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Punitive approach to restraining welfare costs lazy and short-sighted
The discussion being driven by the Turnbull government that there are ‘too many people on welfare’ has as its driver a framework to make it harder for people to get such payments. It is about eligibility for the payments that is dominating the government’s plans for who will be on welfare in the years ahead.
According to Christian Porter, social services minister, annual government expenditure on welfare is estimated to rise from $157bn to $277bn in a decade. The vast bulk of these payments will go to aged pensioners, the unemployed and the disabled. When looking at this increase, Porter says there is a serious issue of how we pay for it and how we make the welfare system sustainable.
Porter’s approach is squarely on making it harder for people to get “generous” welfare payments. In his sights is a tightening of the tests for the unemployed to receive the Newstart allowance and for those unable to work to receive the disability support pension.
Let’s be honest here. This is lazy policy and looks at using punitive measures rather than limiting the supply of people who will need welfare support in the years ahead. Rather than tackling the welfare “time bomb” this way, it is possible to lower spending on welfare by encouraging economic growth, productivity and decency. What about reducing unemployment, encouraging more self-funded retirement and helping those with a disability through a mix of employment opportunities and preventative health care?
If you listen too much to the financial news at the moment you would be very worried about Australia’s economic future. This is because so much of the focus is on the collapse in commodity prices.
The price of iron ore, coal, copper, gold and most other commodities are at or near six, seven or eight year lows. What is missing in much of the commentary on the economy, and something that is almost always overlooked, is the simple fact that commodity prices are still well above the levels prevailing from 1992 to 2004, a time of strong economic expansion.
In many cases, today’s low commodity prices are still double, triple or even quadruple late 1990s levels. The 12 year stretch of a strong economic growth up to 2004 was clearly supported by factors other than stratospheric commodity prices and a mining investment frenzy.
Looking back at that period of economic history saw consumer spending, generally buoyant construction activity and the early stages of a surge in services – finance, education, health and tourism – support the economy. Fast forward to today and despite lower commodity prices, it is clear that the economy is still growing, a reasonable amount of jobs are being created and those factors are occurring with low inflation and very low interest rates.