Don’t blame welfare for budget woes.

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Bruce Duncan.

pope quote
Pope Francis rips capitalism and trickle-down economics. Devendra Makkar. flickr cc.

Prime Minister Turnbull promised us centrist and fair policies, but the Treasurer Mr Morrison appears to be playing a politics of resentment against people on income supports. On 25 August, he declared, “There is a new divide – the taxed and the taxed-nots”.

This sounds suspiciously like ‘lifters’ versus ‘leaners’, and implicitly blames the country’s debt on those on benefits, particularly the poor. Dr Helen Szoke, chief executive of Oxfam Australia, was alarmed that the government seemed to be demonizing the poor, while saying nothing about large companies avoiding taxes of billions of dollars.

The Social Services Minister, Christian Porter, embarked on a similar scare campaign on Sky News in August that “In every single category of social services, growth was “unsustainable if it were to go on the way it’s gone on over the last ten years. In all areas, things like the disability support pension and a range of other payments… are growing at a rate greater than the ability of the tax base to sustain them”.

This sounds like the old dog-whistle politics of generating resentment against others, with the misleading perception that ordinary taxpayers are being exploited by people on benefits.

Welfare payments are not the problem

Professor Peter Whiteford from the Crawford School of Public Policy at the Australian National University has blown out of the water the government’s claims about welfare spending being unsustainable.

In Inside Story on 26 August, Whiteford showed that many areas of welfare spending have, in fact, declined in the last ten years. Other areas have grown, as with the aged pension, for obvious reasons, although this will not continue to rise at the same rate, because an increasing percentage of retirees will be self-funded. Moreover, the number of war veterans has declined greatly, so that the number of people aged over 65 receiving a benefit has in fact dropped from 85 percent to 78 percent.

In addition, Whiteford cautioned that you gain a false picture if you only look at the number of people on disability support, carer payments, or more recently unemployment benefits, since many other payments have declined greatly, so that the percentage of working-age people on benefits has also declined overall from nearly 25 percent in 1995 to 16.8 percent in 2014.

Whiteford found no evidence to support claims of relentless growth in welfare payments, “particularly when the total number of welfare recipients is close to its lowest level in the past twenty years”. However, he warned against complacency, especially if unemployment is allowed to increase significantly.

Debt rhetoric as a ruse to cut welfare?

Mr Turnbull claims that Australia is facing a massive debt crisis, and uses this political rhetoric to soften up public opinion, so the government can cut further into welfare spending, as with Newstart. Yet the austerity policies on which the Coalition hard-liners seem intent are failing overseas, and will fail her, too, as many economists have said. Instead, people like Ross Gittins, John Nevile, and Tim Colebatch argue that, with credit incredibly cheap, it is precisely the time for the government to borrow and set the country to work on rebuilding our national infrastructure.

This is not throwing money away on consumption or unproductive spending like defence, but involves investing in projects which will provide a lasting return, create employment, and boost business. However, the Coalition’s narrative that the nation is facing a debt crisis undermines such constructive policies.

Yes, of course Australia must pay its national debt, and it will do this, as economic growth and mild inflation have done in the past. Budget problems could be solved quickly if the government addressed its revenue shortfall, a legacy from the tax-cutting largesse of the Howard years, including by reducing overly-generous tax concessions on superannuation and capital gains.

parliament house
Parliament House, Canberra. Ben Terrett. flickr cc.

The Coalition seems too much swayed by the hard-right neoliberal thinking which serves the interests of large financial and corporate special interests. In The Saturday Paper of 27 August-2 September, Mike Seccombe described how neoliberals captured groups including the Institute of Public Affairs in Australia, and in turn became a dominant influence in the Coalition parties. Generous corporate funding and ideologically aligned media spread their creed in their attempt to remake Australia along neoliberal lines.

Yet the neoliberal experiment in Europe and the United States has failed spectacularly, climaxing in the Global Financial Crisis, of course, but lingering still beneath layers of austerity policies. It is no wonder that voters in many countries are increasingly angry at the unfairness and inequality which have become entrenched, not least in the United States itself. Is that what we want for Australia?

Global rejection of neoliberalism

It is hard to resist the temptation to say “we told you so”. Among the many voices warning against these extravagant versions of neoliberalism were religious leaders. Pope John Paul II repeatedly criticised this type of neoliberal capitalism, roundly denouncing the “war of the rich against the poor”.

What even many Catholics have failed to understand is that Catholic social teaching has been strongly opposed to virulent forms of neoliberalism for over 125 years. The Church has seen its opposition to neoliberal policies on a par with its opposition to communism.

Both Popes Benedict and Francis continued this rebuttal of neoliberalism, most recently Francis in his encyclical, Laudato Si’. What is so interesting about Francis is that he has tapped into a vast moral energy around the world, not specifically Catholic, but focused on promoting human wellbeing for everyone on the planet.

Francis worked in collaboration with eminent social and economic thinkers, including Joseph Stiglitz and Jeffrey Sachs, as well as environmentalists like Professor Schellnhuber from the Potsdam Climate Institute. They insist that the science and economics behind the Pope’s moral critique are solid.

Francis is appealing to all people of conscience and concern, believers and non-believers. He has spoken in concert with other religious groups, especially Orthodox, Anglicans, Evangelicals and the World Council of Churches, but increasingly also with leaders of non-Christian faiths, Muslims, Buddhists, Hindus, and others.

People everywhere are clamouring for governments to reset their moral compass.




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