Ideas@TheCentre
The self perpetuating welfare state
On Thursday, Australia’s 4.6 million welfare recipients received the second of their twice yearly pay increases.
Normally, such generosity by the government with other people’s money would have had the welfare lobby dancing in the streets.
Instead, they complained that people on other payments, like the Newstart allowance, are ‘falling further and further behind’ other welfare recipients, and called for increasing the base rate of the dole by $50 per week.
Far from Ronald Reagan’s belief that ‘Welfare’s purpose should be to eliminate, as far as possible, the need for its own existence,’ it seems welfare spending is being used to justify ever more welfare spending.
Around 3.5 million single pensioners (age, disability and carer) will now receive up to $772.60 a fortnight; couple pensioners will receive up to $1,164.80 a fortnight – increases of $17.10 and $25.80 per fortnight respectively.
Parenting Payment (Single) recipients will receive an extra $15.20, bringing their payment to $663.70 a fortnight.
In contrast, 1.1 million people on Newstart, Widow, Sickness and Partner (working-age) allowances will only receive an extra $2.90 a fortnight to bring their payment to $492.60. ACOSS likes to call the $140 per week difference between pensions and allowances the ‘poverty gap’.
The difference exists for two reasons. First, working-age payments are indexed to the Consumer Price Index (which grew at only 1.2% for the year to June 2012), while pensions are linked to wage increases (which typically grow at about 4% per annum), and second, in 2009 the government increased the base rate of single pensions by $32.50 per week.
The welfare lobby is claiming that people receiving more money from the government (Newstart recipients) are worse off because other people (pensioners) are receiving even more money from the government – hence the demand for the $50 weekly increase to close this government-created poverty gap.
Although there is some merit in increasing indexation rates for the dole to match those on pensions because their recipients have similar expenses, increased spending on pensioners does not justify increased spending on dole recipients, which is what the welfare lobby wants.
The welfare state drives its own growth. It does not work to eliminate its own existence; rather, the welfare state perpetuates its own existence by growing ever larger and spending increasing amounts of other people’s money.
Andrew Baker is a Policy Analyst at The Centre for Independent Studies.
