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The wrongs of an inequitable budget

By Tristan Ewins - posted Monday, 16 June 2014

Australian Treasurer Joe Hockey has been "on the attack" recently; targeting Australians who for whatever reason have been welfare-dependent, or have benefited from welfare during their lives. Specifically, Hockey asserted that one in ten Australians were welfare-dependent in some way, with a total welfare bill of $146 billion a year in a $1.6 Trillion economy.

Apparently, this is meant to produce a 'shock and horror' effect amongst an electorate which is considered to be 'narrowly self-interested', without any sense of social solidarity, or of the gains to be had through such reciprocal solidarity.

Interestingly, though, Minister for Social Services, Kevin Andrews himself has observed that cash payments in Australia comprise around 7 per cent of GDP, compared with approximately 19 per cent in France; and approximately 14 per cent in Sweden! Though in Denmark, for instance, there is a much more substantial social wage, with social expenditure at approximately 31 per cent of GDP compared with only 19 per cent Australia. (also approximately 33 per cent in France, and approximately 29 per cent in Sweden)


More particularly Hockey has alluded to those dependent of Youth Allowance, Newstart, the Aged or (military) Service Pension, and the Disability Support Pension. Apparently in an attempt to stir up division and resentment, Hockey argued that "the average Australian", whether "a cleaner, a plumber or a teacher" works over a month every year to provide for the nation's welfare bill. (Herald-Sun, June 12th, 2014, p3) This 'political play' to narrow financial self-interest ignores the benefits of reciprocal social solidarity via welfare.

Meanwhile in a speech to the right-wing Sydney Institute Hockey launched into a tirade against those he describes as "leaners" as opposed to "lifters". For Hockey it is claims that the wealthy must 'pay their fair share' that comprise 'class warfare'; and not the Federal Government's attacks on welfare, as well as their assaults on Medicare and rights and conditions for labour. Rather than 'social solidarity' Hockey proclaims 'individual responsibility'. (ie: 'sink or swim')

In an infuriating furphy, Hockey promoted his personal interpretation of "equal opportunity" as opposed to the 'straw-man' of "equality of outcomes". On this basis he also attempted to defend the Federal Government's Higher Education 'reforms' – which will see some fees reach well over $100,000; as well as a reduction in the repayment threshold for student loans, and also an increase in the rate of interest paid on those outstanding loans. ('The Age', June 13th, 2014, p 8) This will affect women especially (whose working lives are often interrupted).

In the same vein, there will be those with significant university debts who for various reasons (eg: disability) may not be able to continue their pursuit of a career – most notably in law, medicine etc where 'a high level of financial gain' is assumed. These kind of people will see their debts spiral out of control.

The element of 'risk' here means that many young students from disadvantaged backgrounds will not dare to take on a university debt. Those that do also may be distracted from gaining their most from study because of the necessity for part-time work. And 'equality of opportunity' in this context is a lie: because disadvantaged students tend to be concentrated in lower socio-economic zones, with relatively under-resourced schools. (they may also lack the support of parents who have enjoyed a tertiary education)

In response to Hockey one of the most important of his assertions to deal with is that 'straw-man' argument of 'Equality of Outcome OR Equality of Opportunity'. Instead of this false dichotomy it is much better to frame the issue as a matter of fairness. Pretty much no-one – even on the far Left – want full  'equality of outcomes'. Rather there is support for redistribution via the social wage, welfare state, social wage, and forms of social insurance for the sake of distributive justice (as opposed to full equality). 'Equality of opportunity' is part of the picture; but so too are 'fair outcomes'.


Here, 'distributive justice' assumes that the outcomes gained in the labour market through 'supply and demand' of skills – and/or based on 'consumers' capacity to pay' are not necessarily just. For cleaners, as well as hospitality, child care, and aged care workers – people whose work deserves respect – there is an argument for intervention and redistribution as the means of achieving fairness (not absolute equality). Those measures of redistribution – through the social wage, tax-transfer system, welfare state, labour market regulation - do not have to put the remuneration of a cleaner 'on par' with a surgeon, for instance. But all workers who face disadvantage and injustice in the labour market deserve fair outcomes; and those means of intervention are effective ways of providing those fairer outcomes.

Arguably Joe Hockey is attempting to 'divide and rule' the nation. An element of division is inevitable – perhaps even desirable – in a democracy. The point of democracy after all is 'to set oppositions free' and resolve them through democratic processes. But Hockey is inciting resentment against the vulnerable – no matter what he has said to the contrary. This is qualitatively different than attempts to tax the wealthy – which Australia's Conservatives try and dismiss with hypocritical howls of 'class warfare'.

More specifically, Hockey's approach comprises a 'bold gambit'. Low-income workers themselves are to be 'played off against' the welfare dependent. Rather than raising minimum wages and conditions, or improving the social wage – they are urged to express resentment against the vulnerable. The 'endgame' is a US-style class system. The very wealthy are to be 'untouchable' and largely untaxed lest we be bombarded with cries of 'class warfare'. Taxes are to be 'simpler' and 'flatter' – that is, more unfair. The middle class are to provide 'the base of stability' for Conservative political forces: their lifestyles supported by the exploitation of the working poor. And the working poor – indeed, the 'underclass' - are to be 'disciplined' by fear of homelessness and destitution – with the erosion of the 'social safety net'.

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About the Author

Tristan Ewins has a PhD and is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP). He blogs at Left Focus, ALP Socialist Left Forum and the Movement for a Democratic Mixed Economy.

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