Ideology before evidence: How neoliberals have responded to recent Australian welfare reform measures

Over the past three decades, neoliberal ideas in favour of the free market, small government and reduced social expenditure have captured the Australian welfare state policy agenda.

Neoliberal think tanks such as the Institute of Public Affairs and Centre for Independent Studies, and media outlets such as the News Corp media, have proposed radical programs for welfare state retrenchment.

Liberal-National Coalition governments headed by John Howard, Tony Abbott, Malcolm Turnbull and Scott Morrison have attempted to implement sections of those programs, albeit within the limits of what’s considered electorally acceptable.

The Labor Party has sometimes resisted the neoliberal policy agenda at the edges, and at other times actively collaborated.

Only the Greens within the political mainstream have consistently presented an alternative pro-welfare-state discourse and strategy.

Read more: Going Green: The political party setting the agenda in social welfare reform

Neoliberals reject the welfare state on ideological grounds, and adhere to what may be termed the “perversity” thesis.

In their opinion, measures such as social security payments and other welfare state programs that seek to relieve poverty and inequality, and potentially advance the life chances and opportunities of disadvantaged cohorts, in fact, achieve the opposite outcome.

They claim that government interference with the level of income distribution generated by the free market, even if highly unequal – whether via introducing welfare measures or legislating minimum wages or other award requirements – only undermines the inherent self-fixing qualities of that system.

In short, a free market left unfettered by state intervention will ensure the highest level of incomes and wages for all.

Consequently, neoliberals seek to reduce, and ideally eliminate, social rights that exist outside the labour market.

They argue that adequate social security payments give recipients an incentive not to work, that recipients become psychologically dependent on payments in a manner not dissimilar to those addicted to substance use or gambling, and that overt pressure should be placed on recipients to cease their dependence and transition to paid employment.

One particular example of the application of neoliberal ideas in the Australian context has been the introduction of forms of conditional welfare that require participants to conform to behavioural or attitudinal tests to retain eligibility for certain payments.

The best-known examples of welfare compliance include Work for the Dole, Parents Next, and the multiple forms of compulsory income management such as the Basics Card and the Cashless Debit Card.

Yet, these proposals are rarely based on research evidence. It’s hard to think of one Australian neoliberal policy report that has directly engaged with the real-life experiences and voices of low-income Australians that rely on social security payments.

In fact, most of the existing research evidence suggests that the hegemony of neoliberal measures within Australian welfare policy has resulted in higher, not lower, levels of social and economic injustice, and additionally larger economic costs to government due to expanded demand for crisis intervention services such as homelessness programs, mental health treatment, and prisons.

To give one example, neoliberals totally oppose an increase in the rate of the JobSeeker payment for the unemployed on the grounds that it will only encourage recipients to enjoy their allegedly relaxed lifestyle (despite major financial and other barriers to engaging with the mainstream community), and not seek paid work.

Yet, the Australian Council of Social Service (ACOSS) has been arguing for more than two decades for a major increase in the JobSeeker rate, both on the grounds that the low rate reinforces chronic poverty and disadvantage, and also that it excludes the long-term unemployed from opportunities for social and economic participation.

There are currently 820,965 Australians receiving JobSeeker. Of that cohort, more than 565,000 have been in receipt for more than one year, and more than half have been in receipt for more than two years.

For many Australians, the low single fortnightly rate of $693.10 is their principal medium to longer-term source of income.

A recent ACOSS report highlights the adverse impact of the low rate on the wellbeing of recipients. That report, based on a survey of 365 people reliant on JobSeeker and related payments, found evidence of major housing instability, problematic physical and mental health, including in some cases suicidal behaviour associated with poor nutrition, social isolation and limited access to medication and health care, and low capacity to engage in paid work.

A second example of the failure of neoliberal policies is evidenced by the Per Capita think tank’s measure of inequality.

Its study documents a major rise of inequality in Australia from 2010-21, as reflected in a widening gap in the areas of income distribution, wealth ownership, gender, age, disability, race and culture. According to Per Capita, urgent action is required “to close the growing gap between Australia’s haves and have-nots”.

A third example of negative social outcomes is provided by the interim report of the Australian parliamentary inquiry (coordinated by the Senate Community Affairs Legislation Committee) into the extent and nature of poverty in Australia.

That inquiry, which is chaired by Senator Janet Rice from the Greens, has found that more than one in eight Australians, totalling more than three million people, live in poverty.

The report documents the immense social harm caused by entrenched deprivation, and recommends a major increase in social security payments to relieve inequality and disadvantage.

In the recent May 2023 budget, the Australian Labor government displayed some signs of retreating from the previously hegemonic neoliberal agenda.

Informed by Prime Minister Anthony Albanese’s election night promise that no one would be “left behind” by a Labor government, the government increased the Jobseeker rate by $20 per week (commencing September 2023), extended the eligibility period for the Parenting Payment mainly claimed by single mothers from the age of eight to 14 for the youngest child, thus reversing a decision of the earlier Gillard-led Labor government, and announced the abolition of the Parents Next program.

Additionally, the government earlier legislated its electoral promise to abolish the ultra-restrictive Cashless Debit Card.

How have neoliberals responded to these mildly reformist measures?

An examination of six statements from neoliberal sources (four media commentaries and two statements from the Federal Liberal-National Party Coalition) displayed no retreat from the neoliberal policy ideal.

The first statement emanated from Peta Credlin, a former chief of staff to former Coalition prime minister Tony Abbott from 2013-15, who has frequently opined strident attacks on welfare recipients. Writing in the News Corp-owned Herald Sun (14 May), Credlin argued that Labor had delivered “a budget for the bludgers”.

She particularly attacked the small rise in the JobSeeker rate, suggesting it would give recipients a disincentive to attain paid employment.

She also censured Labor for raising the eligibility age for the Parenting Payment, similarly insisting that this measure would discourage single mothers from entering the workforce.

Credlin’s analysis seems to be an exemplar of the neoliberal theory whereby full-time employment at a liveable wage automatically becomes available to anybody who chooses it.

There’s no recognition in her argument that many Australians are reliant on welfare precisely because they’re unable to secure sustainable paid work.

The other three media articles were editorials published in the News Corp-owned Australian newspaper. Writing just before the federal budget, the newspaper (“Budget discipline is the priority”, 20 April) strongly opposed the proposal by the government’s Economic Inclusion Advisory Committee (EIAC) for the JobSeeker rate to be increased by $256 per fortnight.

The editorial ignored the evidence-based reasons advanced by the EIAC in favour of a major increase, including, for example, that many recipients experience enormous financial stress, and struggle to afford core needs such as energy bills and medication.

Instead, the editorial argued that the priority of the government should be to advance “incentives to work”, encourage recipients “to get off welfare’, and promote “self-reliance”. But the editorial provided no evidence-based strategies or proposals detailing how new employment opportunities for Jobseeker recipients might be advanced.

Eligibility age extension slammed

In a further editorial post-budget, the paper slammed the government’s decision to extend the eligibility age for the Parenting Payment.

It argued it was a “bad move economically and in social policy terms”, but didn’t provide any evidence to support either assertion. Rather, it simply restated that the “best form of welfare is a job”, and argued that the policy priority should be to promote “incentives for…hard work”.

Once again, no practical proposals were made for advancing new labour market opportunities for those lacking access to employment.

A further editorial attacked both the parenting payment and JobSeeker rate reforms, arguing that the changes would “entrench dependence on the state and with it, long-term disadvantage”.

Instead, the paper recommended that recipients be given an “incentive” to secure “productive work and independence”. The paper seemed to assume that more punitive and less-compassionate welfare policies would automatically create full employment for all seeking work.

The two statements from the federal Liberal-National Party Coalition reflected a similar reliance on ideological assumptions, rather than evidence.

The additional comments by Coalition Senators to the government-led parliamentary inquiry into the Income Management Reform Bill (that is, the Cashless Debit Card) castigated the Labor government for abolishing what was termed the “successful CDC arrangements” that had allegedly advanced positive outcomes in substance use, gambling, violence and welfare dependency.

This assertion completely ignored the repeated findings of numerous independent and government-commissioned evaluations that the card had not only been ineffective in reducing substance abuse, child abuse and other forms of social harm in targeted communities, but had also caused new forms of harm such as manifestations of shame and stigma in many affected participants and communities.

Yet despite the lack of evidence for positive impact, the Coalition promised to “reinstate the CDC” should it return to government.

Similarly, the Coalition’s additional comments to the Greens-led parliamentary inquiry into the “extent and nature of poverty in Australia” defended the efficacy of the Australian ”social safety net”, despite the overwhelming evidence presented to the inquiry of chronic disadvantage caused by entrenched structural and systemic inequalities.

The Coalition restated its commitment to “creating jobs and getting people back into work because…getting a job is the best way to improve the living standards of individuals and families”, while ignoring the many barriers identified by the inquiry’s interim report to disadvantaged Australians achieving employment at a liveable wage.

In summary, the handful of neoliberal statements canvased above have several things in common. They don’t engage with the real-life experiences and voices of those reliant on social security payments. They either downplay or ignore evidence from research studies on the adverse social impact of conditional welfare and other forms of neoliberal social policy. They display little compassion for vulnerable cohorts who experience disadvantage and direct harm as a result of neoliberal policy agendas. And they don't interrogate the economic, as well as social costs, of punitive policies that contribute to chronic disadvantage and associated increased demand on crisis intervention services.

Rather, they blame the very welfare state measures intended to relieve and reduce systemic and structural inequalities. This can only be termed a magic carpet approach to policy development.