Welfare’s share of total spending has fallen over the past decade and Australians are less welfare-dependent, not more

The release of the Forrest review into Indigenous training and employment contains numerous interesting recommendations to improve Indigenous employment opportunities, but his recommendation for welfare provided through income management for all welfare holders is based on what has become a persistently false view of social security in Australia.

Forrest’s report is certainly very well meant and there is no doubting his desire to see improvements in the lives of Indigenous peoples. The report contains some good suggestions and points of view – especially with regard to training leading to a job, rather than just training for the sake of it.

But the report and statements he has made betray a view of welfare as a negative that needs to be reduced and which holds back rather than helps people. It’s a view based on ignorance rather than facts.

In Saturday’s the Weekend Australian, Forrest wrote an opinion piece explaining his report and approach. The article began by setting out his foundation position on welfare in Australia: “One-third of all government spending is on welfare and welfare-related social security. That’s a massive $131bn last year and growing year by year.”

This figure is often spouted by politicians and commentators as being significant and suggests that welfare spending is out of control. But, as I noted in June, when the same line was put forward by Joe Hockey, it’s rather meaningless.

Yes, $131bn was spent last year on welfare and yes, it will grow. But that’s because both inflation and population growth inherently lead to inevitable ‘year by year’ growth in nominal government expenditure (and also that of private businesses).

But welfare funding as a percentage of government expenditure has actually fallen over the past decade. And the overwhelming reason social security spending is expected to grow at all over the next four years (and beyond) is because of the increase in the age pension. Take those away and social security spending as a proportion of the total government expenditure remains quite flat:

Forrest then followed up his opening sentence with an even more misguided second statement:

“Australia is becoming welfare-dependent and each of us must bear responsibility. Welfare is becoming a destination and a trap for too many of our fellow Australians.”

Now I love impassioned policy advocacy – but not when it is based on such ignorance.

Australians are not becoming welfare dependent.

As I noted in June, the latest Household, Income and Labour Dynamics in Australia (Hilda) survey showed that fewer households and individuals are dependent on welfare now than 10 years ago:

Similarly, as the most recent data from the Department of Social Services shows, the percentage of Australians on any form of welfare has also fallen over the past decade:

And finally, as ANU’s Peter Whiteford has noted, based on the Hilda survey, 65% of all households received some form of welfare between 2001 and 2011, but only 11.4% of households received welfare in each of those years. And a mere 3% of households received over half of their total income during that period from welfare.

In short: Australians are becoming less welfare dependent, and people on welfare do not get trapped. People go on welfare, and then overwhelmingly get off it.

These opening lines reveal Forrest’s philosophical view on welfare, and it flows through into his suggestion that people should have their income managed through use of a “health welfare card”. This card would limit the things on which people could spend their money. But it wouldn’t just limit it to food, rent and utilities. Forrest also recommends the card prevent spending on things like alcohol and gambling and also any “activities discouraged by government” such as “pornography”.

It’s an oddly paternalistic policy to advocate, given Forrest writes in the report how it is “time to end the paternalism”.

But aside from the fact such a policy treats those on welfare as less able than those employed, does income management work?

Luckily for us, the Parliamentary Library last year provided a research note addressing this basic point. It found that there were lots of anecdotes either way, but scant evidence to suggest changes in behaviour. It concluded that there is “little evidence to date that income management is resulting in widespread behaviour change, either with respect to building an ability to effectively manage money or in building ‘socially responsible behaviour’ beyond the direct impact of limiting the amount that can be spent on some items”.

Forrest, however, asserts in his report that income management will save the government money “because individuals will move to employment more quickly as they are able to concentrate on their return to work”.

Just don’t bother looking for any evidence to support this claim.

So it’s not so much about achieving any aim as making sure people on welfare are not seen to waste the money. Unless you’re spending money on things Forrest and the government thinks are worthwhile, you’re not getting, to quote the report, “the full benefit from the welfare provided by government”.

Except, of course, Forrest does not suggest it should apply to all people on welfare: he specifically excludes “aged pensioners and veterans”. I suppose those pensioners across the country sitting in RSLs playing the pokies are just investing wisely for their future.

The view that welfare should only be spent on certain things comes from the belief that welfare is essentially a waste to the economy, and that is it mostly wasted by those who receive it. It is a view much promulgated by some in the US and, sadly, adopted by many in conservative media and politics here. It is the driver behind “work for the dole” schemes, which also have little evidence to support their achieving any of their stated aims.

But even such income management won’t stop criticism of welfare as “a trap” or a waste; it just helps the critics of welfare shrink the welfare pie even more. For example, the US “food stamps” program limits the things that can be bought, but it still attracts the same criticism from the same type of people who think welfare is a blight. Instead of criticising people on welfare for not spending money on food, they just criticise what type of food is bought.

Fox news has recently made great noise complaining that people on food stamps are able to buy seafood or organically grown food. Conservative politicians such as Paul Ryan suggested such programs turned the welfare safety net into “a hammock that lulls able-bodied people to lives of dependency and complacency” or even, a “poverty trap”.

And the Republican party last year voted to cut funding for food stamps by $40bn over the next 10 years.

The critics of welfare will continue to criticise people on welfare and suggest welfare needs to be cut.

Income management may offer help for people who volunteer to go on it, but suggesting that it applies to all conveys the sense that people on welfare are to blame for their position – that they clearly lack the smarts or drive to get a job, even if they are disabled, and should be punished for not getting off welfare quickly enough.

But if we’re going to institute income management, first we should also institute some fact management for commentary about welfare. With luck, it might reduce the number of statements made by able-minded people who have been lulled into dependence on stereotype and fact-free views about welfare in Australia.