Heavy-handed welfare state attacks the most vulnerable

The major risk of a growing welfare state is the threat of overzealous paternalism applied to welfare recipients.

Curiously, a key Abbott government response to the budget emergency has been not to cut middle class welfare or to pare back the unsustainable age pension scheme, but to advocate a set of quick fixes to discourage the take up of the Newstart unemployment allowance.

This explains the apparent zeal with which the government has embraced several ideas serving to impose additional conditions upon Newstart recipients.

Most job seekers will be required to search for up to 40 jobs a month, while those job seekers under 50 will be obliged to work for the dole, for either 15 or 25 hours a week, for six months each year.  This does not include changes aimed at greater economic participation by recipients of other government welfare programs, such as assessing the capacity for younger recipients of the disability support pension to engage in labour market activity.

In addition, there have been suggestions, most notably presented by mining entrepreneur Andrew "Twiggy" Forrest, to extend the "income management" regime, presently restricting the consumption spending of certain welfare recipients, in high-unemployment areas and largely indigenous communities, to all welfare payment recipients across Australia.

The imposition of welfare payment conditions, on top of basic eligibility criteria, is predicated on the notion that taxpayers, who are being forcibly compelled to finance government income transfers, would ordinarily expect transfers to be directed to those in genuine need, and that the needy make financial calls upon taxpayers only for a short period of time.

After all, the fiscal costs of supporting the unemployed are already hefty, estimated to be at least in the order of $10 billion a year.

However, the evidence suggests there are not only substantial numbers of Newstart Allowance recipients at present, but that many tend to remain on the payment for a lengthy period, compounding the risk of long-term dependency on welfare and their being paternalised by government.

It is estimated that, of the total of 549,773 people receiving Newstart in 2012, about 62 per cent received the allowance for 12 months or more, with about 21 per cent of the total (or 113,417 people) receiving it for more than five years.

These worrying statistics possibly understate the true extent of unemployment within Australia's welfare rolls, since a considerable number of working-age people have been shifted on to the disability support pension, with its higher payment rates and almost negligent work activity testing regime.

It is the derogatory stereotypes that many Newstart Allowance recipients, in particular, are "dole bludgers" enjoying endless sleep-ins and trashy daytime television, at the expense of hard-working Australians, which fuels broad electoral endorsement for the government's creeping welfare state paternalism.

And, to be clear, federal governments have long pandered to this "downwards envy" impulse within the Australian body politic, stretching as far back as the "susso" sustenance payments, or food vouchers, doled out to the unemployed working on public projects during the Great Depression, if not earlier.

But, as in just about every other aspect of governmental activity today, there is the risk that politicians and the bureaucratic class will indulge in paternalistic heavy-handedness upon some of the most economically and socially vulnerable members of our community, in this case the unemployed.

The income management scheme is perhaps the most conspicuous example of overkill, implicitly rationalised on the ludicrous grounds that the unemployed are, somehow, less financially literate than everyone else, but, at the same time, Centrelink bureaucrats are better placed to decide a jobseeker's consumption needs and desires.

While the presentation of some evidence by Newstart recipients that they are, indeed, searching for work is not unreasonable, one needs to be mindful that the increasingly sclerotic performance of the Australian labour market prevents at least some from finding work easily.

The cruel, but very real, numerical fact is that all the Newstart Allowance recipients simply cannot fit into the much more limited numbers of total job vacancies, which are currently running at about 146,000 vacancies but which, by the same token, have been falling since mid-2012.

These basic statistics mask the fact that the vacancies waiting to be filled have job-specific skills or working requirements, and are often more likely to be filled by those presently in employment switching between jobs, or not long out of work, while those languishing long term in dole queues tend to have their hiring chances cruelled.

Proponents of work for the dole, for example, argue that the initiative is designed to assist the unemployed tackle job-specific skills decay and a lack of work readiness, in ways that education and training courses cannot do, but evidence that such initiatives actually help substantive numbers of people secure jobs is disputed.

And if the proposal that jobseekers must tender 40 job applications a month goes ahead, one could expect little more than an avalanche of emails and paperwork heaped upon employers having to sift through frivolous job applications by Newstart recipients.

It would seem many of the activity-related conditions for unemployment payments are maintained, and extended, to appeal to voter prejudices, yet policy alternatives which could actually help the unemployed much more effectively are also opposed, with great hostility no less, by largely the same voters.

There is seemingly strong sentiment for maintaining the minimum wage, one of the highest in the developed world, even though it effectively prohibits the creation and maintenance of lower paying, entry-level jobs for those seeking work.

In equal measure it would seem the byzantine system of occupational licensing regulations also wins broad electoral support, although it costs everyone in terms of higher prices, and shuts out new labour entry from sheltered occupations, including manual labouring and personal services roles.

Governments, with the tacit approval of the voting public in recent years, have also implemented more restrictive regulations raising the cost of child care and reducing access for those aspiring to work.

Meanwhile, severe housing supply restrictions and housing taxes, which current homeowners would probably support with great fervour, impedes labour mobility to where jobs exist.

It is the profound anti-deregulation sentiment, juxtaposed with otherwise reasonable expectations that jobseekers look for employment, which allows governments to impose paternalistic policy experiments, of ever-increasing intensity yet questionable effectiveness, upon the unemployed.

Receiving unemployment benefits is not a birth right, but it is not unreasonable to contend, either, that we might all just be better off if deregulation proceeds, allowing the all-round prospects of job creation to be turbo-charged.