Welfare is state sponsored disadvantage

Everyone who depends on welfare is living in poverty. Poverty isn’t alleviated by giving people money. Poverty is alleviated by people making money; by economic development driven by jobs, education and innovation.

By Nyunggai Warren Mundine AO

Recently I appeared on ABC’s Q&A program discussing disadvantage and inequality. I know about these subjects. I grew up in a poor Aboriginal family with 13-plus people living in a tiny two-bedroom home, sharing a single bed with three brothers. Sometimes the power was cut because the bill wasn’t paid. Sometimes my mother skipped meals because there wasn’t enough food.

The overwhelming sentiment on Q&A was that government spending and increased welfare can reduce inequality and make societies better; and disadvantage can be remedied by taking money from the wealthy and giving it to the poor.

When at one point, when I called a particularly “Robin Hood” suggestion “fantasyland”, fellow Q&A panellist Michael Marmot responded by quoting former World Health Organisation director-general Halfdan Mahler who said, “What sounds idealistic today becomes realistic tomorrow”. Mahler spent his career at the United Nations. I don’t think he ever built a business or created jobs. I prefer this quote from The Economist: “The biggest poverty-reduction measure of all is liberalising markets to let poor people get richer”.

I’ve never seen evidence welfare reduces inequality or government lifts people out of poverty. I have seen taxpayer money wasted on initiatives that achieved nothing. Just consider Indigenous affairs for the past 40 years: billions spent and the gap between Indigenous and non-Indigenous people has barely moved.

Globally, extreme poverty halved between 1990 and 2010; 1 billion people lifted out of extreme poverty over a 20-year period. Two-thirds of this reduction came from economic growth.

Poverty isn’t alleviated by giving people money. Poverty is alleviated by people making money; by economic development driven by jobs, education and innovation. Governments can set conditions for economic development to thrive but jobs and innovation are generated by commerce and private capital, not government.

Another fellow panellist, Cassandra Goldie, was at pains to point out Australia’s welfare system is very targeted; only 5 per cent of the working population have social security as their main source of income, only a small number on it for a lifetime.

Whether 5 per cent or 50 per cent, everyone who depends on welfare day-in-day-out is living in poverty. The level of dependency is relevant if you’re defending the system’s design. It’s not relevant to whether welfare is a good way to live.

According to Department of Social Security demographics there were 768,375 Newstart recipients in March 2016. Seventy-three per cent had been on Newstart for over a year: 41 per cent for 1-5 years; 17 per cent for 5-10 years; 14 per cent for over 10 years. That’s more than 500,000 Australians on unemployment benefits for over a year; 100,000 for over a decade. As a teenager I couldn’t work for a year after a motorbike accident. It nearly destroyed me.

Professor Marmott said research shows European countries with more generous welfare systems have better health and narrower health inequality. I can cite another correlation. Indigenous Australians are disproportionately dependent on welfare and have the worst health metrics in Australia. Also more suicides, abuse, violence and incarceration and worse life expectancy and education. Another panellist, Deborah Cobb-Clarke, noted children in families on welfare for six years or more will be late to school two-and-a-half times more than other children, will miss more school, are less likely to study and to earn a university entrance score and are twice as likely to have a mental health issue.

In the 2013 Griffith Review, former University of Tasmania professor Jonathan West wrote:

“Tasmania ranks at the bottom among Australian states on virtually every dimension of economic, social and cultural performance: highest unemployment, lowest incomes, languishing investment, lowest home prices, least educated, lowest literacy, most chronic disease, poorest longevity, most likely to smoke, greatest obesity, highest petty crime, worst domestic violence. It seems not to matter which measure is chosen, Tasmania will likely finish last. The underlying problem is simple but intractable: Tasmania has developed a way of life, a mode of doing things, a demographic, a culture and associated economy, that reproduces underachievement, generation after generation.”

You could replace “Tasmania” with “Indigenous Australians” and it would be equally apt. Both groups have lower participation in the real economy and disproportionately high dependence on government. These problems don’t stem from ethnicity or geography, but from an absence of self-sufficiency, control of destiny, purpose, aspiration and hope life will get better.

Welfare is state-sponsored disadvantage. My parents didn’t get welfare and didn’t want it. My father judged the measure of a man by whether he was a worker. He did better than his own father and his children did better than him. This aspiration made our experience of poverty different.

Of course we need a welfare system. Of course we must take care of people who can’t take care of themselves. A very small number will never be able to. For everyone else, the best thing about welfare is moving off it.

Nyunggai Warren Mundine AO chairs the Yaabubiin Institute for Disruptive Thinking. This article first appeared in the Australian Financial Review on 5 September 2016.


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  1. I don’t often watch Q&A because it seems deliberately unbalanced as it was the other night. Bareheaded people talking through their hats and trying to stop Warren Mundine from talking sense. 50 or so years ago (the supposed bad old days) most indigenous people had a job, thousands of them were stockmen, and damn good ones too. Their women folk did domestic things and so did most other Australian women. Maybe some of them were hard done by at “the Company Store” but I don’t think any of them or their kids went hungry.
    On my travels North and West I have seen many schools provide a good breakfast for the kids who would otherwise go hungry (no food in the house). Then if they have money, at lunchtime, they make a beeline for the fast food cafe and buy the fattiest chips and the sweetest lollies. And as lunch goes down so does their future health.
    I don’t know the answers but nor does the Government. Warren Mundine and Noel Pearson seem to talk sense but few people are listening.

  2. Good headline – and great solution – we get people off it by providing a better opportunity to make money. But segregation destroys ability for interchange of ideas and collectivism destroys individuality and freedom to innovate. Abolish Communal Land and create freehold. Add Work ethic. Mix well and lower taxes and red-tape.
    ‘Would appreciate actual statistics on welfare and population Facts Trump Feelings – so how about some facts that aren’t FakeNews – does the alleged white hoon racism against aboriginal people occur without cause? I don’t abuse white partying noisy people at 2 am because they keep me awake and my young children do not need to hear their swearing and yelling, I don’t yell “white trash”, I tell them off for being noisy and ask them to please be quiet, or I will call the Police, but do people yell “black trash” at aborigines for doing the same thing? Is there evidence in Police files of constant disturbances of the peace? Is there evidence that it is endemic in indigenous communities? Is there evidence that indigenous people are predisposed to alcohol dependency, or is it simply that hot weather does it?

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