Extract from The Guardian
This week reminded us that the government’s default narratives on
welfare spending and government debt and deficit falter in the face of
reality.
The big story about welfare this week was that the worries about growing numbers of people staying on welfare was not that big a problem.
The minister for social services, Christian Porter, released a report which examined the dependence of certain groups on the welfare system over the course of their lives.
The report contained some pretty dodgy budget figures that were best ignored but the report itself was worthwhile and instructive.
Conservative governments often struggle with welfare, given their default position that it is a “problem” that requires cutting. They aren’t helped by friendly media outlets so desperate to push the idea of those on welfare as bludgers that they will rush to paint youth as such on their front pages, regardless of the facts.
The struggle is compounded by the findings of reports, such as that released this week, which show the biggest driver of welfare spending is the age pension, and that those who remain on welfare for lengthy periods are in small and very specific groups.
That reality doesn’t look good on a tabloid front page and so that rather benign information is smothered with large hypothetical figures.
Joe Hockey tried this approach last year in his much criticised Intergenerational Report. That report actually predicted all welfare payments would decrease by 2055 as a proportion of GDP except for the age pension and the carer payment – both of which are linked to our ageing population.
To his credit, despite the inclusion of big numbers about “lifetime costs”, Porter this week did try to swim against the flow of welfare bashing by talking instead of the failures of the system. He spoke movingly at the National Press Club about the plight of youth who are forced to care for their parents and who remain in the welfare system due to a lack of education and employment experience.
He also talked of a “moral imperative” to help such people.
The pull of the old narrative, however, was often too strong to resist.
Fifteen years ago the base level of Newstart was equivalent to being on the poverty line; now it is equal to being 30% below that line. But Porter quickly dismissed propositions from organisations such as Acoss about the inadequacy of the base level of the payment as exaggerated because “only 5%” of those on Newstart receive only Newstart.
That receiving rent assistance, carer allowance, or the family tax benefit resolved questions of the “adequacy” of Newstart is a rather alarming proposition from the man with carriage of the program.
Similarly, Porter dismissed concerns about the government’s proposed policy of a four-week wait before being able to access Newstart. He suggested that “it may well be challenging for a very short period of time” but he insisted, because in his view it would prevent people from entering the welfare system, it would be a “huge win”.
Yet he already noted that only 5% of those on Newstart were only on Newstart, therefore in reality many of these people would already be in the “welfare system”.
And the very report he was trumpeting noted that the numbers of people on working-age welfare payments such as Newstart was almost perfectly correlated with the unemployment rate.
Not surprisingly, what keeps people on Newstart is not the level of Newstart, but whether or not there are jobs available.
The rhetoric on the dangers of debt and deficit was also hit by reality this week when the new governor of the RBA, Dr Philip Lowe, appeared before the House economics committee.
He suggested that cutting interest rates was nearing the end of its usefulness and that to spur growth the government instead should take advantage of “the low interest rates to increase its spending”.
Lowe argued the government should borrow money to fund infrastructure projects, which in turn would improve productivity and drive growth.
But throughout the election the narrative from the government – and the ALP – was of the terrible danger of Australia losing its AAA credit rating should spending not be brought “under control”.
Lowe, however, argued there was little to fear from such an occurrence.
Rather than preach fear, he suggested the ratings were really just a “useful reminder” about the need to watch government spending growth and would have little material effect on the government’s borrowing costs.
It is unlikely the government will change its narrative, but you would think at some point it might realise that if you are going to get people to agree with your policies, perhaps basing them on reality might be a good way to start.
The big story about welfare this week was that the worries about growing numbers of people staying on welfare was not that big a problem.
The minister for social services, Christian Porter, released a report which examined the dependence of certain groups on the welfare system over the course of their lives.
The report contained some pretty dodgy budget figures that were best ignored but the report itself was worthwhile and instructive.
Conservative governments often struggle with welfare, given their default position that it is a “problem” that requires cutting. They aren’t helped by friendly media outlets so desperate to push the idea of those on welfare as bludgers that they will rush to paint youth as such on their front pages, regardless of the facts.
The struggle is compounded by the findings of reports, such as that released this week, which show the biggest driver of welfare spending is the age pension, and that those who remain on welfare for lengthy periods are in small and very specific groups.
That reality doesn’t look good on a tabloid front page and so that rather benign information is smothered with large hypothetical figures.
Joe Hockey tried this approach last year in his much criticised Intergenerational Report. That report actually predicted all welfare payments would decrease by 2055 as a proportion of GDP except for the age pension and the carer payment – both of which are linked to our ageing population.
To his credit, despite the inclusion of big numbers about “lifetime costs”, Porter this week did try to swim against the flow of welfare bashing by talking instead of the failures of the system. He spoke movingly at the National Press Club about the plight of youth who are forced to care for their parents and who remain in the welfare system due to a lack of education and employment experience.
He also talked of a “moral imperative” to help such people.
The pull of the old narrative, however, was often too strong to resist.
Fifteen years ago the base level of Newstart was equivalent to being on the poverty line; now it is equal to being 30% below that line. But Porter quickly dismissed propositions from organisations such as Acoss about the inadequacy of the base level of the payment as exaggerated because “only 5%” of those on Newstart receive only Newstart.
That receiving rent assistance, carer allowance, or the family tax benefit resolved questions of the “adequacy” of Newstart is a rather alarming proposition from the man with carriage of the program.
Similarly, Porter dismissed concerns about the government’s proposed policy of a four-week wait before being able to access Newstart. He suggested that “it may well be challenging for a very short period of time” but he insisted, because in his view it would prevent people from entering the welfare system, it would be a “huge win”.
Yet he already noted that only 5% of those on Newstart were only on Newstart, therefore in reality many of these people would already be in the “welfare system”.
And the very report he was trumpeting noted that the numbers of people on working-age welfare payments such as Newstart was almost perfectly correlated with the unemployment rate.
Not surprisingly, what keeps people on Newstart is not the level of Newstart, but whether or not there are jobs available.
The rhetoric on the dangers of debt and deficit was also hit by reality this week when the new governor of the RBA, Dr Philip Lowe, appeared before the House economics committee.
He suggested that cutting interest rates was nearing the end of its usefulness and that to spur growth the government instead should take advantage of “the low interest rates to increase its spending”.
Lowe argued the government should borrow money to fund infrastructure projects, which in turn would improve productivity and drive growth.
But throughout the election the narrative from the government – and the ALP – was of the terrible danger of Australia losing its AAA credit rating should spending not be brought “under control”.
Lowe, however, argued there was little to fear from such an occurrence.
Rather than preach fear, he suggested the ratings were really just a “useful reminder” about the need to watch government spending growth and would have little material effect on the government’s borrowing costs.
It is unlikely the government will change its narrative, but you would think at some point it might realise that if you are going to get people to agree with your policies, perhaps basing them on reality might be a good way to start.
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