The secret sauce in the government’s A$130 billion JobKeeper payment is that it will be retrospective, in the best possible way.
It’ll not only go to employers who have suffered losses and had employees on their books tonight, March 30, but to employers who have suffered losses and had workers on their books as far back as March 1.
This means that employers who have sacked (“let go”) of workers at any time in the past month can travel back in time, pay them as if they hadn’t been sacked, and nab the A$1,500 per employee per fortnight payment.
As the official fact sheet puts it, “the JobKeeper Payment will support employers to maintain their connection to their employees”.
This retrospective connection will add new meaning to the term “revision” when the March unemployment numbers are released.
Not only will the March numbers be liable to being revised a month later as is normal in the light of extra information, but many Australians who were unemployed in March will retrospectively turn out not to have been unemployed.
(And if they have applied for the Centrelink payment of Newstart plus $550 per fortnight, they’ll have to un-apply to avoid what the prime minister referred to as “double counting” rather than the more loaded “double dipping”.)
It gets better. If you have been part-time, or for some other reason on less than $1,500 per fortnight, “your employer must pay you, at a minimum, $1,500 per fortnight, before tax”.
This means you’ll get a pay rise, for the six months the scheme lasts.
If you’ve been let go and then retrospectively un-sacked, you are also guaranteed to get at least $1,500 per fortnight, which in that case might be less than you were being paid, but will be more than the $1,115 you would have got on Newstart (which has been renamed JobSeeker Payment).
If you remain employed, and are on more than $1,500 per fortnight, the employer will have to pay you your full regular wage. Employers won’t be able to cut it to $1,500 per fortnight.
To get it, most employers will have to have suffered a 30% decline in their turnover relative to a comparable period a year ago. Big employers (turnover of $1 billion or more) will have to have suffered a 50% decline. Big banks won’t be eligible.
Self-employed Australians will also be eligible where they have suffered or
expect to suffer a 30% decline in turnover. Among these will be musicians and performers out of work because large gatherings have been cancelled.
Half the Australian workforce
The payment isn’t perfect. It will only be paid in respect of wages from March 30, and the money won’t be handed over until the start of May – the Tax Office systems can’t work any faster – but it will provide more support than almost anyone expected.
It’s scope is apparent when you consider the size of Australia’s workforce.
Before the coronavirus hit in February, 13 million of Australia’s 25 million residents were in jobs. This payment will go to six million of them.
Without putting too fine a point on it, for the next six months, the government will be the paymaster to almost half the Australian workforce.
Announcing the payment, Prime Minister Scott Morrison said unprecedented times called for unprecedented action. He said the payment was more generous than New Zealand’s, broader than Britain’s, and more comprehensive than Canada’s, claims about which there is dispute.
But for Australia, it is completely without precedent.
G20 leaders have pledged to do “whatever it takes” to minimise the impacts of COVID-19.
Most of these nations are lumbered with welfare safety nets unfit for purpose. They are designed for last century, with a binary way of thinking about employment that’s no longer the experience of casual, contract and gig workers.
The limitations are being thoroughly exposed by a crisis further blurring the line between having or not having work.
A simple solution is a universal basic income – a regular payment to every adult, no questions asked.
The deficiencies of current welfare nets have been demonstrated in Australia over the past week. The nation’s social security system has been in meltdown as hundreds of thousands make new claims for government assistance.
There have been massive queues at Centrelink offices. The government’s MyGov website has crashed and phone calls have gone unanswered.
These problems are more than logistical. They are also ideological, reflecting how the system has been conceived. It requires people to jump through bureaucratic hoops, filling in forms and providing documents and financial statements. It judges need according to a binary (employed-unemployed) way of thinking, with processes that are punitive and complex.
No conditions attached
The universal basic income (UBI) is a well-developed idea to address these problems with existing social security regimes.
The basic idea is to make a regular cash payment to all adult individuals, no conditions attached. The intention is to ensure the welfare safety net reflects the fact many more people in informal, casual, part-time, portfolio, irregular and self-employed work face financial stress despite technically being employed. Everyone gets the means for a basic existence regardless of their employment situation.
Limited trials have occurred in Finland, Kenya and Canada. These have generally found recipients are happier and not disincentivised to look for work, a common criticism of the concept.
The most common criticism of the universal basic income is its cost. But now, with the need for income support spiking and governments adopting a “whatever it takes” approach to spending to keep economies afloat, this argument is not compelling.
The scale of the economic challenge is demonstrated by Australia’s unemployment predictions for the next six months jumping from 7% a week ago to 11%. Government Services Minister Stuart Robert this week acknowledged the decision to close businesses had left “maybe a million people unemployed overnight”. That million, on top of 700,000 already unemployed, would take the jobless rate above 12%.
In truth, much like the trajectory of the coronavirus, no estimates can be relied upon at this stage, other than to say unemployment levels will be very high. Along with pensioners and other welfare recipients, this means government financial support will be crucial for a significant proportion of households.
How it might work
The advantage of a universal basic income scheme, especially now, is that it is simple and easily understandable.
This is how it might work in Australia.
It would be run through the Australian Taxation Office, not Centrelink. A direct payment would be made fortnightly into the bank account of all adult Australian citizens and permanent residents over 18 years and no longer at school.
The money would be taxable income, so the tax office would recoup a significant portion from higher earners. For now, it could exclude those over 65 years for whom long-standing pension and retirement systems exist and which we may not want to meddle with at this time.
Australia’s United Workers Union (representing workers in hospitality, health, aged care, supermarket supply, cleaning and other exposed sectors) has advocated a universal basic income equivalent to the minium wage – A$740 a week.
But I’m going to make some ballpark calculations based on an emergency universal basic income payment of A$550 a fortnight.
This is equal to the bonus the Australian government is giving job seekers during the crisis (double their usual payment).
To extend this to 7.65 million eligible Australians would cost about A$55 billion over six months. The government would recoup a portion of this, though, through income tax and being able to suspend some (but not all) existing welfare payments.
That compares with almost A$84 billion – about 3.5% of GDP – in spending already announced by the Australian government. About A$24 billion of this is for payments to welfare recipients, with the lion’s share directed to business and industry.
Newstart recipients and other Australians on benefits get their half-yearly pay rise today (and also on March 20). This one is vanishingly small.
Announced very quietly by Social Services Minister Anne Ruston earlier this week, it amounts to just A$3.30 per fortnight for someone on the Newstart unemployment benefit.
That’s $1.65 per week, less than 24 cents per day.
It’s enough to buy about 36 peanuts – or more if you buy them in bulk.
More galling still for Australians on Newstart, age and disability pensions will increase by twice as much – $6.80 per fortnight, an increase the government was keener to highlight in its press release than the increase in Newstart.
It is hard to comprehend how it could have come to this. Back in 1997 Newstart and the pension were about the same in dollar terms. Each was probably somewhat less than a single person needed to live on.
How did it come to this?
Then the Howard government effectively froze Newstart, forevermore increasing it only in line with inflation (which back then was typically 2.5% per year) while using a formula that lifted pensions in line with wage growth or inflation, whichever was the bigger (back then wages were growing by more than 3% per year).
The difference wasn’t big, but over the past two decades it has compounded. Prime Minister Kevin Rudd helped it along in 2009 by a one-off $64 per fortnight increase in the single pension, unmatched by an increase in Newstart.
It means that from today the single pension will be $850.40 per fortnight, while the single Newstart payment will be $559 – a mere two-thirds of the pension.
And it’ll get worse.
Because inflation is low, and each low increase is off what is now a much lower base than the pension, Newstart increases are small while pension increases are twice as big.
If prices and wages continue to grow at the rates they have over the past decade (2.1% per year for prices, 2.7% for wages) by 2070 Newstart will be just half of the pension. By the end of the century it’ll be just two fifths of the pension.
If it can’t continue, it won’t
Herbert Stein was an economic advisor to US presidents Nixon and Ford. These days he is best remembered among economists for Stein’s Law, which says pithily:
If something cannot go on forever, it will stop.
It’s a warning against the dangers of extrapolations of the kind I have just done, and also a guide to the future. A Newstart rate of just two fifths of the pension, way below everyone else’s standard of living, would be intolerable.
The formula will change well before it gets that bad. It’ll have to.
The Australian Council of Social Service wants the government to lift Newstart by $150 per fortnight to $709, still well short of the pension, and afterwards to lift it in line with the pension and wages, so that it never falls further behind.
It wants the same for Youth Allowance, Austudy, Abstudy, Sickness Allowance, Special Benefit, Widow Allowance and Crisis Payment, which all move in line with Newstart.
And it would get smaller. Deloitte Access Economics says that after some years about $1.5 billion per year would return to the budget in extra tax as Newstart recipients and the other beneficiaries spent what they were given and boosted economic growth.
Labor is promising a “living wage” rather than a “minimum wage” if elected.
It will ask the Fair Work Commission to first determine what wage would offer a “decent standard of living for families”, and then to determine the time frame over which it should be phased in, taking into account the capacity of businesses to pay, and the potential impact on employment, inflation and the broader economy.
It is selling the idea of what would be a very big increase on the present minimum wage as “good for workers and good for the economy”.
“Consumer spending makes up 60% of the Australian economy,” its employment spokesperson Brendan O’Connor said. “When low-paid workers get a pay rise, they spend it in the local shops and help small businesses. It’s good for everyone.”
The idea harks back to the 1907 Harvester judgement, in which an arbitration court judge decreed that wages at a Melbourne factory should be based on the cost of living “for a worker and his family”.
To get there from the current bare minimum wage of A$18.93 per hour would almost certainly require increases bigger than the sum of productivity growth and inflation, which are running at a combined annual rate of around 3%.
Unacknowledged by Labor in spruiking the policy this week was the fallacy of its consumer spending argument, the cost of the proposal to jobs, and the likelihood that it won’t much help many of the people who need it.
The false increased spending argument
One of the claimed benefits of a living wage is that employees will spend most of their extra income, resulting in large increases in national spending, national income, and even the tax take.
An implicit assumption is that the extra money comes “as manna from heaven” with no second-round effects.
But given that other labour costs won’t come down (it is hard to see executive pay being cut), the labour cost for each affected business will climb, pushing down returns to the providers of capital, including the returns to shareholders and small business owners.
With lower returns, less capital will be put up to invest.
Where businesses can, they will pass on the increased costs not matched by increased productivity by increasing prices.
They will get away with it unless they face competition from imports or other exporters.
Where import competitors and exporters face international competition, they will reduce output. In turn, the greater amount of money sent out of the country will eventually push down the Australian dollar, pushing up the Australian dollar price of import and export products.
In the short term, the increases in prices of goods and services will cut the purchasing power of the wage increase. In the longer term, it might create a vicious cycle of wage and price hikes, with adverse economic consequences.
The bad news on jobs
It is well established that wage increases above the rate of productivity growth plus inflation lead to less employment than there would otherwise be, in both the number of employees and the hours worked per employee.
Labour costs are a major expense for most businesses.
In response to higher labour costs, many employers will choose less labour-intensive ways of making their products. The large and rapid wage increases in the mid-1970s and early 1980s resulted in sharp reductions in employment. In contrast, the recent low rates of labour cost increases have helped drive significant increases in employment and a fall in unemployment.
With the Australian economy facing a likely slowdown over the next year or two, a large increase in wages might be particularly poorly timed.
The false hope for those most in need
Universal education and health care, and the redistribution of income via social security payments funded by a progressive income tax, are the most direct and effective ways to fight household poverty.
The world today is very different to the world of the Harvester case in 1907. Then, most workers were in full-time employment and needed a living wage to support a family. Now, about a third are employed part-time. Redistribution via the tax and payments system is how we support families who need it.
A higher minimum or “living wage” would provide minimal assistance to some on low incomes, and would lift the incomes of many others not generally considered in need of support.
Many of those below the poverty line who are only employed part-time or not at all would not be lifted out of poverty. A higher living wage would provide more to those already in full-time jobs than it would to part-time workers.
And it would provide more to low-wage employees who are members of high-income families, who probably shouldn’t be our first concern.
We can do more more directly to alleviate poverty by reforming the income tax and social security systems. They are specifically designed to redistribute income according to need.
We should start by reducing income tax on low earnings, automatically indexing tax brackets, and increasing Newstart.
The idea of the living wage is back on the political agenda. In the United States the Democrats are proposing to double the federal minimum wage. In Australia the federal Labor Party has promised to deliver a living wage.
“A living wage should make sure people earn enough to make ends meet, and be informed by what it costs to live in Australia today – to pay for housing, for food, for utilities, to pay for a basic phone and data plan,” Opposition leader Bill Shorten said this week.
The principle of the living wage is the subject of my book published in January. To write the book I spent five years researching working conditions in countries including Australia, Bulgaria, Cambodia, India and Thailand.
What my research underlines is that there are limits to thinking about a living wage for Australian workers without also making the principle global.
A ‘reasonable’ standard
Australia first embraced the living wage more than a century ago in what is arguably the nation’s most famous labour law case. The Harvester Judgement of 1907 defined a living wage as “fair and reasonable” payment sufficient for an unskilled worker to support a family in reasonable comfort.
In deciding exactly how much income was needed to assure this, Australia’s Conciliation and Arbitration Court examined 11 households to determine the cost of typical living expenses. These included lighting, clothes, boots, furniture, insurance, union membership, sickness, books, newspapers, alcohol and tobacco.
Twelve years later the principle was enshrined in international labour law, when the International Labour Organisation was established in 1919. It defined a living wage as one “adequate to maintain a reasonable standard of life as this is understood in their time and country”.
A century on, Australia’s industrial relations system has long abandoned the central premise of the living wage. Around the world being paid enough to live on remains elusive. We are all intimately connected to many of these workers. They have assembled the phones we handle. They have sewn our clothes.
Women in Bangladesh who make clothes for brands such as Big W, Kmart, Target and Cotton On earn as little as 51 cents an hour, according to an Oxfam report published last month.
The report is based on interview with 470 garment workers in Bangladesh and Vietnam. Three-quarters of the Vietnam workers and all of the Bangladeshi workers earned less than a living wage (as calculated by the Global Living Wage Coalition).
Especially in price-sensitive industries, globalisation exerts strong pressure on governments to keep minimum wages low, lest any increase lead to “capital flight”. This competition pits countries in a race to the bottom.
Should labour costs go up in Bangladesh, for example, its government fears garment brands moving production to, say, Ethiopia. It’s a legitimate fear; in my 15 years of research I’ve seen whole garment factories dismantled and trucked across borders to countries where the labour is cheaper.
Cooperation is the answer
The obvious solution would be for countries to cooperate and raise minimum wages collectively and incrementally (at an agreed percentage every year). This approach would help overcome “first mover risk”. Business would have less incentive to look for cheaper labour elsewhere.
For this to occur would, of course, require huge amounts of international political good will. Nation states would need to put aside the tendency to think in terms of immediate self-interest and work cooperatively for mutual benefit.
Here we face a problem with the architecture of international law in general, and labour law in particular.
Though the principle of a living wage was enshrined in the treaty that formed the International Labour Organisation, it is not codified in any of the eight fundamental international labour conventions. These cover forced labour, child labour, workplace discrimination and the right to unionise.
But even if it was, that wouldn’t necessarily make much difference. International law isn’t the same as national law. Most international treaties, conventions and agreements are not enforceable. There is no real penalty for any country that refuses to sign, nor for any signatory failing to meet its obligations. The ILO cannot enforce targets in the way needed to address a problem this big.
Emulating trade law
However, there is one area of international law that comes close to what we usually think of as law: international trade and investment law.
In addressing goals like reducing tariffs, countries faced similar coordination problems. Beginning with the General Agreement on Tariffs and Trade, which came into effect in 1948, half a dozen major multilateral trade deals were negotiated before the agreement in 1994 to establish the World Trade Organisation.
The WTO has since adjudicated hundreds of disputes in which one nation has accused another of failing to meet its WTO commitments. Investors can also take states to tribunals to seek compensation for unfair behaviour. States take these tribunals very seriously.
Why not emulate this architecture of international trade law for living wages?
Concrete targets for raising wages could be set through multilateral agreements. Countries would increase wages incrementally, by a certain percent each year, in a coordinated fashion, until they reached a living wage level.
An international tribunal would hear claims against states accused of failing to raise or enforce minimum wages as agreed. National tribunals would adjudicate cases involving corporations.
Cambodian garment workers, for example, would be able to take their government to the international tribunal for failing to raise wages or enforce minimum wage laws. A state held liable to pay compensation for wage breaches could pursue factory owners or their international buyers through national tribunals. This would be an incentive for states to police their own labour laws.
Instead of having separate national conversations about living wages, now is a good time to start the conversation at a global scale.
This is part of a major series called Advancing Australia, in which leading academics examine the key issues facing Australia in the lead-up to the 2019 federal election and beyond. Read the other pieces in the series here.
Spending on social security and welfare accounts for more than a third of the Commonwealth budget.
Despite this, social security and welfare spending has continued to grow. In fact the best way to describe the approach of the Coalition’s past five budgets is attempted rather than actual austerity, with the Senate rejecting or never considering repeated cuts. More than A$10 billion of these were served up again and again in budgets as so-called “zombie measures”.
It is also widely recognised that Newstart, the main payment for unemployed Australians, is increasingly inadequate. It has slipped relative to pensions and wages each year because it is indexed to the slower-growing consumer price index. Payments for single parents are also inadequate, having been cut as a result of specific government decisions.
In 2014, the new Coalition government’s first budget speech classified people whose main source of income was support payments as “leaners not lifters”. In 2017, the human services minister described welfare dependency as the most pressing problem facing Australia’s social security system, likening it to “poison” for the unemployed.
And yet most of us are recipients at one time or another or have family members or friends who become recipients because of unemployment, ill health or family breakup.
… but we are them
During any fortnight, more than 5 million Australians, or roughly a quarter of the adult population, receive an income-tested social security payment. This includes an age pension, a disability support pension, Newstart, a carer’s payment, a parenting payment or one of seven other categories of income support.
Family tax benefits supplement the incomes of around another 855,000 families. And 900,000 or so families, many of them not receiving social security benefits or other family payments, are assisted with childcare costs.
As we look over longer periods, receipt of social security payments becomes ever more common.
The longer the time period, the more common becomes the receipt of payments.
Between 2001 and 2015 around 70% of working-age households included someone who received an income support payment at some point (not including the age pension or family payments).
It is one of the most important lessons of longitudinal surveys like HILDA – we, our family or friends are in this together.
While the likelihood of receiving support is greater than acknowledged, that support is less intense than is commonly believed. HILDA shows that 70% of working-age households received some social security benefits over a 15-year period. However, only around 1% of working-age households receive the bulk of their income (90%) from benefits for 10 years or more.
These were people with deep and persistent disadvantage. They were highly likely to be Indigenous Australians or people living in areas with limited job opportunities or people with long-standing disabilities or educational disadvantages.
The welfare system does indeed provide temporary rather than long-term support for most recipients, and is potentially playing a very important safety net role.
The social security system is among the core institutions of contemporary Australian society. And it can be regarded as one of the main levers of not just social policy but economic policy. Australian governments have used the social security system to stimulate household spending during recessions or to avoid recessions — as happened during the global financial crisis.
An effective social security and welfare system is an essential underpinning of a modern economy, not least because security when people are in work requires security during periods when people are looking for work or outside the labour market.
The first welfare priority for a new government has to be to increase the Newstart unemployment benefit. Opposition Leader Bill Shorten has promised that, if elected, Labor will do this via a “root-and-branch review”.
Crossbenchers Rebekha Sharkie and the departing Cathy McGowan want to go further. They have introduced a private member’s bill that would create an independent commission to examine the adequacy of all social security payments other than family payments and payments to veterans. The commission would make recommendations rather than set rates.
The review promised by Shorten and the ongoing commission proposed by crossbenchers need not be mutually exclusive. An immediate review could be used to increase payments in the short term, while an ongoing commission could examine longer-term priorities.
There is a case for going further. We are overdue for a comprehensive review of Australia’s social security system. This should be undertaken in an integrated fashion and include tax, family payments and payments for childcare and to support people who study and work.
Looking further ahead, the ageing of Australia’s population is going to force us to spend more on health and aged care.
Population ageing and increased life expectancy represent a fundamental challenge that will inevitably be met by collecting and distributing more of our economy in tax and benefits than at present.
Some of the budget changes on welfare appear to be about sending the message that receiving welfare is undesirable. Whether these changes actually reduce social security spending and encourage independence to any significant extent remains to be seen. While the 2014 rhetoric of “lifters” and “leaners” may have been dispensed with, the dichotomy between “them” and “us” remains an underlying signal.
There’s actually little current evidence of an unsustainable growth in spending on social security and welfare. So it begs the question as to why these measures are needed.
One of the areas attracting the most controversy is the focus on payments for people of working age, particularly the unemployed and lone parents. Some of these measures appear to be more about signalling a stigmatising approach to welfare than identifying what works most effectively.
For example, “a commitment to reduce social harm in areas with high levels of welfare dependency,” will continue through the expansion of the Cashless Debit Card to two new locations and an extension of Income Management for a further two years to June 2019. As academic Eva Cox has pointed out, the official evaluations of Income Management didn’t find evidence of significant changes as a result of the policy, even on some its key objectives including changing people’s behaviours.
Then there’s a new approach to compliance for job seekers, a demerits points phase will be followed by a “three strikes” phase to engage with welfare recipients early and prevent them from incurring financial penalties for not meeting their obligations.
The government has also signalled that it will promote “self-reliance before welfare” through changes to the liquid assets test. Currently, there is a waiting period for people making a new claim for Newstart Allowance, Sickness Allowance, Youth Allowance, or Austudy of between one and 13 weeks. It applies if claimants have funds that are equal to or more than A$5,500 for single people with no dependants, or A$11,000 for those who are partnered or single with dependants.
From September 2018, the maximum Liquid Assets Waiting Period will double from 13 to 26 weeks when a claimant’s liquid assets are equal to or exceed $18,000 for singles without dependants or $36,000 for couples and singles with dependants – that is, people with savings above these levels may have to wait up to six months before receiving payment.
Stigmatising welfare recipients, but at what cost?
The government appears to be implementing a number of the substantive recommendations of the 2015 McClure Review of the Welfare System. In particular, from March 2020, the government will introduce a new, single “JobSeeker Payment”, which will progressively replace a number of payments such as the Newstart Allowance, Sickness Allowance, Wife Pension and Partner Allowance.
While this is presented as simplifying the system, over 99% of people will have no change to their payment rates. The government expects there will be around 800,000 people receiving Newstart at the time of the change and between 15,000 and 20,000 receiving all other payments, to be combined into the new payment.
Work requirements for the unemployed will also increase. Jobseekers will also have to spend more time looking for work or working for the dole – around 270,000 people aged between 30 and 49 years of age will be forced to spend 50 hours a fortnight. That’s 20 hours more than they do currently. This is despite a recent OECD report finding that Australia already has the heaviest set of obligations on the unemployed of seven countries.
In the government’s new approach to job seekers, they accrue demerit points for failing to turn up or being intoxicated. Once four demerit points are incurred over a six-month period, they will be assessed for the next phase. This involves escalating financial penalties for each additional failure; with the first strike leading to a loss of 50% of a fortnightly payment, the second strike leading to a loss of 100% of a fortnightly payment, and the third strike resulting in the cancellation of payment with a four-week exclusion from re-applying.
The rhetoric of “three strikes” (and you’re out) is clearly derived from changes in criminal sentencing.
Another of the more striking initiatives in the budget was the announcement that from 2018, 5,000 Newstart Allowance and Youth Allowance claimants, in two trial locations, may be subject to randomised drug testing for cannabis, methamphetamine and ecstasy, as a precondition of their welfare payment.
Job seekers who test positive will be placed on welfare quarantining to reduce the cash available to spend on drugs. After an initial positive test, the recipient would have further random drug tests, a penalty will only be applied for failing to comply with a test request. It’s notable that the cost of this measure is classified as commercial-in-confidence in the budget papers and has not been published.
In a related initiative, the government will close “loopholes” which allow welfare recipients to be exempt from job seeker requirements solely due to drug or alcohol abuse. The government estimated that because of this 11,000 exemptions annually would no longer be granted. This measure will cost A$28.8 million to implement over four years.
From July 1, 2017, people will also no longer be able to qualify for Disability Support Pension on the basis of their substance abuse alone. It’s estimated by the government that 450 fewer people will be granted Disability Support Pension each year due to this measure, saving about A$22 million over five years.
But the testing of welfare recipients doesn’t end there, from January 2018, a stronger “relationship verification process” for existing single parents will ensure people are not getting higher income support payments by claiming to be single when they are not. From September 2018, people applying for the Parenting Payment (single) or single parents claiming Newstart Allowance will be required to have a third party sign a new form verifying that they are in fact single. Penalties of up to 12 months in prison may be applied to referees – presumably families or friends – who provide a false declaration.
There doesn’t seem to be much concrete evidence for the effectiveness for all these types of measures.
An Australian Institute of Health and Welfare report in 2013 did report that use of illicit drugs was more prevalent among the unemployed. It reported people who were unemployed being 1.6 times more likely to use cannabis, 2.4 times more likely to use meth/amphetamines and 1.8 times more likely to use ecstasy than employed people.
But the same report notes that people with the highest socio-economic status were more likely to consume alcohol in risky quantities and to have used ecstasy and cocaine in the previous 12 months than people with the lowest socio-economic status. It also appears these figures don’t control for differences in the demographic profile of the unemployed and those in paid work.
Welfare quarantining policies of this sort have been tried in the United States in recent years. According to the National Council of State Legislatures at least 15 American states have passed legislation regarding drug testing or screening for public assistance applicants or recipients.
Reports of the effectiveness of this testing vary widely.
In the United States, a 2011 review by the federal Department of Health and Human Services estimated the prevalence rate of substance abuse among US welfare users ranged between 4% and 37%. However, a review by US academics in 2005 found substance abuse disorders are less common among welfare recipients there than other serious barriers to self-sufficiency (such as physical health, poor academic skill and transportation difficulties, among a range of factors). These academics argued widespread substance abuse is not a major cause of continued economic dependence.
Earlier research pointed out that in the results of drug testing of welfare recipients there was a large group of “false positives” with no apparent disorder; and that drug-testing could not distinguish “false negatives” who may may be alcohol dependent or experiencing psychiatric disorders and need assistance.
There have also been a number of court cases in the US about the constitutionality of these drug tests when applied randomly, and it has been noted that similar proposals in Great Britain may violate EU based rights to privacy.
It’s worrying that the budget papers do not identify the costs of the proposal nor the expected savings. Overall, it’s difficult to escape the conclusion that this proposal is symbolic, rather than designed to have a positive impact on the well-being of those to be tested.
Budget spending on welfare continues to increase
Social security and welfare remains the largest single component of government spending, and is projected to increase from A$164 billion in 2017-18 to A$191.2 billion in 2020-21, or from 35.3% to 36.6% of total expenses.
Overall social security and welfare spending is projected to grow by 0.22% of GDP over the projection period. Spending on the National Disability Insurance Scheme (NDIS) is projected to grow by 0.46% of GDP, compared to other measures such as the spending on child care by 0.07% of GDP and spending on unemployment and related benefits by 0.05% of GDP. Most other components of social security and welfare expenditure are projected to fall over this period, with the largest impact being on spending on Family Tax Benefits.
The development of the NDIS is clearly the most significant source of new social spending in this year’s budget. The additional 0.5% increase in the Medicare Levy to guarantee funding for the project will apply from July 1, 2019 and will raise an extra A$3.55 billion in revenue in its first year, rising to A$4.25 billion in 2020-21. There are also positive initiatives in continued funding for valuable longitudinal surveys, such as HILDA and the Parents Next Programme.
The main area of savings is in the area of Family Tax Benefits, where savings are to be used to fund changes in child care – although the savings over the period are more than twice as great, as the increased spending on child care. These savings of A$1.9 billion over five years are made possible by not indexing payment rates to inflation until July 2019.
In addition, a further A$415 million will be saved over five years through adjustments to the rate at which Family Tax Benefit A is income-tested when family incomes exceed the higher income threshold of around $94,000 of joint family income. As a result, around 24,900 families will lose access to Family Tax Benefit Part A, and around 71,800 families will see a reduction in their family payments.
Overall, the 2017-18 budget has abandoned many of the most regressive welfare measures that have led to their blocking in the Senate since 2014. However, it remains the case that the freezing of payment rates for Family Tax Benefit will have the largest proportional effect on low income families with children, since these payments form a larger proportion of their disposable incomes.
There are projected increases in spending on income support and services for the aged as a result of the ongoing and predictable ageing of the Australian population. There’s also smaller increases in income support for parents and for the unemployed – perhaps partly due to the simplification of support for working age recipients – but these are more than offset by reductions in other areas of welfare spending.
To a large extent, the challenges facing government in providing the services and benefits that the Australian population values are predictable and manageable, so there is a need to base policies on evidence and not myths or stereotypes.
The government hopes to save A$632 million over five years from 2016-17 by strengthening penalties for non-compliance in Work for the Dole programs. Failure to meet requirements will result in suspended payments, and then escalating penalties.
Defence spending will rise to 2% of GDP by 2020-21 as the government increases spending by $50 billion over the forward estimates. The Australian Federal Police will receive $321.4 million over four years to support counter-terrorism, and operations against organised drug imports, violent criminal gangs, cybercrime and serious financial crimes.
Foreign aid has risen with inflation to $3.9 billion in the budget, and will rise again to $4.01 billion in 2018-19. However, it will remain at that level for the following two years.
The current broadcaster licence fees will be replaced with new ones, costing the government $414.5 million over the forward estimates.
The Conversation’s experts respond to these and other aspects of the budget below.
A populist attack on welfare recipients
Ben Spies-Butcher, Senior Lecturer in Economy and Society, Department of Sociology, Macquarie University
For a budget that has shifted considerable ground in areas like education and health – and, to a lesser extent, housing – it strongly plays to existing Coalition themes on welfare. These reinforce punitive welfare measures and the divide between the “deserving” and the “undeserving” poor.
There are some mildly positive reforms for older Australians – enabling access to state concessions – and some additional funds to assist single parents return to work. However, it is strongly punitive towards many of the most vulnerable.
The budget seeks to save $4 billion in new “integrity” and “mutual obligation” reforms. There is no funding to increase what is now a tragically low unemployment benefit (Newstart). Instead, there are new enforcement measures. These are largely constructed around drug and alcohol use. They include measures to force more recipients to access their money through a “cashless welfare card” that directs how people spend their money.
More surprisingly, there are harsh measures that include trials of drug tests, harsher breaching rules (that often leave recipients with no income), and even restrictions on accessing support for disabilities related to substance use.
That reflects a very strong populist attack on some of the most vulnerable. It also reaffirms an important political dynamic in Australia: when we frame action for everyone (as we do with health, education and housing), it is much easier to achieve equitable action. And when action is focused on the very poor, the political instinct is to attack.
Aid gets another cut, but not the unkindest
Robin Davies, Associate Director, Development Policy Centre, Crawford School of Public Policy, Australian National University
The Coalition once again cut overseas aid, as it has done now for several years running. However, the cuts in this budget will not be felt for another two years and are smaller in annual terms than those inflicted in the previous two years.
Aid spending will, as promised last year by Foreign Minister Julie Bishop, increase in line with CPI in 2017-18, rising from $3.8 billion to $3.9 billion, and also in 2018-19, when it will reach $4 billion.
For the following two years, though, the indexation of aid to CPI will be suspended and the resulting savings, $303 million, redirected to “other policy priorities” of the government. CPI indexation, according to the government, will resume thereafter.
Since coming to power in late 2013, the Coalition has fashioned five aid budgets, starting with its revision of Labor’s 2013-14 aid budget. In addition, it has now set notional bottom lines for the next three, out to 2020-21.
Over these aid budgets, aid has been or will be cut in real terms six times. The biggest cuts were in the last two budgets, 2015-16 and 2016-17, where aid was cut by 20.2% and 7.4% respectively.
After the reprieve in 2017-18 and 2018-19, when there will no real growth in aid, the cuts resume in 2019-20 and 2020-21 at the modest rate of 2.5% per year. The cumulative cut in aid from 2013-14 to 2020-21 will be 32.8%: basically one-third.
Australia’s aid as a proportion of its gross national income will stagnate at the historically low level of 0.22% for several years, and could fall to 0.2% by 2020-21. Australia’s aid generosity is now very far below the OECD average of 0.32%. We rank 17th among our peer countries on this measure.
It appears that The Australian was taking some dramatic licence when it reported, just before the budget, that:
The Turnbull government will divert foreign aid funds to boost Australia’s intelligence agencies as part of its escalation of the war on terror.
However, it had the basic story about right.
The Coalition pledged in late 2013 to increase aid in line with inflation. Last year, implying that it had finished cutting aid, it revived that pledge.
However, the Coalition has only maintained aid in real terms in two of eight years. While it cannot be claimed that aid is funding domestic policing or foreign intelligence, these are prominent among the “other policy priorities” the government is able to pursue by cutting aid.
No news is good news for defence
Andrew Carr, Senior Lecturer in Strategic and Defence Studies, Australian National University
Defence wasn’t expecting anything in tonight’s budget, and didn’t get it. The 2016 Defence White Paper and the 2016-17 budget both proposed minimal changes for defence in 2017-18. This was not because of a lack of support, but because the ten-year funding plan to raise the defence budget to match 2% of GDP by 2020-21 is largely backloaded, and because the Department of Defence is struggling to spend the funds it already has.
The 2017-18 budget papers’ main change was an efficiency reclaim of $304.1 million over the next four years, aimed at:
… reductions in the numbers of consultants and contractors used in Defence, as well as limiting the costs of non-operational overseas and business travel.
There is also $350 million in support for Veterans Health – an important and popular measure that was announced two days ago.
Freed of the need to devote new significant resources, the treasurer’s speech confidently reiterated the government’s commitment to the 2% target. While there are underlying issues with the notion of tying defence spending with the health of your economy — namely the worse the global situation, the easier the 2% target becomes – this stability itself is welcome.
Over the last decade, defence has seen significant promises of spending and some harsh cuts on budget night. So no news is good news.
Many will also be pleased to see the return to surplus remains a priority. While not a defence measure, this provides additional flexibility and resilience, which could be important for Australia’s security in the unpredictable Trump era.
Government levels the playing field for traditional media
Andrew Dodd, Program Director – Journalism, Swinburne University of Technology
There are no big shocks for the ABC in this budget, as the national broadcaster is only one year into its current round of triennial funding. SBS has won a cash injection to make up for lost advertising revenue, and broadcasters in general have won a reprieve from licence fees.
However, it’s women’s sport on pay TV that seems to have done best of all out of the 2017 budget.
The government has levelled the playing field for media companies that are struggling to compete against internet-based media by abolishing licence fees for broadcasters and datacasters that use broadcast spectrum. However, it is also broadening the revenue base through a new regime of apparatus licence fees for broadcasting spectrum. The change is estimated to cost $414.5 million over the forward estimates period.
The budget provides a “transitional support package” for those licensees who will be left worse off. The Treasury estimates state this:
… support package is estimated to have a cost of $24.8 million over the forward estimates period.
And the Australian Communications and Media Authority will receive a small cash injection to make the transitional support package work.
The budget is also providing $30 million over four years to support:
… underrepresented sports on subscription television, including women’s sports, niche sports, and sports with a high level of community involvement and participation.
In addition, $6 million will be spent over two years to support the development of Australian film and television content.
SBS will get $8.8 million in 2017-18 to:
… restore revenue that could not be raised due to the delayed passage of legislation, which would allow SBS further flexibility in the way it advertises.
Science flies under the radar
Les Field, Vice-President & Deputy Vice-Chancellor (Research), UNSW
Science has largely flown under the radar in a restrained budget, with no big spending measures and no major cuts apart from the university funding changes announced last week.
It is pleasing to see an astronomy partnership with the European Southern Observatory that will ensure Australia’s access to world-leading optical astronomy facilities, as well as new funding and administrative improvements in health and medical research, including the first investments from the Medical Research Future Fund.
It is also positive that the tried-and-tested CRC program will benefit from the government’s advanced manufacturing industry focus. But it was disappointing that the budget didn’t include any of the recommendations of the review of the R&D tax incentives.
There are small decreases in indexation of funding across the forward estimates equating to savings of several million dollars per year in agencies such as ANSTO and CSIRO, and funding programs such as the ARC and NHMRC. These will certainly be absorbed, but will add to the challenge of doing important science and innovation in areas of critical national importance.
The science sector will now look ahead to the 2030 Strategy for Science and Innovation, to be finalised by the end of the year, and the government’s response to the Research Infrastructure Roadmap – which will determine priorities for new capital investment.
John Rice, Adjunct Professor, University of Adelaide
As far as science is concerned the 2017 budget could be described as 2014 budget-lite. There is no vision for the role of science and technology in Australia’s future. Instead what stands out are the cuts to universities and to the CSIRO.
The National Innovation and Science Agenda (NISA) made the 2016 budget very exciting, even if a little disconcerting. There wasn’t much new money behind it and what there was largely reversed the disasters of 2014 and 2015.
But NISA was the kind of vision that we ought to expect from a budget, a vision for the economic direction of the country, one that can guide its productive capacity, meet current challenges and show the way to continuing prosperity.
Where did that vision go? There is none of it in the 2017 budget.
A less-than-enthusiastic electorate reminded politicians there needs to be more to an innovation-driven economy than everyone developing an app. Clearly the average citizen needed to understand where innovation-driven automation and other labour productivity improvements leave them in relation to earning a living.
If the 2017 budget does nothing else it confirms that the government has not risen to these challenges, and has lost its faith. In the face of the electoral blowtorch it has simply melted away.
There are a few modest and sensible initiatives that are a legacy of the 2016 rush of blood. Their gestation has been so long, like the activation of the Medical Research Futures Fund, that you would have expected an elephant rather than a mouse, but they are positive moves nonetheless.
What is seriously disappointing is the cutting of funding to the universities and to the CSIRO. Universities contribute probably more than three-quarters of Australia’s basic research. University research is seriously underfunded, and the underfunding is made up via transfers from other areas, particularly teaching. The cuts will make this worse, which leaves no room, let alone incentive, to engage university research and teaching more with industry.
What this budget represents for science is a retreat from any serious vision for an innovation-based economy, and a return to the unthinking cost cutting of the 2014-15 budgets.
Christian falsely accused of ‘blasphemy’ taken into custody, released – and detained again.
LAHORE, Pakistan, April 18 (CDN) — A Christian illegally detained in Faisalabad on false blasphemy charges was freed last night, while two other Christians in Gujranwala arrested on similar charges on Friday (April 15) were also released – until pressure from irate mullahs led police to detain them anew, sources said.
Masih and his family have relocated to a safe area, but just 10 days after he was falsely accused of desecrating the Quran in Faisalabad district of Punjab Province on April 5, in Gujranwala Mushtaq Gill and his son Farrukh Mushtaq were taken into “protective custody” on charges that the younger man had desecrated Islam’s holy book and blasphemed the religion’s prophet, Muhammad. A police official told Compass the charges were false.
Gill, an administrative employee of the Christian Technical Training Centre (CTTC) in Gujranwala in his late 60s, was resting when a Muslim mob gathered outside his home in Aziz Colony, Jinnah Road, Gujranwala, and began shouting slogans against the family. They accused his son, a business graduate working in the National Bank of Pakistan as a welfare officer and father of a little girl, of desecrating the Quran and blaspheming Muhammad.
The purported evidence against Farrukh were some burnt pages of the Quran and a handwritten note, allegedly in Farrukh’s handwriting, claiming that he had desecrated Islam’s holy book and used derogatory language against Muhammad. A Muslim youth allegedly found the pages and note outside the Gills’ residence.
Inspector Muhammad Nadeem Maalik, station house officer of the Jinnah Road police station, admitted that the charges against the accused were baseless.
“The initial investigation of the incident shows Mr. Gill and his son Farrukh are innocent,” he told Compass.
The two were kept at a safe-house, instead of the police station, out of fear that Islamist extremists might attack them; their subsequent release led to Islamic protests that compelled police to detain them anew today, sources said.
Despite police admitting that the two Christians were not guilty, a First Information Report (No. 171/2011) was registered against them under Sections 295-B and C in Jinnah Road Police Station early on Saturday (April 16).
“Yes, we have registered an FIR of the incident, yet we have sealed it until the completion of the investigation,” Inspector Maalik said, adding that the police had yet to formally arrest Gill and his son. “We registered the FIR for their own safety, otherwise the mob would have become extremely violent and things could have gone out of control.”
The police official said that after the Muslim youth made the accusation, he gathered area Muslims together.
“It seems to be a well thought-out scheme, because the perpetrators chose the time of the Friday prayers for carrying out their plan,” Maalik said. “They were sure that this news would spread quickly, and within no time people would come out of the mosques and react to the situation.”
He added that police were now inquiring of the Gills why they might suspect anyone of wanting to harm them.
“We are also looking for any signs of jealousy or old enmity,” Maalik said.
Soon after the Muslim youth found the alleged pages, announcements blared from the area’s mosques informing Muslims about the incident and asking them to gather at the “crime scene,” sources said.
There are about 300 Christian families residing in Aziz Colony, and news of the alleged desecration spread like jungle fire. Announcements from mosques sparked fear in the already shaken Christian families, and they started packing their things to leave the area, fearing the kind of carnage that ravaged Gojra on Aug. 1, 2009, killing at least seven Christians.
“It’s true…the news of the accusations against Gill and his son and the announcements being made from the mosque calling on Muslims to avenge the desecration sent shivers down our spines,” said Pastor Philip Dutt, who has known the Gill family for several years and lives in the same neighborhood. “The charges are completely baseless. I’m sure no person in his right frame of mind would even think of committing such a vile act. Someone has clearly conspired against the Gill family.”
He added that most of the area’s Christians had left their homes overnight, fearing an attack by Muslims.
Dutt said that a large police contingent arrived in time and took Gill and his son into custody after assuring the enraged mob that a case under the blasphemy laws would be registered against the two men. Police remained stationed in the area to provide protection to area Christians, but the atmosphere was tense.
According to some reports, a group of angry Muslims wanted to torch Gill’s house, but timely police intervention thwarted their plan.
At the same time, a group of Muslim extremists stormed into the house of Anwar Masih, a Christian factory owner in Aziz Colony, and started beating him and his son, sources said. The family managed to save themselves by calling the police and now they too are in “protective custody.”
The Rev. Arif Siraj, moderator of the Presbyterian Church of Pakistan, which also oversees the functioning of the Christian Technical Training Centre in Gujranwala, said the accusations against Farrukh were yet another example of how the country’s blasphemy laws are misused against innocent people.
“We have been engaged with the police and local Muslim leaders throughout the day to resolve this issue amicably,” Siraj said. “An eight-member committee comprising six Muslims and two Christian pastors has been formed to probe the incident, and they will make a report on Friday.”
The names of the Christians of the eight-member committee are Pastor Sharif Alam of Presbyterian Church Ghakarmandi and the Rev. Joseph Julius.
A large number of Muslims, including members of religious parties and banned outfits, came out to the roads of Gujranwala on Saturday (April 16) to protest the alleged desecration of the Quran and pressure police to take action against Gill and his son. The protestors reportedly gelled into one large demonstration on Church Road and headed towards the CTTC. Siraj said that some participants threw stones at a church on the road, but that Muslim elders immediately halted the stone-throwing.
“The district administration and Muslim leaders have now assured us that no one will target Christian churches and institutions,” he said, adding that both communities were now waiting for the committee’s report.
Sohail Johnson of Sharing Life Ministry expressed concern over the accusations.
“This case is a classic example of how Christians and Muslims continue to be charged with blasphemy on false accusations,” he said. “Isn’t it ridiculous that the accuser is claiming that Farrukh has confessed to burning the Quran in his note and thrown the burnt pages in front of his house – what sane person would even think of saying anything against prophet Muhammad in a country where passions run so deep?”
Arif Masih, the falsely accused Christian released last night, has reportedly been relocated along with this family to a safe location.
The original blasphemy law, introduced in British India in 1860, imposed a prison term of up to two years for any damage to a place of worship or sacred object carried out “with the intention of thereby insulting the religion of any class of persons or with the knowledge that any class of persons is likely to consider such destruction, damage or defilement as an insult to their religion…”
The current provision in the Pakistan Penal Code, as amended in 1986, introduces both the death penalty for insulting Muhammad and drops the concept of intent. According to Section 295-C of the Penal Code, “Whoever by words, either spoken or written, or by visible representation, or by any imputation, innuendo, or insinuation, directly or indirectly defiles the sacred name of the Holy Prophet Muhammad (peace be upon him) shall be punished with death, or imprisonment for life and shall also
be liable to fine.”
The laws have drawn condemnation across the world, and two senior government officials – Punjab Gov. Salman Taseer, a liberal Muslim, and Federal Minister for Minorities Shahbaz Bhatti, a Christian, have been assassinated this year for demanding a review of the legislation.
Christians call for agency to probe anti-Muslim terrorism ties to Orissa-Karnataka attacks.
NEW DELHI, March 25 (CDN) — Right-wing terrorists played a key role in attacking and killing Christians in Orissa and Karnataka states in 2008, one of the Hindu extremist suspects in anti-Muslim bomb blasts has told investigators, leading to renewed demands for a probe by India’s anti-terror agency.
Pragya Singh Thakur, arrested for planning 2008 bombings targeting Muslims in west India, told the National Investigation Agency (NIA) that Lt. Col. Prasad Srikant Purohit had “masterminded” the 2008 anti-Christian violence in Orissa and Karnataka, The Indian Express daily reported on Wednesday (March 23). Purohit is accused along with Thakur for the 2008 bombings of Muslims.
Thakur had met with Purohit after the August 2008 Kandhamal attacks against Christians began and told her “he was into big things like blasts, etc., and had masterminded the Orissa and Karnataka ‘disturbances,’” the national daily reported.
The NIA, a recently formed agency to prevent, probe and prosecute terrorism-related incidents on a national scale, is investigating several cases involving right-wing terrorism aimed at the Muslim minority in retaliation for Islamist attacks. Both Thakur, formerly a member of the Hindu nationalist Bharatiya Janata Party’s student wing, and Purohit, who was serving in the Indian Army when he was arrested for his role in blasts in Malegaon city in western Maharashtra state, were part of the Hindu extremist Abhinav Bharat.
Thakur’s statement to the NIA came soon after a Directorate of Military Intelligence report said Purohit had confessed to having killed at least two Christians in Kandhamal and playing a role in violence in Karnataka and other states.
The revelation by Thakur was not surprising, said John Dayal, secretary general of the All India Christian Council.
“We have held that the military precision of the Kandhamal riots, which spread fast and raged for months, could not be a work of mere common people, and that higher brains were at work to ‘teach the Christians a lesson’ while sending out signals of their power lust to the entire nation,” Dayal told Compass.
The violence in Kandhamal began following the assassination of a Hindu extremist leader Laxmanananda Saraswati on Aug. 23, 2008. Though Maoists claimed responsibility for the murder, Hindu extremists blamed Christians for it. The violence began after the arrival of Indresh Kumar, an executive committee member of the Hindu extremist Rashtriya Swayamsevak Sangh (RSS) and a suspect in blast cases, said Kandhamal activist Ajay Singh. Local media reports said Kumar was part of Saraswati’s funeral procession, which was designed to trigger the attacks, Singh added.
The RSS denies having played any role in terrorism. On March 12, Ram Madhav, an RSS national executive committee member, called the allegation against Kumar “a concerted political campaign.” Those who were dragging the RSS leader into blast cases “will stand thoroughly exposed,” The Times of India daily quoted him as saying.
Dayal and another Christian leader, Joseph Dias, said they had separately written to India’s prime minister and home minister seeking inclusion of the anti-Christian attacks in an ongoing NIA investigation. Sajan K. George of the Global Council of Indian Christians (GCIC) said he had petitioned the president for the same.
Dias, general secretary of the Catholic-Christian Social Forum, a Maharashtra-based rights group, recalled that violence in Kandhamal spread across 13 other districts of Orissa.
“In Kandhamal alone, more than 6,600 homes were destroyed, 56,000 people rendered homeless, thousands injured, and about 100 men and women [were] burned alive or hacked to death,” Dias said. “Among the women raped was a Catholic nun.”
In September 2008, as the violence continued in Kandhamal, a series of attacks on Christians and their property rocked Mangalore city in Karnataka state.
“In Karnataka, it was hundreds of churches that were desecrated, Christians brutally beaten up, over 350 false cases foisted on them, property held by the community taken over, and no relief to date [has been] received,” Dias said.
While the government of Orissa downplayed the violence as “ethnic tensions,” Karnataka officials blamed it on Christian conversions.
The RSS and outfits linked to it such as the Vishwa Hindu Parishad (World Hindu Council) and the Vanavasi Kalyan Ashram, which claims to work for tribal welfare, facilitated the Kandhamal attacks together with alleged Hindu nationalist terrorists, Dayal said.
“We want the truth about Hindu groups’ anti-national terror activities against minority Christians to come out,” said George, whose GCIC is based in Karnataka.
Dias warned that that the latest statement by Thakur must not to be seen in isolation, as the Military Intelligence report revealed that the Abhinav Bharat had targeted Christians in several states, including Madhya Pradesh and Maharashtra.
The “game plan” is to “cripple Christian religious places, property and institutions, besides eliminating its nascent community leadership at the grassroots,” Dias added.
The Abhinav Bharat was formed in 2007 by a few right-wing Hindus allegedly disillusioned with the leaders of the Hindu nationalist movement, whom they thought were too timid to make India a Hindu nation, rather than one based on religious pluralism.