Long-term welfare dependency is of no real benefit to recipients

For a liberal, turning a share of welfare payments into vouchers for groceries and rent is not a happy solution. A safety net for those who are ill, disabled or unable to find a job is a significant social achievement of compassionate democratic capitalism. But worldwide experience indicates that welfare without strings will be misused.

Longitudinal studies have shown that the welfare safety net can play its intended role for those who use it to recover from illness, overcome disabilities or recover from the death of a principal income earner. But welfare has become so attractive that many recipients prefer staying on it to working. This creates acute problems of welfare dependence.

About two million Australians are mainly dependent on welfare payments for their income. They include non-working single parents with children over six years of age. Many long-term unemployed show little inclination to return to work. Others have dropped out of the workforce into disability pensions, although they could work.

Many of the second and even third generations of unemployed in families where no one works do not seem inclined to get jobs. Aborigines denied the education they need to get jobs are a significant but very minor component of Australia's very large number of welfare-dependent people. The same rules must apply to all Australians on welfare.

Whether high levels of alcoholism, smoking, illegal drug addiction, gambling, violence and crime are the causes or results of welfare dependence, their costs to the community are high.

The plight of neglected children in welfare-dependent households has been highlighted in every state as well as in the Northern Territory.
The evidence that long-term welfare dependence leads to family dysfunction, poor health and thus to the curtailment of years of life is overwhelming.

A considerable industry of academics, federal and state bureaucrats, social workers and welfare organisations has been unable to stem increasing numbers of welfare dependents or their health and social problems. More and more tax revenue goes to permanent welfare recipients.

The health and criminal costs of welfare dependence create additional burdens for taxpayers. The same taxpayers will face increased mortgage repayments because labour shortages that could be reduced by higher work participation are leading to inflation and rising interest rates.

Most academics whose disciplines are supposed to cover social issues have ignored the costs of welfare dependence. The analysis of how welfare damages its recipients has largely been undertaken outside academe. Noel Pearson has made an outstanding contribution, arguing that a practical approach to improving family budgeting in welfare-dependent communities is to sequester welfare payments so that children are fed, rents are paid and decent standards of behaviour are observed. His approach embraces community-administered welfare and covers the need for mainstream education and opportunities for employment.

When Mal Brough introduced welfare payment sequestering as part of the intervention to reduce Aboriginal disadvantage in the NT, he foreshadowed the application of the same sequestering conditions to other Australians. Family payments recipients were identified as targets.

If welfare payment sequestering is a useful tool of social policy, as improving nutrition in the communities where it has come into effect indicates, then it should apply to all welfare recipients. Recipients with real disabilities or who suffer other misfortunes would have to be excluded, as would those receiving welfare for less than a year, because for them it is likely to be only a temporary expedient.

But the mum who fails to feed her children because she spends most of her welfare payment buying virtual gold to spend in World of Warcraft is no less in need of help because she is not indigenous. Charitable organisations have volumes of evidence regarding non-indigenous families in housing estates in Melbourne and Sydney lacking food because welfare payments have been spent on gambling, alcohol and drugs.

A nationwide welfare payment sequestering policy could be effective in pushing into the labour force at least some of the people who find a welfare lifestyle preferable to working. Centrelink regulations are clearly unable to get able-bodied unemployed into well-paid jobs such as picking fruit.

Labour training policies for long-term unemployed have a long history of failure. Lifestyles that combine a little subsistence farming or a few hours in the black economy with cash welfare payments are not affected by such programs.

Beginning to tackle welfare reform in general, and Aboriginal deprivation in particular, was undoubtedly to the Howard government's credit. It is up to the Rudd Government to ensure that these efforts are expanded into a major thrust that helps welfare-dependent families enter the working mainstream, and that inflationary pressures are contained.

Helen Hughes is a senior fellow at the Centre for Independent Studies.