Sense of obligation a route out of handout hell

Opinion Article

2007 December, 22

Take two $20 notes. In nominal value and representation, such two notes are indistinguishable from each other.

And yet in meaning they can be profoundly different. Handout money can buy as many clothes or as much drugs as earned money. But $20 earned by a young man in the Work Placement Scheme (a scheme that supports young indigenous people who have never had a job to take up entry-level work) for filling a large plastic bin with oranges is different to the $20 he received on welfare back home.

Hunter-gatherers understand the deal with nature as the provider of livelihood: one must work hard to harvest one’s livelihood from nature. Workers involved in the modern economy understand the deal with their employers: you work and you get paid. Buyers of goods and services in the marketplace also understand the deal: you get something in return for something.

When it comes to welfare, there is no deal between the provider and the recipient. There is no principled transaction.

The $64 million question facing those who are challenged by the problems created by passive welfare dependency is: how do you insert a productive rationale into government-provided welfare?

Passive welfare is an artificial creation of the welfare state. Its reform is therefore necessarily going to involve an artificial attempt to insert a logic where there is no natural logic.

Our reform plan in indigenous Cape York Peninsula is therefore to make welfare payments conditional on four basic expectations: ensure your children attend school; fulfil your responsibilities to keep your children free from abuse and neglect; abide by the laws concerning violence, alcohol and drugs; abide by your public housing tenancy conditions.

In June, we suggested that a family responsibilities commission comprising a magistrate and eminent representatives of the community be created to mandate these obligations.

At this week’s Council of Australian Governments summit, Prime Minister Kevin Rudd and Indigenous Affairs Minister Jenny Macklin secured agreement with Queensland Premier Anna Bligh to pilot the commission in Cape York Peninsula. The Queensland and federal governments are now fully behind our reform plans. Bligh has pledged legislation will be introduced into parliament in February.

Behavioural obligations attaching to income support are an important part of our agenda. However, we are conscious that the measures we propose will give rise to reasonable doubts about whether we are engaging in social engineering that will never work.

We are unconcerned by leftist criticism that our policies are punitive and blame the victim. However, we are very mindful of those who harbour policy doubts about the dangers of statist and communitarian approaches.

While acknowledging that we are entering uncharted waters with these reforms, it is plain to us that sticking with the existing artificial economy of unconditional welfare is no solution: it is a proven disaster. At present, unconditional welfare is paying for abusive lifestyles that compromise the protection of indigenous children and families.

Policies that have a conservative flavour - rebuilding of social norms - are one element of our reform agenda. But I want to dispel the notion that conservative policies are the essence of the agenda. The other two building blocks of our agenda have distinctly liberal and social-democratic flavours: realignment of incentives and increased government investment in capability development (that is in developing the capabilities of individuals).

Following Nobel Prize-winning economist Amartya Sen, we believe that poverty and disadvantage are to a large extent capability deprivation. Indigenous capability development was the topic of a seminal speech by Treasury secretary Ken Henry to the Australian Institute of Health and Welfare Conference on December 6.

Henry identified three key interdependent foundations to indigenous disadvantage: perverse economic and social incentives (specifically passive welfare); underdevelopment of human capital and of capability; and absence of indigenous engagement in policy development.

Henry specifically addressed the second issue, capability deprivation and the key role of education in human capital development.

Henry and his colleagues in the Secretaries Group on Indigenous Affairs have identified seven platforms that need to be prioritised within a framework for indigenous capability development: Basic protective security from violence for parents and children. Early childhood development interventions provide a critical foundational base for young children from pre-birth to school. The home environment needs to be conducive to regular patterns of sleep and study, free from overcrowding and distraction. There needs to be ready access to a suitable primary health service infrastructure. In an environment where real jobs are not the norm, incentives in the welfare system cannot be allowed to work against the promotion of investment in human capital. There must be a realistic prospect of an educated indigenous person securing a real job. In some places it is difficult to avoid confronting the need for mobility. Governance systems have to support the political freedom and social opportunities of local indigenous people to be engaged in policy development.

This plan focuses on education but, as Henry pointed out, these issues are interdependent; any comprehensive and competent analysis of indigenous disadvantage quickly gets us into considerations affecting incentives and indigenous involvement in policy development and implementation.

Targeting educational outcomes means embracing a holistic indigenous development strategy.

For example, housing problems need to be solved in order for home environments to be conducive to study.

Henry has articulated a policy framework that should be endorsed and adopted by the state and federal governments.

Sense of obligation a route out of handout hell