Australia has an inequality problem. But it is not the inequality problem of the US, as generally assumed. The August report of the Productivity Commission, Rising Inequality: A Stocktake of the Evidence, shows Australia has performed very well compared to other OECD countries in terms of containing inequality.
The report found sustained economic growth has delivered improved living standards for the average Australian of every income decile. A second finding is that our progressive tax system and targeted transfer systems substantially reduce inequality. A third finding is that economic mobility is high in Australia, with almost everyone moving across the income distribution across the course of their lives.
These findings all sound assuring. We should be careful not to decry our success ever since the Hawke and Keating governments set us up for 28 years of economic growth since 1991. We should confront wage stagnation and other signs of failures in national policies to ensure gainsharing for all, but a turn to quasi-socialism would be the wrong answer.
It is the fourth finding of the Productivity Commission we need to heed: the 700,000 Australians who experience entrenched economic disadvantage. The commission wrote: “Persistent and recurrent poverty affects a small but significant proportion of the population. About 3 per cent of Australians … have been in income poverty continuously for at least the last four years. People living in single-parent families, unemployed people, people with disabilities and indigenous Australians are particularly likely to experience income poverty, deprivation and social exclusion. For people in these circumstances, there is an elevated risk of economic disadvantage becoming entrenched, limiting their potential to seize economic opportunities or develop the skills with which to overcome these conditions.”
This is the mob we need to worry about. For this group, disadvantage is a cycle that is very hard to break. The chances of children inheriting the disadvantage of their parents and grandparents are almost inevitable. The odds are stacked high against those born into these households and communities, black and white, old and new Australian.
Disadvantage is in truth a euphemism. What do you call the circumstances of socially produced disability? Where children are born with disabilities because of foetal alcohol syndrome and prenatal drug addiction? Or acquired disabilities because of malnutrition and exposure to trauma and violence in utero and early childhood?
Disadvantage is not just the absence of social or economic opportunity but entrenched dysfunction within families, within relationships and within neighbourhoods and communities.
The Productivity Commission report makes clear Australia has made little to no headway in tackling this inequality. Investments in government services and programs aimed at tackling disadvantage have not turned the dial for the better.
There are two big systems that affect the prospects of these most parlous families and communities.
First is the income support system run by the federal government. Many millions of Australians who are not disadvantaged, or, if they are, soon manage to get out of poverty, depend on the country’s welfare system. And this is, of course, a good thing.
However, we know this system is not without problems. Long-term and intergenerational welfare dependency produces social problems and, if it hasn’t produced the original disadvantage, frustrates and impedes any attempts to overcome the disadvantage.
Second is the social service support system run by state governments. These services are provided to advantaged and less advantaged Australians, as much as to the disadvantaged we are concerned with here. However, these services are not producing the dividends we all want to see. These families and communities are still over-represented in child protection, youth detention and adult incarceration as well as poor health, poor education and unemployment. In other words, entrenched poverty.
In Cape York Peninsula we sought to do something about these two systems and their failure to achieve their ostensible aims: to tackle poverty and enable families to break the cycle of disadvantage.
We believed the two systems needed to be connected because never the twain meet. Ever. The two systems needed to work in concert with one another, to tackle the problems caused by what we called passive welfare.
The Social Security Act provides that income support to individuals is a right and is inalienable to the recipient. There are almost no exceptions to this rule. This is why we believed there needed to be welfare reform. To make the receipt of welfare payments from the commonwealth system conditional on individuals and families fulfilling basic responsibilities to their children, family members and communities.
These responsibilities are: to send the children to school; to make sure they are not neglected or harmed; to abide by housing tenancy obligations; and to abide by local laws. A further obligation was added in respect of domestic violence.
The Cape York welfare reforms obliged all welfare recipients, of whatever race, living in these trial communities to carry out these responsibilities, and if they do not they have to answer to local community elders serving on a Family Responsibilities Commission. This commission is the lynch-pin, the connection point between the Commonwealth income support system and the Queensland service support system.
The Family Responsibilities Commission is the only social innovation that connects these two vast systems. It was put in place through the co-operation of then prime minister John Howard and then premier Anna Bligh. They passed the necessary complementary laws through their parliaments. It was continued under prime minister Kevin Rudd.
The commission is given serious authority under these laws. It can call members of its community who have failed in their responsibilities to attend a conference. These people are often commissioners’ relatives. Some are contrite and some are upset and angry.
The first response of these local commissioners is to give love and encouragement. Where necessary they also respond with tough love. They remind their community members about their family responsibilities and the expectations the community has of them.
Many, many people who are conferenced by the local commissioners have been assisted to get back on the straight and narrow. Some of the families that appeared before the commission 10 years ago now have children graduating from boarding school.
Income management is the sanction this welfare reform allows. If community members do not heed the counselling of the elders they can be placed on the Basics Card, an account that disables cash welfare and limits expenditure to necessities. The elders decide what proportion of income is managed and for how long. If the individual steps up and starts doing the right thing then they are given back management of their income, unless they decide to keep the Basics Card. Many people decide to remain on the card because it provides a structure to enable them to ensure their basic necessities are provided for. Not one dollar is lost to the family with the Basics Card.
This is community-controlled welfare reform. This is not paternalism or racism. This is maternalism and self-determination, giving authority to local leaders to take charge of their own social problems among their families.
This is not primarily a welfare-to-work solution. It is a restoration of basic family functioning so that the children of welfare-dependent families have all of their basic needs met and have a real chance to get the education they deserve so that they can break the cycle of dependency that trapped their parents and grandparents.
This week the Queensland government’s intentions to scrap the Family Responsibilities Commission came to light. It knows not what it proposes to do. The connection between the two big systems will be broken and the progress made during the past 10 years will be undone. Instead of moving forward — by extending welfare reform to other communities that want to opt in — the Queensland government wants to return to passive welfare rather than conditional welfare.
This week the Joint Select Committee on Constitutional Recognition of Aboriginal and Torres Strait Islanders delivered its report. Chaired by Liberal MP Julian Leeser and Labor senator Patrick Dodson, this is the eighth report on constitutional recognition in 10 years. The report reiterates the Voice to Parliament as the only viable proposal for recognition but sets out no pathway to a referendum.
The most important thing that happened this week was not the JSC report as such but the press statement made by Bill Shorten with Dodson and other indigenous MPs committing Labor to a referendum of recognition as “the first priority” should they form government.
The need for a voice to parliament was made stark this week for us in Cape York Peninsula. After 20 years of seeking welfare reform, and 10 years of trial welfare reforms involving community control through complementary commonwealth and state legislation, the announcement by Queensland to reverse the reforms is a terrible blow.
If Cape York people had a voice they could be bringing to the attention of the country’s legislators the implications of what Queensland proposes to do. If Queensland continues to oppose real reform for our people there is a question of whether they should vacate the policy space in favour of an exclusive jurisdiction of the commonwealth. We could make the case to retain and, indeed, scale welfare reforms that are our best opportunity to break cycles of disadvantage, and to truly tackle inequality.