Would you be happy asking friends for $512.66 every week?

Imagine you fall upon hard times and (it’s hard, but try) imagine further that there is no government welfare to fall back on. You have a couple of kids to support, you have no idea who their father was, you have no source of income, no savings and you cannot find a job. So what do you do?

Quite probably, you would ask your friends or family to help you out until you manage to get on your feet. You don’t like to impose on them in this way, for it’s embarrassing having to rely on aid from other people when you should be looking after yourself. But sometimes things just go wrong in life, and in your present circumstances, you really have no choice but to rely on your nearest and dearest.

They ask you how much you need. You tell them you’d like $512.66 every week (this is how much a jobless single parent with two children currently gets from the government in Parenting Payment, Family Tax Benefit and Rent Assistance). They think that sounds rather a lot, but they cough up, for they care about you, and you are in desperate straits.

After a while, you are offered a part-time job. Your kids are at school most days, so it’s perfectly possible for you to accept the job and combine it with your parenting responsibilities. But it’s not very well paid. Indeed, once you’ve paid your travel and other related costs, you work out you’ll only be $25 a week better off.

You gather your friends and family around you and explain the situation.

“I could earn enough to look after myself without having to rely on you guys at all. But it’s hardly worth my while – I’d only be $25 better off each week. So I’ve decided to turn down the job and stay at home watching daytime TV while you lot continue going out to work to earn the money to keep supporting me.”

It’s unthinkable. You’d never say it. You’d never even consider it. Even if you ended up no better off than before, we all know it would be preposterous to demand that your kith and kin continue supporting you once the opportunity arose to earn money for yourself. And if you did have the bare-faced cheek to suggest such a thing, even those who love you most would soon tell you to get off your backside and stop being so unbelievably selfish.

Yet this is exactly what happens under current welfare rules as they relate to jobless single parents. The difference is, it’s strangers rather than intimates who are expected to provide the continuing financial support.

Until two years ago, single parents had the right to stay at home and claim welfare until their youngest child turned fifteen. There was no requirement that they should look for work, and no mutual obligation activity attached to those who continued receiving benefits. Jobless single parents were also paid more than other unemployed people (even though the unemployed were looking for work and were undertaking mutual obligation tasks).

Australia was one of only three developed nations that thought it was sensible to allow single parents to fester for years on welfare in this way. And to its credit, the Howard government finally grasped the nettle and changed the rules. We still have one of the world’s most generous set-ups, but at least now, single parents are expected to look for part-time work once their youngest child is at school.

However, the rules stipulate that if a claimant is offered a job that leaves them only $50 better off than they were on welfare ($25 after travel and other expenses), they can elect to stay on benefits. In other words, even if you could look after yourself and stop being a burden on others, you don’t have to.

The welfare lobby thinks this $50 figure is too low and so, apparently, does Mr. Rudd, for the government is reportedly thinking of raising it. The argument is that people should have a strong financial incentive to go to work. If working leaves them little better off than being on welfare, they should not be expected to work.

Now it is true that our tightly means-tested welfare system, coupled with our steeply progressive income tax system, does weaken work incentives. A paper delivered by NATSEM’s Ann Harding last week estimated that 7% of the population loses more than 50 cents in each additional dollar it earns (even at quite modest incomes, you pay 30 cents in the dollar tax and you lose 20 cents in the dollar off your Family Tax Benefit).

These disincentives are a serious problem in our tax-welfare system, and we should try to find ways to reduce them. But even if some people do find that working pays them little more than welfare, this shouldn’t mean they are entitled to stay on benefits. Incentives are important, but so too is personal responsibility. It is perfectly reasonable to expect people to make an effort to look after themselves, rather than relying on others, even if financially this leaves them little or no better off.

When Mr. Rudd and his ministers sit down to consider the idea of raising the net earnings rule for single parents on welfare, they should therefore ask themselves one, very simple question.

If it is outrageous to continue demanding money from your family and friends when you are in a position to earn it for yourself, why is it acceptable to continue demanding money from complete strangers in exactly the same circumstances?

Professor Peter Saunders is Social Research Director at The Centre for Independent Studies. His book The Government Giveth and the Government Taketh Away was published by CIS in 2008.