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Wednesday, 14 May 2014

Young people are now on the edge of our reconfigured welfare state

Young people are now on the edge of our reconfigured welfare state

Young people are now on the edge of our reconfigured welfare state

The 2014-15 federal budget continues the deconstruction of
Australia’s post-war welfare state. In fact, the budget takes it a step
further, particularly for the young. People under the age of 30 will

Treasurer Joe Hockey warned Australians that ‘the age of
entitlement is over’ – a promise that certainly came true for young
Australians in the federal budget.
AAP/Lukas Coch

The 2014-15 federal budget continues the deconstruction of Australia’s post-war welfare state.
In fact, the budget takes it a step further, particularly for the
young. People under the age of 30 will now have a quite different
relationship to the social protection system. Essentially, their rights
and entitlements to payments are heavily circumscribed. There are
certainly no “entitlements”, as treasurer Joe Hockey promised.

Young people must now wait until they are 25 before they are eligible for a Newstart unemployment payment, and instead rely on the much lower Youth Allowance if under 25.

For those under the age of 30, there is a waiting period of six months before a claim for any assistance can be made, although some account will be taken of previous workforce experience. In addition, all payments are subject to “earn or learn” requirements.

The fallacies of ‘work for the dole’

In 1987, as a research officer at the Brotherhood of St Laurence, I wrote a policy paper entitled Community Work for Unemployed Young People.
The paper argued against the Hawke government’s controversial proposal
that unemployed young people should “work for the dole”.

The paper took the line that work for the dole was antithetical to
the objectives enshrined in the post-war welfare state in which
unemployment payments were an unconditional compensation for
unemployment and, as such, a right. If you were unemployed you received a
low but adequate payment while you looked for work until you found a
job – no more, no less.

Of course, in the full employment
post-war era, it didn’t take long to find a job. Your unemployment was a
fault of the system in not providing jobs, so your unemployment payment
was an entitlement. This was how welfare systems were constructed
following the Great Depression and World War Two.

Work for the dole largely abandons these principles. It enshrines a
view that unemployment is a matter of individual deficits. In this world
view, there is no “entitlement” to compensation payments – especially
if you are young with no or limited work experience. In fact, you must
“work” for that payment.

Needless to say, my paper had no impact whatsoever and work for the dole
has long been a part of the social welfare settings for unemployed
young people. Perhaps there are some positive aspects to it, although
the evidence for this is not strong.

According to economist Jeff Borland’s research,
the best path out of unemployment for young people consists of jobs
that emanate from economic growth. But high quality, flexible, locally
driven labour market programs can also help.

Damaging the safety net

These new requirements attached to eligibility, as announced in the
budget, profoundly damage the welfare state and certainly erode most of
the original principles enshrined by its architects in the post-war
period. Australian social protection is now seriously compromised.

The waiting period, denying unemployment payments, means that those
waiting have no income. If they have been working in a low-paid and/or
casual job, as many young people do, they will have little or no back-up
savings if they lose a job. If they have emerged unemployed out of
education and training, again they will have no income.

There is, in effect, no social safety net for some of those affect by the budget changes.
AAP/Natalie Boog

Click to enlarge

This is a very troubling dimension of the changes: there is, in
effect, no social safety net. For some, a return to the family home and
parental support may be an option but it won’t be for many. These people
will be penniless and pauperised. It will put them at risk of
homelessness and could also encourage greater participation in black or
grey economies. This is certainly a very regressive element of the

Young people, however, are not the only ones taking a king hit in
this budget. The other group consists of older Australians, who will be
working until they are 70 before qualifying for an age pension. The
policy affects everyone born after 1958 and continues the present
timeframe for increasing the pension eligibility age to 67 by 2024.

Many older people will struggle to maintain workforce participation
until they are 70 and will be forced on to the lower Newstart
unemployment payment if they have insufficient savings. This is most
likely to be those who have worked in lower paid jobs through their
working lives or who have had disrupted careers.

Compromising our future

It is also greatly troubling that policies that once were confined to
the very young – those under the age of 21 – are now applicable to
people up to the age of 30. There might be some justification for
differential treatment for people under the age of 21 on account of
their youth and lack of skills and experience. But there is no
justification for treating people in their 20s up to the age of 30 as
different citizens from older age groups.

People in their 20s are largely independent or wish to be so, are
active social contributors, and many have their own families. They are
on the path to becoming the leaders and key social actors of the future.

However, the policies instituted in Tuesday’s budget serve to
infantilise, disempower and disenfranchise this group. The impact will
consist of lower levels of social protection at key junctures during
Australians' lives, particularly at early and later stages – when such
protection is most needed.

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