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Attachment: Some Themes in the Public Poverty Debate

• a strong economy is not sufficient to ensure against poverty. Problems can arise from deficiencies in: skills / education; resilience; life skills; relational networks; and access to basic social / physical infrastructure. There is a need for prevention / early intervention  [1]
• social problems have resulted from capture of university Arts faculties by counter-cultural radical Left. Potential leaders have been indoctrinated against values of Australia's civilization; education systems promote social change, but leave children functionally illiterate. Problems of the poor should not just be addressed by socialist Left who continue to  ask for money to be thrown at them [1]

• the belief that there is an underclass is mostly wrong and obscures practical ways of helping the disadvantaged [1]

• those suggesting that inequality is increasing in Australia tend to adopt a Marxian style of analysis, and will find their work subject to a more rigorous analysis in future than they have been accustomed to [1];

• a new social contract is needed to reduce inequality [1]

• the welfare state is experiencing problems because churchmen became involved and saw virtue in welfare rather than in work, while the new Left sought equality of outcomes rather than of opportunities [1];

• Australia is seen to have become addicted to welfare - and this harms both welfare recipients and broader community. The welfare lobby has resisted reform because it seems more welfare spending as sign of civilized, rather than failing, society. [1]

• reformers should aim to improve people's lives by getting them off welfare [1];

• 100,000 people are homeless, while many others suffer housing stress. A large public housing program is needed as well as removal of tax arrangements which have encouraged housing price explosion (ie tax deductibility of losses and concessional capital gains tax rates) which has created a social divide in Australia [1]
• Australia is said to face a huge problem of poverty - but investigating the claim is discouraged. 4m are said to suffer hardship (an unsupported figure). Radical political solutions are seen to be needed. Case is based on discredited Senate inquiry - which was dominated by Opposition senators and received submissions mainly from groups favouring radical social change. Report claims that prosperity has been captured by few at expense of many - and low income families are seen as left behind (though their income rose 8% between 1994 and 2000). Poverty is said to lead to long term financial hardship - but 60% of those under poverty line in 2001 had moved above it by 2002. Report suggests 1m households are in poverty - and working poor are said to be increasing. But even using discredited Henderson poverty line this claim fails. Federal minimum award wage is above poverty line. Thus poverty affects those with no full time jobs. The claim that 4m are in poverty comes from Senate inquiry which used unreliable data. Department of Family and Community Services found 3% suffer real hardship - often due to the way money is spent not lack of money. Solution is helping families cope with their money and cajoling  jobless back into workforce. Welfare activists want higher welfare benefits, higher taxes and more regulation - which would give them powerful place in government [1]
• an underclass has to struggle to escape deprivation. A second generation of welfare recipients has now hit flexible job market. 1/5 of families with children are jobless. Half jobless families involved sole parents. Some argued that culture of dependency needs to be broken - by requiring those on welfare to look for work, reducing regulations and changing tax system encourage work. Tax credits are also suggested for those moving from welfare to work. But little is paid for unskilled work, and employment is casual. Though unemployment is down officially, people are counted as employed if they do 1 hour's work. In 2001, 60% of poorest 10% improved their position but only 20% entered wealthier part of population. Bottom 10% includes people disguising their incomes. Tough welfare rules force people to look for work - but are recycled between welfare and part-time work. [1]
• an underclass has become concentrated in particular regions because of high housing costs - in some of which they have few job opportunities  [1];
• Centrelink transitional arrangements make it hard for poor to find work [1];
• tax breaks for the wealthy (eg negative gearing of property) are at the expense of the poor [1]
  • [Comment: with a different tax regime, rents would be likely to be much higher or a large public housing program would have to be developed];
• a Senate Committee on poverty (which reported in early 2004):
  • found 3.5m live in poverty, and that 20% of households have less than $400pw. Rising economic indicators have been accompanied by: inequality; poverty; homelessness; housing stress; long term unemployment; child abuse and suicide. Blame is placed on: labour market deregulation, long term unemployment and inadequate welfare programs. It proposed a Commission to develop a national poverty strategy. A minority view supported: participation, self-reliance and mutual responsibility - as well as assisting those facing hardship [1];
  • found that millions more will sink into poverty unless issue is taken seriously. 5m households live on < $400 pw - including some with jobs. Flaws in Job Network and inadequate welfare were blamed. The combined effect of tax and welfare systems provide strong disincentive to return to work. But while poverty is becoming more entrenched and intractable, Commonwealth is abrogating responsibility. Committee suggested: removing poverty traps; control on high-interest money lenders; and more public housing; means-tested job-seeker allowance; higher minimum wages; paid work-experience. [1]
  • suggested a crackdown on the credit industry; a national taskforce to combat poverty; funding schools to provide breakfasts to disadvantaged children; easier access to Youth Allowance; rent assistance to university students; overhaul of youth welfare system. Increased casual work is seen as responsible for new generation of working poor. The true extent of unemployment is hidden by ignoring those forced into part time work [1].
  • was seen as dominated by ALP which wants to establish poverty programs, while government believes that poor have become richer, even though inequality increased [1];
  • was seen as politically biased, and recommending heavy government spending. Its facts are wrong (eg concluding that 3.5m are poor using discredited Henderson Poverty Line measure and data on living standards of poorest which ABS says is unreliable because of under reporting of income) and using facts selectively. It says that increased income has been captured by few at expense of many, while income of all groups increased. Poverty was said to be associated with low pay - a view Smith Family data disproved [1]
• homelessness is a significant problem [1]
• strong economic growth has been associated with increased inequality of income and even greater inequality of wealth [1];
• a 'toxic' environment for children (related to family breakdown, rampant individualism and inequality) has been seen to contribute to: youth suicides; ADHD; risk taking; depression; autism; cerebral palsy; crime; insecure neighbourhoods; and drug-taking Moreover: this is associated with poor quality of child care - partly due to lack of support for working mothers, and the ending of public maternal and child welfare initiatives. A large blow-out in welfare costs is expected because many young people from dysfunctional families will depend on welfare, and perpetuate their problems with their own children [1]
• income of top 5% of income earners has grown 5 times faster than average incomes [1];
• lower and middle income earners suffered a decline in real incomes [1] ;
  • [Comment: there appeared to be poor methodology in part of this analysis]
• wealth is increasingly concentrated. 5% of households have 60% of wealth. 3m people live in poverty. 22% of families with children have no breadwinner. Many find it impossible to get a job. The social security system has a stigmatizing and negative effect [1];
• an entrenched underclass of young families that have missed out on jobs is developing [1];
• More casual jobs and limited bargaining power of low skill workers have created a new working poor [1]
• the only solution to homelessness, according to state Premiers, is more federal spending on public housing [1];
• government might save money by housing homeless or placing social workers in schools to deal with homelessness given the cost of support services and lost future earnings [1];
• there is little interest in poverty, inequality or unemployment. The poor no longer get a hand-up, and the unemployed are seen as dole-bludgers. Inequality and welfare dependency have increased. The poor see themselves as living on the edge and ignored. Poverty drives people to despair, sickness, disease, drugs, disaster, death.  Centrelink is hostile to welfare recipients. Poverty degrades people generally. Though bottom 20% are better off health, education and other services are now scarcer and more expensive [1].
• 21% of households earn less than $400pw and many are desperate. But Australians do not believe in poverty. The nature of poverty has changed due to collapse in full time jobs. This is hard to communicate to public. Education and trades used to provide social mobility. But now the ladder up has disappeared. The poor are blocked from a one generation progress into middle class. Country children can't now get good enough marks to get into university - because of poor schools. Information is important currency, but poor can't do a Google search. Public education is now seen as second best. Government spending on education has fallen, and is low on child care (the front end of education, health, crime prevention and better parenting). In 1990s unemployment has declined and welfare increased - as jobs growth has been mainly part time. If all had full-time jobs, poverty would be minimized. There are jobs - but not where the people who need them are. The Jobs Network has had to be bailed out, and unemployed blamed for failing to find work. [1]  
• welfare dependence has grown over the past two decades - with 1/3 of working age now on some benefits. 1/4 received welfare in 1982. This is now about 35%. Welfare reliance is becoming deeper in groups already reliant on welfare [1]
• joblessness is main cause of poverty - so moving from welfare to work is the solution. But for 40 years the opposite has been done. Adults whose main income is welfare increased from 3% in 1960s to 14%. Single parent benefits (which 6% of women rely on) are a major factor. Most countries do not allow single parents to remain on welfare long term. The longer they rely on welfare the worse the outcomes for themselves and their children. Long periods on welfare increase risk of long term poverty. They erode skills and self-confidence [1]
• politics is to blame for homelessness problem. The federal government spends $21bn annually on housing - but just increases individual wealth rather than to solve affordability crisis. There is not enough low cost housing. Thousands face homelessness - and once homeless it is impossible to prepare for work, study or sometimes even to live. Governments need to spend money on easing homelessness [1]
• despite strong economic performance, unemployment remains high and jobless households have increased which adversely affects children [1];
• Australia is not a classless society - according to a new report on the chances of people from lower socio-economic backgrounds going to university. The attitudes of students (and some other barriers) are keeping them out [1]
• it should not be assumed that poverty is widespread and getting worse, and that the best solution is to increase taxes and redistribute income. Poverty estimates (a) are based on bad data (b) do not consider how people's incomes vary throughout life. Also income redistribution is counter-productive. After 40 years welfare dependency has escalated, and poverty has remained. If continued welfare dependency and the disincentives of high taxation would remain. A sell-help strategy based on work (a) solves problem of poor without confiscating other's income and (b) promotes independence [1];
• more schools' investment is needed to reverse growing gap between rich and poor. The widening gap was exacerbated by unequal access to education. Students whose parents can afford private schools do better (probably because of more supportive home environment and better teaching facilities [1]
  • Comment:  the debate about how values may affect school performance also needs to be recognized in this regard.
• suggestions that university fees have reduced university attendance are wrong. Low income people are now twice as likely to attend as in 1980 (given more university places, a lack of jobs for teenagers and more professional jobs). Poor year 12 results are the main obstacle to university study [1]
• Wealth inequality is increasing and rivals that in the US / UK. Galbraith's Affluent Society argued that capitalism's emphasis on production required shaping values to favour consumption. Up to 25% of people have now shifted their world views away from materialism (which had bred dissatisfaction). [1]
• Middle income earners have slid back in relative income over the past decade - and professional middle classes can no longer afford to live in the better suburbs they used to aspire to [1]
• changes to tax transfer system are more effective than wage rises in aiding low-income families. Restraining wage rises it would help reduce unemployment, and increase the incentive to move from welfare to work. Half low-wage workers gain the skills that lead to higher paying jobs. The industrial relations commission needs to endorse this. Unemployment is linked to low self-esteem / social problems. About 1/6 of children now live in jobless households. Australia should look at new international practices (eg tax credits to boost take-home pay while restraining wage costs). [1] 
• all agree that inequality is increasing. However there are adverse side effects (eg increased crime; educational achievement - where private schools dominate in good results; health inequality). However the main problem is disappearance of middle class [1];
• measure of poverty used by Smith Family implies rising poverty (even though all incomes are rising). Getting jobs into households is key to reducing poverty - so tax / welfare disincentives to work are part of problem [1];
• the way in which Smith Family define poverty means that income increases by higher earners imply increased poverty - even though income of poorest is increasing [1];
• living standards of many fell though economy grew 40% in 1990s. 1 in 8 lack enough for basic needs. Past emphasis on getting economy right has stressed cutting costs, and reduced emphasis in other areas. A report identified problems of wealth inequality; of overwork and under-work; reducing indigenous life expectancy. Recommendations related to tax avoidance; increasing welfare; giving priority to environmental problems - to avoid higher costs later; educational; a world competition and consumer commission to counterbalance the WTO [1]
• the numbers where experience sustained poverty in Australia is much smaller that the numbers who experience this in any given year - ie for most this condition is transient [1]

Incorporating the Alienated: A Challenge to Australia's Civil Society - email sent 17/3/14

Camilla Nelson
University of Notre Dame

Re: A society yearning for security divides along lines of liquid fear, The Conversation, 12/3/14

Your article suggests that perceptions of evil have clouded many people’s ability to relate to those who are outside what is regarded as ‘normal’ society (eg asylum seekers, Aboriginal people, Lebanese crime gangs, bikies. intergenerational welfare recipients and the long term unemployed).

However the issue is a little more complex than this. For each such category there is a (usually different and quite complex) cause of their difficulties – and it is more constructive for those with the resources / ability to do so to address those causes than to criticise those in the community who don’t understand or have any ability to remedy those problems. Criticism of ‘ordinary people’ for their inability to understand / do anything about things that are disrupting their world is a little like the criticism of the One Nation phenomenon in the 1990s. The latter reflected marginal groups in marginal regions who could not cope with the more competitive economic environment that governments had imposed on them (on quite rational grounds – though grounds that ‘marginal’ people could not understand). They thus expressed their frustrations in ways that were not ‘politically correct’ – see Assessing the Implications of Pauline Hanson's One Nation, 1998. The real problem was that opinion leaders generally focused on criticising the ‘marginal’ groups for their ignorance rather than doing anything to remedy the underlying problems.

The same continues to apply today. In each of the cases you nominated there are factors that lead certain groups to have problems. It is futile to blame ‘ordinary people’ for their failure to understand or do anything about this. Rather blame should be focused on the civil society groups who could remedy those problems but don’t get off their backsides do so. For example:

• Intergenerational welfare recipients and the long term unemployed are victims of an economic environment in which very high levels of competency are required to get reasonable employment (and to some extent of welfare systems that make it possible for individuals to survive (barely) without acquiring those competencies). However there are arguably options available to business / community leaders (though they are not available to democratic governments) to create an environment which would be more supportive of enterprises (to create more job opportunities) and individuals as suggested in The Long Term Impact of the Global Financial Crisis (2009) and Making Australia's Competitiveness Everyone's Business (2013). Likewise there seems to be a need to remedy various social dysfunctions which constrain the ability of many children to get the good education usually required for life success. Options available to non-governmental groups to reduce those dysfunctions need to be highlighted (eg see Gonski Review: An example of the limitations of government initiatives);
• Bikie crime gangs are also largely a product of dysfunctional social environments – and the problem arguably needs to be addressed at that level by the non-governmental groups who should be doing so, rather than being left to governments to try to deal with the consequences of civil society’s failure through ‘law and order’ methods (see Reversing Queensland's Institutional Decay, 2013);
• Various groups suffer disadvantage as a consequence of dysfunctional traditional cultures – and the humanities and social science faculties of Western universities deserve criticism for their post-modern resistance to dealing with such issues (see A Case for Restoring Universities, 2010). For example economic prosperity requires an ability to use information and to change – neither of which is a feature of traditional Aboriginal cultures (see The Challenge of Aboriginal Advancement). Such problems can’t be overcome by political emphasis on the ‘rights’ of such people – but only by enabling them to understand the need for cultural change. Likewise the way in which Islam is enforced (presumably as a consequence of the Arabic tribal context in which Islam emerged) is a critical constraint on the difference / initiative / innovation that social, economic and political progress requires (eg see Saving Muslims from Themselves (2012) and Liberty and Islam in Australia, 2014). Most of the asylum seekers who have approach Australia come from countries which currently suffer unresolved turmoil and violence because of those cultural afflictions (see Boat People Magic) – and they potentially bring the risk of that turmoil and violence with them. Those who should be spreading understanding of the practical consequences of differences in cultural assumptions are more deserving of criticism than those who express views about whether Australia should try to accommodate or exclude such asylum seekers.

While reducing fears about social difference is highly desirable, I submit that criticism should be directed to those elites in Australia’s civil society who are failing to deal with these problems rather than at the ‘ordinary people’ who don’t have the ability to either understand or do anything about these problems.

I would be interested in your response to my speculations.

John Craig