proportion of wealth-creating tax payers to beneficiaries has to be sustainable and industry must be efficient and profitable. You guys call it neo-liberalism. The rest of us call it a market economy.

    No, what we call neoliberalism is the absurd belief in the infallibility of “the market”.

    But generally, they are not likely to become taxpayers again, unlike many of the 1,500,000 people on the unemployment benefit and the disability support pension. Most of them are of working age.

    Measures that encourage them to enter the workforce a positive.

    No matter how miserable you desire to make like for people on the dole, they can’t work if there aren’t any jobs.

    You guys should lay off the self-righteousness. It’s a lefty disease where you see those who have a different view as morally flawed and/or evil.

    I don’t see those who have a different view as morally flawed and/or evil.

    I see people who promote morally flawed and/or evil philosophies as morally flawed and/or evil.

    When you come from that judgemental world view, the contest of ideas becomes impossible.

    The most prosperous period in human history was the quarter-century after WW2. Innovation abounded, wealth and quality of life increased across the board in leaps and bounds, income inequality dropped, anyone who wanted to work had a job, public services were extensive and high-quality, global poverty nosedived.

    Then the neoliberals took over in the late ’70s, and we got massive private debt levels, structural public debt (from lowering taxes), ongoing sales of public assets, declining quality of public services, increasing wealth gaps, stagnant wages for all but the top few percent and entrenched high unemployment.

    We’ve _had_ the “contest of ideas”. Yours have been an utter disaster.

    by drsmithy on Jan 27, 2014 at 7:17 pm

  46. It is correct that our system relies on a certain level of unemployment to put a lid on wages growth. The cost of that, of course, is that some people will not be able to find a job. So do you pay them $250 a week, or up the payment? Or make them pick up rubbish for their $250 pw?

    Another issue not looked at in this story is about the type of work available to people without much education, maybe without a great start in life. It seems that 50 years ago there was more entry-level work available, more unskilled or semi-skilled work. Whereas now, even a low-paying-office job is asking for Excel skills and Microsoft this and x years’ experience and database management that - and you only get $40k. What is others’ experience of this?

    by Cathy Alexander on Jan 28, 2014 at 2:23 pm

  47. It’s funny how we see the same events from entirely different perspectives.

    My recollection of the 70s was that the command and control centrally planned economy ran out of steam. We had national awards, spiralling debt, double digit inflation, no economic growth. These were the days when over half the captains of industry were public servants and the wages of a shoe salesman were set by the ministry of labour.

    The people you call neoliberal doctor, are probably the people who brought in the measures to rescue the Australian and New Zealand economies from collapse. We are talking about Hawke and Keating. About Lange and Douglas. These were the most visionary and far-sighted leaders I have ever seen in action and their contribution to Australia’s and New Zealand’s prosperity will still be relevant in 2100.

    Write them off as neo whatsits if you like. The post war economy collapsed under its own flaws. One of them was the massive growth in welfare dependency that is an unintended consequence of the welfare state.

    Any measure to rein it in is good.

    by David Hand on Jan 28, 2014 at 3:53 pm

  48. Cathy,
    I think you make a couple of good points, particularly the second one regarding the disappearance of unskilled work. This is a real barrier to reducing welfare dependency and it’s why education is so important.

    I’m actually sceptical that unemployment limits wages growth. You could argue that employers are willing to hire the right skills and those skills earn a lot of money. It’s when the wages paid have little relationship to the revenue side of a business that the problems start. The motor vehicle industry is a good example. Unemployment has not had any downward pressure on wages at Toyota, Ford or GM and they’ll all be gone within 5 years.

    Their demise has been caused by a disconnect between workers wages and the price the auto makers can get for their cars.

    by David Hand on Jan 28, 2014 at 4:02 pm

  49. Their demise has been caused by a disconnect between workers wages and the price the auto makers can get for their cars.

    Their demise has been caused by a high dollar, a refusal to build cars people want to buy, and lack of scale and productivity.

    Wages are some way down the list of reasons why the Australian car industry is doomed (and has been for a decade or more).

    by drsmithy on Jan 28, 2014 at 7:48 pm

  50. I think the economic troubles of the 70’s were caused more by the deterioration of our long-standing economic partnership with GB, as well as the limitations imposed upon our fiscal policy by a non-fiat economy.

    You are correct when you say that the economic vision of Hawke and Keating was outstanding, although given the social policies that they enacted they are probably the furthest things from neo-libs that could exist.

    by Jimmyhaz on Jan 28, 2014 at 9:10 pm

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