Despite the ministry reshuffle, the Government looks set to charge ahead with its paternalistic income management scheme for welfare recipients. This is not a good thing, writes Chris Berg.

Last Thursday Kevin Andrews, then minister for Social Services, wrote in The Australian that income management - the practice of "quarantining" a portion of social security payments for approved purchases like food and accommodation - is central to the Abbott Government's welfare reforms.

Four days later he was replaced in the social services ministry by Scott Morrison. This has been seen as somewhat a demotion for Andrews, who now takes Defence.

But it is in no way a repudiation of Andrews' plans. Far from it. Morrison was lauded at the reshuffle press conference as a minister who gets things done. One of the things to be done, no doubt, is the expansion of income management.

This is not a good thing. Income management is paternalistic and illiberal. It's counter-productive, too: far from discouraging welfare dependency, it encourages that dependency.

Yet income management has bipartisan support.

Income management was first introduced as part of the Northern Territory intervention in 2007. The idea was to prevent the sort of child abuse and neglect that had been described in the Little Children Are Sacred report. The policy was originally imposed on a few dozen specifically nominated vulnerable communities.

The original idea was to use income management as an emergency measure in a moment of deep social crisis. But policies that are introduced in a crisis tend to stick around. They entrench themselves in the policy landscape as bureaucrats build reputations on their success - and try to hide their failure.

So the Rudd and Gillard government decided income management ought to be rolled out to at-risk populations across the country. Income management is now being tested in areas like Bankstown in New South Wales, Shepparton in Victoria, and Logan in Queensland.

Last week the Government released a commissioned report that found that income management had not substantially changed what welfare recipients buy. Nor had income management reduced alcohol purchases or problems like running out of food. (You can read the report here.)

It's absurd that governments say they want to reduce welfare "dependency", yet at the same time actively encourage such dependency by taking freedom of choice away from welfare recipients.

And instead of encouraging "financial literacy", income management appears to reduce it - by treating welfare recipients as incapable and incompetent.

Right now income management affects very few people. Most Australians might not even be aware the system exists.

But it is peculiarly central to the debate about the proper size and shape of the welfare state.

One of the great philosophical arguments concerns how we understand the concept of "freedom". In the classical liberal story, people are free when they are not being coerced by external forces like governments or other people. This is a negative conception of freedom. It's all about the absence of constraints.

Social democrats have long criticised this idea of freedom by saying that it takes more to be truly free than just no constraints. A free person is someone who has the capacity - the resources - to pursue their own goals.

Thus, the goal of the welfare state is to enhance a positive conception of freedom, by giving all members of society not only the right to live lives of their choosing, but the ability to do so.

But those welfare recipients who now have their purchases micromanaged by Centrelink are unlikely to feel very liberated.

As this paper from 2013 points out, income management allows government to monitor shopping habits with attendant costs to privacy and feelings of autonomy.

Indeed, decades of paternalism applied to welfare recipients has undermined the idea that government-provided social security is in any way "liberating".

Those placed on work for the dole schemes obviously do not feel more free for being conscripted to do menial tasks below minimum wage for non-profits.

And would those who would have been subject to the punishing high numbers of job applications proposed in the May budget - 40 applications per month - have felt that they were enjoying any sort of positive liberty? Of course not.

It is certainly possible to imagine a welfare state not built around paternalistic mutual obligation requirements. But, in Australia at least, it seems that every political incentive is driving our real-world welfare state towards them.

A person must not lose their rights the moment they receive government assistance. It would be incredibly dangerous to think otherwise. Governments have involved themselves in so many facets of our lives that there are few people who do not receive some form of assistance.

In 1944 the economist Friedrich Hayek wrote his bestselling book the Road to Serfdom, where he suggested that social democracy's expansion of government control would undermine civil liberties.

Hayek has been ridiculed for that argument ever since - post-war Britain did not turn into a totalitarian dictatorship.

But 70 years after Hayek published his book, welfare paternalism is demonstrating that when government is involved, coercion almost always follows.

Chris Berg is a Senior Fellow with the Institute of Public Affairs. His most recent book is In Defence of Freedom of Speech: from Ancient Greece to Andrew Bolt. Follow him at twitter.com/chrisberg. View his full profile here.