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Whole Work
Title :
1975 Seminar on Guaranteed Minimum Income
Author :
ACOSS
Edition :
1975
Publisher :
ACOSS
Place Of Publication :
Sydney
Year :
1975
Additional Information : Entire conference
This article was originally digitised for the following unit. Articles may be reused in future
semesters in other units by different lecturers.
Unit code :
HHB212
Unit title :
COMMUNITY WORK
Lecturer's Name : Tomlinson, John
Faculty/School : School of Humanities and Human Services
Request ID :
45949
DIGITAL COPY MADE FOR QUEENSLAND UNIVERSITY OF TECHNOLOGY
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S.135ZMB (insubstantial portions of a work), OR
S.135ZMC (article contained in a periodical), OR
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S.135ZME (certain illustrations in electronic form)
on 13-JUL-04
SEMINAR
ON
MINIMUM
GUARANTEED
INCOME
Proceedings of a Seminar h e l d b y t h e
Australian Council o f S o c i a l Service, May 1975.
4
INTRODUCTION
The main p u r p o s e o f t h i s s e m i n a r o r g a n i s e d b y ACOSS was t o
f a m i l i a r i s e a b r o a d e r group o f p e o p l e w i t h t h e concept of
g u a r a n t e e d m i n i m u m income, a n d t o p r o v i d e an o p p o r t u n i t y t o
u n d e r s t a n d some o f t h e d i f f e r e n t methods o f i m p l e m e n t a t i o n ,
t h e c o m p l e x i t i e s , and t h e econbmic, s o c i a l and p o l i t i c a l
i m p l i c a t i o n s o f g u a r a n t e e d m i n i m u m income schemes.
The seminar w a s a f a i r l y u n i q u e ex-porience because it b r o u g h t
t o g e t h e r many o f t h e consumer g r o u p s d i r e c t l y a f f e c t e d o r
i n t e r e s t e d i n t h e t o p i c , and t h e l q p o l i c y makers" ( f r o m government, committees o f i n q u i r y and u n i v e r s i t i e s ) r e p r e s e n t i n g many
d i f f e r e n t s p e c i a l i s a t i o n s and professions.
This d i v e r s i t y was
n o t without i t s d i f f i c u l t i e s o f communication. However it was
c o n s i d e r e d t o b e e s s e n t i a l t h a t d i a l o g u e s h o u l d be e s t a b l i s h e d
between t h o s e p e o p l e who r e a l l y u n d e r s t a n d t h e problems o f
p o v e r t y -- who a r e d e a l i n g w i t h i t o r h a v e a c t u a l l y e x p e r i e n c e d
i t -- and t h o s e p e o p l e whose t a s k i t i s t o develop t h e p o l i c i e s
which deal. with it. The problem f i r t h e r r e q u i r e s p e o p l e with
d i f f e r e n t t y p e s o f s p e c i a l i s a t i o n a n d d i f f e r e n t t y p e s o f emphasis.
It i s hoped t h a t t h i s s e m i n a r may have f a c i l i t a t e d p a r t o f t h i s
p r o cess,
The seminar was h e l d p r i o r t o t h e r e l e a s e o f t h e P o v e r t y
Commission's findings. This w a s u n f o r t u n a t e s i n c e one o f t h e
t h i n g s t h a t b e d e v i l a n y d i s c u s s i o n a b o u t g e t t i n g r i d of p o v e r t y
i s t h e l a c k o f i n f o r m a t i o n a b o u t who a r e t h e p o o r , It i s hoped
however t h a t t h i s d i s c u s s i o n p r i o r t o t h e r e l e a s e o f t h e r e p o r t
will h e l p i n t h e p r o m o t i o n o f i n f o r m e d d i s c u s s i o n . It i s h i g h l y
d e s i r a b l e that p u b l i c d e b a t e should c o n t i n u e about income
s e c u r i t y and t h e p o s s i b l e o p t i o n s a v a i l a b l e s i n c e t h e p u b l i c
w i l l i n g n e s s t o a c c e p t a n y new programs w i l l o n l y come a f t e r a
l o n g p e r i o d of d i s c u s s i o n and d e b a t e . P e o p l e must b e convinced
t h a t t h e r e i s a problem; and t h a t s e c o n d l y t h e r e i s a s o l u t i o n .
T h i s i n d i c a t e s t h e n e b e s s i t y f o r a g r e a t many g a t h e r i n g s of
t h i s kind.
Today's s e m i n a r may b e t h e f i r s t s t e p o n some k i n d
of long march,
5
P a p e r p r e p a r s d . by Mr.B i l l Hayden,
M i n i s t e r f o r S o c i a l S e c u r i t y ; and I
p r e s e n t e d b y Mr.John C o a t e s , M.P,
I
for D e n i s t o n e , and S e c r e t a r y t o
t h e Caucus W e l f a r e C o m d t t e e .
I
TCHE SOCIAL OBJECTIVES
AND PRINCIPLES OF
A GUARANTEED MINIMUM
INCONIE SCHElvIE
-
INTRODUCTION
One o f t h e most p e r s o n a l l y r e w a r d i n g a s p e c t s o f my t i m e i n
Far1iamen.t has b e e n that I h a v e l e a r n t things, A t l e a s t , 1 hope
I have l e a r n t things.
During t h m e a r s I h a v e b e e n i n
P a r l i a m e n t , and e s p e c i a l l y s i n c e becoming a M i n i s t e r , many of my
e a r l i e r views o n s o c i e t y a n d s o c i a l r e f o r m have changed.
Today I w a n t t o t a l k t o you about s e v e r a l i m p o r t a n t l e s s o n s t h a t
I b e l i e v e I h a v e l e a r n t , I do t h i s b e c a u s e 1 think i t might be
u s e f u l t o you i n your i m p o r t a n t q u e s t t o r e f o r m Australia's
s o c i a l w e l f a r e system.
P e r h a p s t h e m o s t s i g n i f i c a n t thing t h a t 3: h a v e l e a r n t as a
P a r l i a m e n t a r i a n i s t h a t s o c i e t y i s h a r d e r t o r e f o r m than I used
It has n o t b e e n an e a s y l e s s o n for m e t o a c c e p t ,
t o t h i n k it w a s .
but t h e r e a r e u s u a l l y advantages a t t a c h e d t o being r e a l i s t i c
a b o u t t h i n g s and I t h i n k i t i s e s p e c i a l l y i m p o r t a n t t h a t s o c i a l
r e f o r m e r s l i k e yo-it and me t r y t o b e r e a l i s t i c .
We s h o u l d n e v e r g o r g e t that t h e o v e r r i d i n g g o a l o f a l l our w e l f a r e
programs i s t o s u c c e s s f u l l y t a c k l e t h e problem o f p o v e r t y . T h i s
i s n o t t h e o n l y g o a l , but it i s i n my v i e w t h e paramount o n e ,
It i s always u s e f u l t o a s k o f our w e l f a r e p r o g r a m s Ifdoes t h i s
program, o r d o e s i t n o t , c o n t r i b u t e t o w a r d s t h e e l i m i n a t i o n o f
poverty?"
It i s w i t h i n t h i s b r o a d o b j e c t i v e t h a t t h e d i s c u s s i o n o n g u a r a n t e k d
minimun, income schemes f i t s . B u t one c a n s t i l l ask why i t i s
n e c e s s a r y t o c o n s i d e r g u a r a n t e e d m i n i m u m income schemes i f a l l e v i a t i o n of p o v e r t y i s t h e main g o a l . One r e a s o n i s t h a t p r i m a r y
p o v e r t y a r i s e s when a p e r s o n P S , o r a f a m i l y v s income i s t o o l o w .
Too l o w , that i s when compared w i t h some minimum s t a n d a r d o f
l i v i n g r e c o g n i s e d b y t h e comnunity.
6
In A u s t r a l i a we h a v e v a r i o u s c a t e g o r i e s o f g u a r a n t e e d income
b a s e d o n m e a n s t e s t s , namel.y, age and i n v a % i d p e n s i o n s , widows
pensions, s u p p o r t i n g niothers b e n e f i t s , s p e c i a l b e n e f i t s ,
unemployment and s i c k n e s s b e n e f i t s and s o on. These a r e
" c a t e g o r i s e d " b e n e f i t s , some b e i n g s u b j e c t t o s t r i c t e r means t e s t s
than o t h e r s . The v e r y n a t u r e o f % h i s system o f c a t e g o r i s a t i o n ,
a n d o f t h e method. of e s t a b l i s h i n g e l i g i b i l i t y f o r a b e n e f i t under
t h e various c a t e g o r i e s , leads t o n o t a l i t t l e confusion.
A n o t h e r a.dvantage o f a g u a r a n t e e d m i n i m u m income scheme, i t i s
b e l i e v e d , i s t h a t i t w o u l d s i m p l i f y and: s t a n d a r d i s e our p r e s e n t l y c o n f u s e d s y s t e m o f w e l f a r e b e n e f i t s . We a l l know t h e problems
t h a t a r i s e from t h e c o m p l e x i t y of the v a r i o u s w e l f a r e b e n e f i t
schemes t h a t e x i s t at p r e s e n t , It i s f r e q u e n t l y d i f f i c u l t f o r a
p e r s o n t o f i n d o u t e x a c t l y what b e n e f i t s he o r s h e i s e n t i t l e d t o ,
I n d e e d b e c a u s e o f t h e r i g i d i t y t h a t i n e v i t a b l y r e s u l t s from caref u l l y drawn up g u i d e l i n e s , i t c a n happen t h a t a p e r s o n i n genuine
n e e d i s n o t e n t i - t ; l e d t o m y Government-specified b e n e f i t s at all.
Sometimes -- p e r h a p s , l d n f o r t u n a t e l y , even u s u a l l y -- t h e r e i s a
c e r t a i n amount o f embarrassment i n v o l v e d f o r t h e p e r s o n a p p l y i n g
for b e n e f i t s , And i t can h a p p e n t h a t an i n c r e a s e i n one b e n e f i t ,
say t h e age p e n s i o n , c a n l e a d t o a sudden withdrawal o f ot'her
b e n e f i t s , s u c h as l o w 'bus f a r e s , i f t h e i n c r e a s e i n t h e age
p e n s i o n happens t o t a k e t h e p e n s i o n e r p a s t some a r b i t r a r i l y def i n e d u p p e r income l i m i t f o r low b u s f a r e s . It c o u l d happen t h a t
t h e v a l u e o f t h e b e n e f i t s l o s t i s g r e a t e r than t h e v a l u e o f t h e
b e n e f i t s g a i n e d s o t h a t t h e p e n s i o n e r i s on t h e whole worse o f f
a f t e r t h e change than b e f o r e ,
-
Another problem t h a t n o t i n f r e q u e n t l y a r i s e s u n d e r t h e p r e s e n t
s y s t e m o f w e l f a r e i n Australia i s t h a t anomalies, which a p p e a r
o n t h e s u r f a c e t o b e u n f a i r , 0ccu.r between d i f f e r . e n t w e l f a r e
It can o c c u r t h a t one c l a s s o f r e c i p i e n t s , s a y
recipients.
p e o p l e o n i n v a l i d p e n s i o n s , r e c e i v e c e r t a i n e n t i t l e m e n t s while
a n o t h e r group o f r e c i p i e n t s , s a y unemployed p e r s o n s , do n o t
r e c e i v e similar b e n e f i . t s . O f t e n t h e r e a r e g o o d r e a s o n s f o r t h e s e
d i f f e r e n c e s , but t h e p o i n t u n f o r t u n a t e l y remains t h a t t o t h e welf a r e r e c e i p i e n t s t h e system a p p e a r s b u r e a u c r a t i c , a r b i t r a r y and
unfair,
It i s b e c a u s e o f a1.1 t h e s e d i f f i c u l t i e s t h a t t h e i d e a o f a guara n t e e d m i n i m u n l income has b e e n p r o p o s e d . The hope o f t h e
s u p p o r t e r s o f such a p r o p o s a l i s t h a t one s i m p l e scheme w i l l b e
f o u n d t h a t w i l l . b o t h cut; t h r o u g h most o f t h e a d m i n i s t r a t i v e
t a n g l e s of t h e p r e s e n t programs and p r o v i d e a b a s i c g u a r a n t e e d
minimum level. o f income for a l l p e o p l e in. Australia.
7
Main P r o p o s a l s
Having now o u t l i n e d t h e raison d P e t r e o f g u a r a n t e e d m i n i m u m income
p r o p o s a l s , I want t o t u r n t o l o o k at t h e main s u g g e s t i o n s t h a t
h a v e b e e n p u t f o r w a r d i n more d e t a i l . There i s much l i t e r a t u r e
a v a i l a b l e o n g u a r a n t e e d m i n i m u m income schemes, b u t f o r a quick
stm-rilary o f t h e i s s u e s I can recomniend t w o books: a p u b l i c a t i o n
by t h e O r-g a n i s a t i o n f o r European C o - o p e r a t i o n and Development
c a l l e d N e g a t i v e Income Tax (you s h o u l d be a b l e t o g e t t h i s book
from BCN Agencies h e r e i n M e l b o u r n e ) , and a -p a m-p h l e t c a l l e d
N e g a t i v e Igcome Tax and Tax C r e d i t Systems.
There i s one p o i n t t h a t should be made c l e a r a t t h i s s t a g e : t h e
t e r m " g u a r a n t e e d minimum income scheme" does n o t d e f i n e one
p a r t i c u l a r program. R a t h e r , i t r e f e r s t o many d i f f e r e n t p r o p o s a l s
t h a t have b e e n put f o r w a r d . Such a scheme may b e u n i v e r s a l , i n
t h e s e n s e t h a t i t c o v e r s e v e r y o n e i n Australia whose income i s
below some p r e- d e t e r m i n e d l e v e l .
It may thus t a k e t h e p l a c e o f
a l l e x i s t i n g s o c i a l s e c u r i t y schemes. On t h e o t h e r hand, it may
be designed t o cover a s p e c i f i c group, o r groups, o f people such
as t h e aged, t h e i n v a l i d , t h e unemployed, t h e low-wage income
earner, etc.
A f ' u r t h e r p o i n t w o r t h noting i s t h a t t h e r e i s an i n c r e a s i n g
appreciatiion o f supporters of s o c i a l welfare reform o f the interc o n n e c t i o n o f w e l f a r e programs and t h e t a x a t i o n s y s t e m .
I n one
s e n s e , w e l f a r e programs and t a x e s a r e o p p o s i t e s i d e s o f t h e same
c o i n . One system p r o v i d e s r e s o u r c e s and money t o t h e p o p u l a t i o n ,
w h i l e t h e o t h e r system t a k e s away.
I t w i l l be c o n v e n i e n t f o r us t o c o n s i d e r g u a r a n h e e d income
schemes u n d e r f o u r h e a d i n g s :
N e g a t i v e Income Tax
.
.
.
Tax C r e d i t s
Demogrants
Family Income S u p p l e m e n t s
F i r s t , t h e i d e a o f a n e g a t i v e income t a x .
In i t s p u r e s t s e n s e ,
a n e g a t i v e income scheme i s a t e r m u s e d t o d e n o t e an income
s u p p o r t p r o g r a m which p r o v i d e s w e l f a r e b e n e f i t s through, o r at
l e a s t i n c o n j u n c t i o n with, t h e s y s t e m o f p e r s o n a l income t a x .
I t s o b j e c t i v e -- a n d i t s o b j e c t i v e s a r e u s u a l l y t h o s e o f o t h e r
g u a r a n t e e d m i n i m u m income schemes -- have b e e n s t a t e d b r o a d l y
as b e i n g :
8
.
.
t o a i m p l i f y t k e sociall. w e l f a r e s y s t e m ;
t o e n s u r e t h a t t h o s e who g e t h e l p a r e
t h o s e who n e e d h e l p , and
t o avoid sharp jumps i n t h e s o - c a l l e d
" e f f e e t i v e " t a x rat e t h a t we1 f a r e
r e c i p i e n t s sometimes p a y ,
(These jwnps i n t h e " e f f e c t i v e " t a x r a t e can sometimes be q u i t e
d r a m a t i c , I m e n t i o n e d e a r l i e r t h a t 1%can happen that an
i n c r e a s e i n , say, t h e age pensi"on, l e a d s t o t h e w i t h d r a w a l o f
o t h e r b e n e f i t s . F o r example, i f a $5 p e r week r i s e i n t h e age
p e n s i o n l e a d s t o a $1 p e r week loss i n o t h e r b e n e f i t s , i n
e f f e c t t h e r e i s a t a x on t h e $5 p e r week p e n s i o n r i s e of 20%.
In an extreme c a s e , i f a $5 p e n s i o n r i s e l e a d s t o t h e p e n s i o n e r
l o s i n g , say, $5 worth o f o t h e r b e n e f i t s , t h e e f f e c t i v e t a x o n
t h e p e n s i o n r i s e i s 100%. It i s n o t unknown f o r t h e t a x r a t e
t o r i s e t o o v e r loo$, which i s just a n o t h e r way o f s a y i n g that
t h e p e n s i o n E T o s e s more than h e o r she gains. The q u e s t i o n
here a r i s e s on why a p e n s i o n e r s h o u l d be a s k e d t o pay a t a x
r a t e that i s , i n e f f e c t , much h i g h e r than any t a x r a t e shown
i n t h e o f f i c i a l t a x s c h e d u l e s i n Australia),
Negative income t a x e s have t h r e e main e l e m e n t s : a g u a r a n t e e d
m i n i m u m income; a n e g a t i v e income t a x r a t e ; and a b r e a k e v e n
l e v e l o f income,
The g d a r a n t e e d income i s t h e m i n i m u m l e v e l o f income that t h e
Government g u a r a n t e e s t o p e r s o n s who are c o v e r e d by t h e scheme
and have no o t h e r income.
This m i n i m u m income would v a r y
a c c o r d i n g t o f a m i l y s i z e but may o r may not c o n f o m t o %he inc m e l e v e l o f t h e accepted poverty l i n e ,
The n e g a t i v e t a x r a t e i s t h e r a t e at which t h e g u a r a n t e e d income
d e c r e a s e s as other income i n c r e a s e s . Viewed a n o t h e r way, i t i s
t h e r a t e a t which a p e r s o n g s n e g a t i v e t a x b e n e f i t i n c r e a s e s as
h i s income d e c l i n e s below t h e p o i n t where p o s i t i i v e t a x b e g i n s
t o appl-yo
7
The "bye& even" l e v e l o f income i s t h e p o i n t a t which t h e
n e g a t i v e t a x b e n e f i t s s h a d e o u t a l t o g e t h e r and p o s i t i v e t a x
commences,
A p r a c t i c a l example w i l l make t h i s clear. C o n s i d e r t h e c a s e of
a g u a r a n t e e d income s e t at $2,000 p e r annum, and a n e g a t i v e incame t a x r a t e a f 50%. F o r e a c h $2 t h e w e l f a r e r e c i p i e n t e a r n s ,
h e w i l l l o s e $1 i n b e n e f i t , s o he will be a b l e t o e a r n up t o
$4,000 p e r annum b e f o r e t h e b e n e f i t c u t s out e n t i r e l y . Thus
$4,000 p e r axmum i s t h e "break even" l e v e l o f income.
9
Obviously t h e f i g u r e s I have c h o s e n i n t h i s example a r e
a r b i t r a r y , and c a n be v a r i e d d e p e n d i n g o n t h e p r e c i s e goals that
one wants t o a c h i e v e .
The s e c o n d scheme t h a t 1 m e n t i o n e d w a s t h e " t a x c r e d i t " proposal..
Tax c r e d i t s a r e s o named b e c a u s e t h e y p r o v i d e f o r f i x e d amounts
t o b e c r e d i t e d against t a x c a l c u l a t e d on a p e r s o n * s income. The
c r e d i t s , i f introduced, would r e p l a c e concessional t a x deductions
and p e r h a p s some o t h e r w e l f a r e payments, s u c h as c h i l d endowment.
They a r e f l a t - r a t e amounts which a r e d e t e r m i n e d l a r g e l y by t h e
i n d i v i d u a l ' s family circumstances.
In t h e p r o p o s e d U n i t e d
Kingdom Tax C r e d i t Scheme, f o r example, c r e d i t s o f &4 a week
for a s i n g l e man, cE6 a week f o r a m a r r i e d c o u p l e , and i€2 a week
for e a c h c h i l d were a d o p t e d f o r i l l u s t r a t i v e p u r p o s e s , Where
t h e c r e d i t s e x c e e d t h e amount o f t a x c a l c u l a t e d , t h e amount of
t h e excess i s p a i d t o t h e p e r s o n concerned.
S u p p o r t e r s o f t h e t a x c r e d i t s argue t h a t t h e y a r e t o b e p r e f e r r e d t o c o n c e s s i o n a l d e d u c t i o n s f r o m income b e c a u s e t h e y a r e
o f e q u a l value t o all whereas c o n c e s s i o n a l d e d u c t i o n s i n c r e a s e
i n v a l u e as income i n c r e a s e s .
Another p r o p o s a l , t h e lfdemograntV1system, a t t r a c t e d a good d e a l
o f a t t e n t i o n during t h e 1972 U.S. p r e s i d e n t i a l campaign when
S e n a t o r George McGovern p r o m i s e d a payment o f $1,000 p e r y e a r
t o e a c h American c i t i z e n , c h i l d r e n i n c l u d e d . A s y s t e m of demogrants i n v o l v e s t h e payment o f f l a t - r a t e b e n e f i t s t o a p a r t i c u l a r g r o u p o f p e o p l e . The group c a n b e t h e w h o l e p o p u l a t i o n of
a c o u n t r y , as S e n a t o r McGovern p r o p o s e d , ' o r c a n b e a p a r t i c u l a r
group d e f i n e d by s u c h c h a r a c t e r i s t i c s as age, f a m i l y s i z e , d i s a b i l i t y , e t c . Such payments a r e f r e e o f any s p e c i f i c t e s t o n
income o r assets.
Although t h e payment o f d e m o g r a n t s a v o i d s p r o b l e m s l i n k e d t o
means t e s t p r o c e d u r e s , o t h e r i s s u e s a r e r a i s e d b y s u c h s y s t e m s ;
m a i n l y t h e i r c o s t and t h e i r e f f i c i e n c y i n m e e t i n g n e e d s . The
c o s t o f demogrants i s s e e n by many c r i t i c s as i n d i c a t i v e o f
waste i n t h a t t h e y p r o v i d e b e n e f i t s t o everyone i n s t e a d o f conc e n t r a t i n g a v a i l a b l e r e s o u r c e s on t h e p o o r .
One p o s s i b l e means o f r e d u c i n g t h e c o s t o f s u c h programs o r
of c o n c e n t r a t i n g r e s o u r c e s o n t h e " n e e d i e s t " i s t o r e c o u p p a r t
o f t h e demogrant through t h e t a x a t i o n system. Such t a x a t i o n ,
i n e f f e c t , m o u n t s t o s u b j e c t i n g t h e b e n e f i t t o a means t e s t .
IO
C h i l d endowment w h i c h i s exempt from t a x and t h e f r e e o f means
test a g e p e n s i o n which i s s u b j e c t t o t a x , a r e e x m p l e s o f demos
grants i n Australia.
The f o u r t h t y p e of g u a r a n t e e d m i n i m m i income scheme t h a t I
m e n t i o n e d w a s t h e " f a m i l y income supplement". This t e r m has no
p r e c i s e t e e h n i c a l meaning b u t i s a g e n e r a l t e r m which may be
u s e d t o d e s c r i b e a wide v a r i e t y o f programs i n t e n d e d t o assist
families
.
Difficulties
So much f o r a summary- d e s c r i p t i o n o f t h e main g u a r a n t e e d m i n i m u m
income proposals, I think t h e r e i s much t o be said for each o f
t h e s e schemes -- e a c h p r o p o s a l has i t s a d v a n t a g e s a n d each prop o s a l has i t s disadvantages. S o how can we choose which o f the
programs, i f any, s h o u l d be a d o p t e d ? When f a c e d with a s i t u a t i o n
like t h i s , as a p o l i t i c i a n t h e m o s t i m p o r t a n t s i n g l e q u e s t i o n
t h a t I ask myself a b o u t e a c h p r o p o s a l i a "Is i t p r a c t i c a l ? "
Van i t b e done?'! And u n l e s s , a f t e r making a r e a s o n a b l e judgment, t h e answer t o t h i s q u e s t i o n f o r at l e a s t one o f t h e p l a n s
i s fly-es", t h e n t h e schemes must r e m a i n j u s t s o much w i s h f u l
thinking. T h i s i s n o t j u s t my own r e a c t i o n -- any o t h e r M i n i s t e r
i n any o t h e r A u s t r a l i a n Government would t a k e t h e same approach,
L e t me r e c a l l t h e pclinCs t h a t I made e a r l i e r a b o u t r e a l i s m . A
s o c i a l w e l f a r e program n a s t b e l e all r e a l i s t i c , b e c a u s e t h e r e
i s no p o i n t i n a t t e m p t i n g t o i n r o u c e a new scheme i f i t i s
going t o be r u l e d u n c o n s t i t u t i o n a l . You w i l l know t h a t t h e
Labor Government x A u s t r a l i a A s s i s t a n c e P l a n i s p r e s e n t l y u n d e r
l e g a l c h a l l e n g e f r o m V i c t o r i a and N.S.W. i n t h e High C o u r t , s o
t h e p o s s i b i l i t y o f a l e g a l d i s p u t e o v e r a s o c i a l w e l f a r e proposal i s by no means t h e o r e t i c a l . Indeed I u n d e r s t a n d t h a t t h e
C o n s t i t u t $ o n a l l e g a l i t y of a t a x c r e d i t scheme i n Australia
must as y e t be r e g a r d e d as u n c e r t a i n .
e
Any new program must be a d m i n i s t r a t i v e l y r e a l i s t i c t o o .
It i s
a simple f a c t o f life t h a t some schemes r e q u i r e many more p u b l i c
servants t o a d m i n i s t e r them than do o t h e r s ; A pro&-am which
c a l l s for an army o f b u r e a u c r a t s handling mountains of p a p e r
w i l l p r o b a b l y s t i f l e i t s e l f t o d e a t h . And f o r b o t h economic
and p o l i k i c a l r e a s o n s , t h e r e a r e o b v i o u s l y l i m i t s t o t h e number
of p u b l i c s e r v i c e employees that a Government c a n a l l o c a t e t o
any one program.
I1
F u r t h e r , a s o c i a l w e l f a r e p r o g r a m must b e p o l i t i c a l l y r e a l i s t i c .
The sad e x p e r i e n c e o f S e n a t o r G e o r g e McGovern's "demogrant"
p r o p o s d i s t e s t i m o n y enough t o t h a t . H i s p r o p o s a l , i n f a c t ,
h a d much t o recornlend it. B u t h e f a i l e d t o e x p l a i n t h e scheme
t o a s c e p t i c a l American e l e c t o r a t e . The i d e a o f p a y i n g e v e r y
maul, woman and c h i l d i n t h e U . S .
$1,000 at f i r s t sounded just
silly.. Although t h e o v e r a l l r e s u l t o f McGovern's ltdernogrant'l
p r o p o s a l would h a v e b e e n t o r e d i s t r i b u t e income t o w a r d s t h e
poor, t h e i d e a sounded s o s t r a n g e t h a t McGovern l o s t a good d e a l
o f p o l i t i c a l c r e d i b i l i t y b e c a u s e o f it. The c & e a r l e s s o n i s
%hat in a d e m o c r a t i c system t h e gaound must be w e l l - p r e p a r e d i f
i m p o r t a n t s0qia.l changes a r e t o be a c c e p t a b l e .
+
Fourth, a p r o p o s a l must be e c o n o m i c a l 1 r e a l i s t i c . P e r h a p s t h e
most f r e q u e n t ' r e q u e s t t h a t a i n i s e r e a r s i s one f o r more
money.
It i s my own e x p e r i e n c e t h a t t h e r e i s h a r d l y a p o l i t i c a l
a c t i v i s t a L i v e who does n o t s i n c e r e l y b e l i e v e t h a t more money
s h o u l d b e s p e n t on t h e p a r t i c u l a r programs t h a t h e s u p p o r t s . I
hope you w i l l n o t t h i n k that I am e x c e s s i v e l y c y n i c a l i f I s a y
that it a l w a ; y s seems t o b e t h e case that p o l i t i c a l a c t i v i s t s can
-
p r o v e t h a t t h e i r p r o p o s a l s a r e f o r t h e g r e a t e r good o f a11
A u s t r a l i a n s everywhere a l l o f t h e t i m e !
The t r u t h is, O f c o u r s e ,
that t h e Government's p u r s e i s n o t b o t t o m l e s s . Spending has t o
s t o p somewhere. The w e l f a r e p r o p o s a l t h a t I would most l i k e t o
see i s t h e one t h a t does more t o a l l e v i a t e p o v e r t y than our
p r e s e n t s o c i a l w e l f a r e system but which c o s t s l e s s ! And I am
n o t s o s u r e t h a t it is r i d i c u l o u s t o suggest t h a t s u c h a p r o p o s a l
c o u l d be found.
I n c i $ e n t a l l y , I a m n o t s u g g e s t i n g t h a t l e s s money s h o u l d be
spent on w e l f a r e i n Australia. B u t I do f e e l that p o u r i n g more
money into t h e s y s t e m i s n o t n e c e s s a r i l y t h e answer. It i s
easy t o just s p e n d money, It i s l e s s e a s y t o s p e n d i t w e l l .
The n e e d t o be r e a l i s t i c , t h e n , w i l l be an i m p o r t a n t c r i t e r i a
o f any w a r a n t e e d minimutr, income plan. B u t t h e r e a r e o t h e r ,
more s p e c i f i c d i f f i c u l t i e s a t t a c h e d t o m o s t o f t h e programs t h a t
I want t o m e n t i o n some o f t h e s e t e c h n i c a l
have been, p r o p o s e d .
prgblems i n o r d e r t o d e m o n s t r a t e t o you just how i m p o r t a n t t h e y
a r e . As a g e n e r a l r u l e , i f one cannot come t o terms w i t h t h e
t e c h n i c a l problems, t h e scheme ( w h i c h e v e r one i - t i s t h a t i s
being d i s c u s s e d ) w i l l s o o n be s e e n as u n r e a l i s t i c .
12
One s p e c i f i c d i f f i c u l t y w i t h n e g a t i v e income t a x p r o p o s a l s i s
t h a t t h e r e i s an i n h e r e n t c o n f l i c t between t h e t h r e e main e l e m e n t s
o f t h e scheme.
(You w i l l r e c a l l that t h e s e a r e (1) a g u a r a n t e e d
income; ( 2 ) a n e g a t i v e t a x r a t e ; and ( 3 ) a " b r e a k even" l e v e l
o f i n c o m e . ) If one s e t s t h e g u a r a n t e e d income at a decent m i n i m m l e v e l (say, $2,000 p e r annum) and if one s e t s a n e g a t i v e tax
r a t e which i s n o t t o o o n e r o u s ( s a y , 50%) t h e n t h i s means e v e r yone with an income o f l e s s than $4,000 p e r annum w i l l r e c e i v e a
grant f r o m t h e Government. Such a program i s bound t o be v e r y
e x p e n s i v e and may t h e r e f o r e v i o l a t e our c r i t e r i o n o f "economic
r e a l i s m " . F u r t h e r , for various r e a s o n s not everyone r e c e i v i n g .
l e s s than $4,000 p e r amurn c a n be s a i d t o 'be p o o r , and s o t h e
n e g a t i v e income tax plan i n t h e example I have just g i v e n w i l l
b e s u b s i d i s i n g some p e o p l e who do not r e a l l y n e e d i t .
We c a n g e t around t h e s e t w o problems by e i t h e r (1) s e t t i n g t h e
minimmi income at a lower l e v e l ( s a y , $1,000 p e r annum), o r
But i s i t r e a l l y
( 2 ) introducing a steeper negative t a x rate.
d e s i r a b l e to do e i t h e r o f t h e s e t h i n g s ? A m i n i m m i income l e v e l
o f $1,000 p e r annum i s n o t e x a c t l y generous, And a s t e e p
n e g a t i v e income t a x r a t e ma d i s c o u r a g e p e o p l e from l o o k i n g f o r
work. E a r l y e x p e r i e n c e wi h t h e New J e r s e y n e g a t i v e income t a x
experiment t e n d s t o s u g g e s t o t h e r w i s e b u t i t i s r e a l l y t o o early
f o r dogmatic c o n c l u s i o n s y e t .
I
-2-
So c l e a r l y we a r e i n a dilemma: i f t h e scheme i s t o o g e n e r o u s
i t w i l l be e x p e n s i v e and w i l l h e l p people who a r e n o t p o o r ; if
t h e m i n i m u m income l e v e l i s s e t a t t o o l o w a l e v e l -then t h e
scheme may f a i l t o h e l p p e o p l e who a r e r e a l l y p o o r ; and i f a
high n e g a t i v e t a x r a t e i s imposed, b e n e f i c i a r i e s may b e d i s couraged from l o o k i n g for work,
There a r e a l s o o t h e r d i f f i c u l t i e s t o be f a c e d up t o . How c a n
one k e e p -track o f an i t i n e r a n t worker who moves f r o m j o b t o job?
How does one d e f i n e t h e w e l f a r e u n i t ? Is i t t o be an i n d i v i d u a l ?
O r i s it t o be a f a m i l y ? How does one t r e a t a s i n g l e i n d i v i d u a l
who by h i m s e l f might a p p e a r t o have a l o w income, but i n f a c t
l i v e s i n a commune and s h a r e s a high standard o f l i v i n g w i t h h i s
f r i e n d s ? Or c o n s i d e r t h e a n o m a l i e s t h a t would a r i s e i n comparing
f a m i l i e s w i t h t h e same gross income b u t where t h e income was
e a r n e d i n d i f f e r e n t ways. In one case, t h e whole income ( s a y ,
$20,000 p e r annum) might be e a r n e d b y t h e m a l e .
In a s e c o n d
c a s e , t h e md.e might earn @.8,000 p e r annum and t h e female m i g h t
r e c e i v e $2,000. In t h e first c a s e , i n t h e a b s e n c e of a g u a r a n t e e d
m i n i m m income s y s t e m b a s e d on t h e combined f a m i l y income, t h e
Wife as a non-income e a r n e r would a t t r a c t a full. b e n e f i t .
I n t h e s e c o n d c a s e t h e w i f e w o u l d r e c e i v e a r e d u c e d income
g u a r a n t e e , y e t t h e gross f a m i l y income would b e no g r e a t e r than
i n t h e f i r s t c a s e while t h e c o s t s o f maintaining t h e home,
e s p e c i a l l y if c h i l d c a r e c o s t s a r e i n v o l v e d , would p r o b a b l y be
great.
It m i g h t l e g i t i m a t e l y b e a r g u e d , o f c o u r s e , t h a t n e i t h e r
f a m i l y i s e n t i t l e d t o any income g u a r a n t e e b e c a u s e of t h e high
t o t a l . l e v e l o f f a m i l y income, but t h e b a s i c dilemn,a I am p o i n t i n g
It i s t r u e t h a t some o f t h e s e p r o b l e m s e x i s t u n d e r
t o is clear.
t h e p r e s e n t w e l f a r e system i n Australia, but some o f t h e
p r o b l e m s t h a t I h a v e m e n t i o n e d do n o t . And t o t h e e x t e n t that
t h e y do e x i s t a t p r e s e n t , i n most c a s e s we h a v e managed t o s o r t
o u t t h e a n o m a l i e s by a rough p r o c e s s o f t r i a l and e r r o r o v e r t h e
y e a r s . Under a new system, a l o t o f t h e o l d p r o b l e m s would be
c e r t a i n t o c r o p up a g a i n i n a new f o r m .
In c o n c l u s i o n , and s o t h a t you w i l l not b e t o o d i s i l l u s i o n e d o r
despondent a f t e r my corraents, l e t me r e a s s u r e you that t h e
Government has b e e n working a c t i v e l y o n t h i s m a t t e r f o r more
than 18 nlonths now. The p r o b l e m s I have o u t l i n e d i n t h i s p a p e r
a r e m e r e l y i n t e n d e d t o g i v e you an i d e a o f t h e complex
d i f f i c u l t i e s which we must s o l v e i f we a r e going t o i n t r o d u c e a
s u c c e ss fil s cheme
.
My d e p a r t m e n t and I , o f t e n t o g e t h e r , and e v e n more o f t e n
s e p a r a t e l y , h a v e r e s e a r c h e d many p r o p o s a l s t h a t have o c c u r r e d t o
u s o r t h a t h a v e b e e n brought t o our n o t i c e . We h a v e mn i n t o all
sorts of d i f f i c u l t i e s . The p o l i t i c a l problems c a n n o t be i g n o r e d ,
e x c e p t by t h o s e who do n o t h a v e t o s u c c e s s f u l l y i n t r o d u c e and
o p e r a t e reforms.
It has n o t b e e n e a s y t o s o l v e t h e d i f f i c u l t i e s ,
a n d t o b e frank we have n o t y e t found a s i m p l e s o l u t i o n t h a t
s a t i s f a c t o r i l y improves o n schemes t h a t c u r r e n t l y e x i s t .
A t p r e s e n t , t h e P r i o r i t i e s Review S t a f f and t h e S o c i a l W e l f a r e
Commission a r e t r y i n g t o d e v e l o p a s o l u t i o n t o t h e s e problems.
N a t u r a l l y we a r e l o o k i n g f o r w a r d t o t h e i r p r o p o s a l s w i t h
e a g e r n e s s , as we a r e s i m i l a r l y l o o k i n g f o r w a r d t o P r o f e s s o r
Henderson's proposals with keen i n t e r e s t .
I hope t h a t from t h e s e e f f o r t s a b e t t e r scheme w i l l b e born.
B u t e v e n if we do produce a n e a t s o l u t i o n , ;t know f r o m n ~ yown
e x p e r i e n c e as a M i n i s t e r t h a t t h e b a t t l e w i l l by no means have
b e e n won. T h e scheme would s t i l l h a v e t o b e implemented and
t h a t c a n o n l y Be done w i t h t h e a c c e p t a n c e o f t h e p u b l i c , It
seems t o e s c a p e t h e n o t i c e o f many i n t h e community, although I
would c e r t a i n l y hope that i t w o u l d not excape t h e n o t i c e o f anyone i n t e r e s t e d enough i n t h e s e m a t t e r s t o a t t e n d a c o n f e r e n c e
s u c h as t h i s , t h a t i f we a r e going t o r e d i s t r i b u t e income i n t h e
comnunity t o h e l p t h e p o o r , t h e n some p e o p l e m u s t b e worse o f f .
That i s what r e d i s t r i b u t i o n o f income nleans.
14
U n f o r t u n a t e l y , w h i l e e v e r y o n e wants t
n o t many of t h o s e capable o f b e a r i n g
do s o , F o r example, a,n e d i t o r i a l i n
1974 d i s c u s s i n g t h e L a b o r Government
p r o g r a m s said:
o see poverty eliminated,
-the c o s t a r e p r e p a r e d t o
The Australian o f March 11,
s various s o c i a l welfare
"The p h i l o s o p h y o f e a c h mr3ve i s d e f e n s i b l e i n
isolation.
T o g e t h e r t h e y add up t o a massive a t t e m p t
t o r e d i s t r i b u t e income.,
The program an,ounts -- and
t h e r e i s no way t h i s can b e d e n i e d -- t o an a t t e m p t
t o p e n a l i s e t h e middle- income g r o u p i n f a v o u r o f t h e
* . F o r t h e s e r e a s o n s t h e program i s f'ull o f
poor.
risks f o r t h e Labor Government. I t s i n d i v i d u a l
p r o p o s a l s a r e a t t r a c t i v e , b u t when t h e b i l l s a r e
p r e s e n t e d t 3 e e f f e c t i s l i k e l y t o endanger p a r t i c u l a r l y
t h o s e swinging urban seats which p u t Labor i n power i n
e
.
1972. "
I s t r e s s t h a t when we do move t o lin$roduce a farm o f g u a r a n t e e d
m i n i m u m income -- and I hope -Khat t i m e i s not t o o far o f f now
-- we w i l l be a b l e t o c o u n t on a g e n u i n e , a c t i v e , out- spoken
commitment i n s u p p o r t o f our p r o g r a m s from p e o p l e like yourselves.
We w i l l n e e d y o u r s u p p o r t s o t h a t t h o s e who s a y t h e y b e l i e v e i n
change, but r e a l l y d o n v t w a n t any-khing t o Se d i f f e r e n t , w i l l
a c c e p t t h a t things w i l l hame t o be d i f f e r e n t i f t h e r e a r e t o be
changes. They w i l l h a v e t o a c c e p t t h a t a r e d i s t r i b u - t i o n of
income w i l l b e n e e d e d t o p r o v i d e t h e s o r t s o f b e n e f i t s we a r e
talking about today.
They w i l l a l s o have t o a c c e p t t h a t t h e
c o s t o f t h e r e d i s t r i b u t i o n w i l l h a v e t o be s h o u l d e r e d by t h e
b e t t e r - o f f menlbers o f o u r comnxnity. U n l e s s Australians a r e
p r e p a r e d t o a c c e p t t h i s s i m p l e f a c t , our a t t e m p t s t o h e l p t h e
p o o r w i l l make o n l y small progress.
15
E D I T E D D I S C U S S I O N ON MR, HAYDENOS P'ASER
QUESTION NO. 1
You m e n t i o n t h a t t h e r e h a v e b e e n . . i n v e s t i g a t i o n s , o r a p r o c e s s
of i n v e s t i g a t i o n s , over t h e last 18 months.
Is it t h e i n t e n t i o n
o f t h e government t o p r e s e n t a g r e e n p a p e r o n t h i s a r e a and
open t h e m a t t e r t o p u b l i c d i s c u s s i o n or d o e s t h i s seminar by
ACOSS c o n s t i t u t e t h e o p e n i n g f o r u m i n any way o f a p r o c e s s o f
public participation.
The m i n i s t e r s t a t e s i n h i s a d d r e s s t h a t
h e w o u l d ask p e o p l e s u c h as o u r s e l v e s t o campaign or t o s u p p o r t
t h . e s s sort o f changes,; b:nt i t d o e s seem t o me t h a t i n v i e w o f
a.n open g o v e r r m e n t 1 8 riionths i s a l o n g t i m e a f t e r t h e s t a r t o f
t h e involvement process.
ANSWER
Yes, i t d o e s , t h o u g h I t h i n k t h a t may b e due t o t h e d i f f i c u l t i e s
t h a t t h e m i n i s t e r o u t l i n e d i n h i s p a p e r , A l o t o f t i m e has b e e n
s p e n t discussing t h e p r o s and cons, t h i n k i n g w e p v e come t o a
b r i c k w a l l . a n d t h e n t h i n k i n g again.
QUESTION IYO. 2
I ' d l i k e t o make two o b s e r v a t i o n s . One i s on t h e q u e s t i o n o f
Mr, HaydenOS p l e a for p e o p l e t o be r e a l i s t i c , I w o u l d c o n s i d e r
it a t r a g e d y if all s o c i a l r e f o m i e r s d e c i d e d t h a t t h e y had t o
b e r e a l i s t i c i n t h e s e n s e k h a t w h a t end.ed u p v i r t u a l l y amounted
t o a c o n s p i r a c y where t h e p o l i t i c i a n s , t h e p e o p l e from t h e
r e l e v a n t government d e p a r t m e n t s s u c h as s o c i a l s e c u r i t y , t h e
a g e n c i e s such as t h e s o c i a l w e l f a r e c o n m i s s i o n , v o l u n t a r y a g e n c i e s
and o r g a n i s a t i o n s l i k e ACOSS a1.l came t o g e t h e r and a g r e e d on
s o m e t h i n g t h a t w a s r e a l i s t i c , p r a g m a t i c , p r a c t i c a l and which met
a11 t h e s e c r i t e r i a , These a r e v e r y r e a l c r i t e r i a and I d o n ' t
w i s h t o i g n o r e them at aL1 b u t u n l e s s some p e o p l e t r y t o b e
u n r e a l i s t i c I d o n o t s e e how s o c i a l change beyond " r e a l i s t i c
c h a n g e g i s e v e r r e a l l y going t o b e p o s s i b l e .
I d o n ' t s e e how
t h e d e b a t e o n sxch i s s u e s i s e v e r g o i n g t o become n u c h w i d e r if
i n f a c t a Owelfare e l i t e ' d e c i d e o n t h e s o c i a l change which i s
practicable
The s e c o n d o b s e r v a $ i o n i s on Mr. H a y d s n D s cornlent r e g a r d i n g
w h a t h e c a l l e d 'a d e c e n t minimiani l e v e l o f some%hing l i k e $2,000
p e r ammo And then he s u g g e s t e d that maybe t h e m i n i m u m l e v e l
c o u l d b e s e t a t something l i k e $1,000 p e r annul, which h e
s u g g e s t e d w a s n o t e x a c t l y generolxs. My o n l y cormlent on t h a t i s
t h a t I d o n Q t c o n s i d e r $2,000 p a r t i c u l a r l y g e n e r o u s e i t h e r .
16
ANSWER
I a m b a s i c a l l y an i d e a l i s t a.nd an o p t i m i s t t o o , but I do a p p r e c i a t e
t h a t t h e r e a r e r e a l i s t i c f a c t o r s t o b e t a k e n i n t o a c c o u n t , I mean
t h e r e a r e going t o be some d i f f i c u l t budget d e c i s i o n s coming u p ,
c r i e s f o r r e d u c t i m i s i n governrcent e x p e n d i t u r e s , a l o o k at t h e
d e f i c i t , and s o OE,
It would b e s o n i c e t o rutLe o f f and s t a r t a g a i n h u t one o f t h e
. p r o b l e m s i s t h a t e a c h i n d i v i d u a l i n t n e comaunity l o o k s at how he
i s t h i s y e a r , and when a change i s n a d e , how h e i s i n t h e n e x t y e a r ,
One o f t h e u n f o r t u n a t e t h i n g s i s % h a t I suppose that a l l o f us t o
one e x t e n t o r a n o t h e r a r e b a s i c a l l y s e l f i s h . Without u s i n g t h a t
i n a d e r o g r a t o r y way t h e r e i s this comparison t h a t p e o p l e make,
O n t h e o t h e r p o i n t , i n s a y i n g t h a t $2,000 i s a decent minimm l e v e l ,
I p o i n t o u t that it i s s u b s t a n t i a l l y h i g h e r than t h e e x i s k i n g b a s i c
pension r a t e . .
QUESTION NO. 3
If I coulc? just say one t h i n g about p o l i t i 9 a l f e a s i b i l i t y . It
a p p e a r s t o me t h a t It i s p0ssibl.e t o a r r i v e a t t w o d i f f e r e ; n t
conclusions.
You cor;.id c o n s i d e r tha5 t h e o b j e c t i v e f u n c t i o n of a
scheme i s t o b e p o l i t i c a l l y f e a s i b l e . A l t e r n a t i v e l y you c o u l d
p r o p o s e a scheme which by i t s e l f might n o t 5 e q u i t e s o a c c e p t a b l e
b u t w i t h t h e r e o r d e r i n g o f p r ? - o r i t i e s i n o7;her a r e a s does become
acceptable.
P e r h a p s % b e s e c o n u s ~ h e r mi n t h i s i n s t a n c e might b e
B u t it d o e s mean t h a t o t h e r schemes o r t h a t
more e x p e n s i v e .
o t h e r i n t e n d e d programs o f t h e government have t o b e r e o r d e r e d and
It d o e s a p p e a r t o xe t h a t i5 i s f a i r l y c r u c i a l which
some d e l a y e d .
one o f t h e s e o b j e c t i v e s you choose bEca;l.se t o a y view you c o u l d
v e r y much g e t t w o d i f f e r e n ' i ; schemes o u t o f it.
1 w a s wondering when yo11 were t a l k i n g about t h i s , which o b j e c t i v e
f u n c t i o n where you s u g g e s t i n g ?
ANSWER
Well one i s more i d e a l i s t i c -khan zhe o t h e r , I wouldnOt p r o p o s e
at t h i s s t a g e w h i l e , w e o r e s t i l l t k i n k i n g a b o u t i t , t h a t one
s h o u l d s e t t l e o n one a l t e r n a t i v e t o t h e e x c l u s i o n o f t h e o t h e r .
M y p e r s o n a l f e e l i n g i s that one way c f i n t r o d u c i n g a r a d i c a l
change i n this whole a r e a i s t o do it a l i at once. AB a t t e m p t
t o do it g r a d u a l l y means t h a t p e o p l e do comgarisons o f t h e i r
p a r t i c u l a r c i r c u m s t a n c e s year by y s a r . P e r h a p s t h e answer,
and I * m n o t s a y i n g t h i s e n t i r e l y c y n i c a l l y , i s t o s o s c r a m b l e
t h e t a x a t i o n and w e l f a r e s y s t e m and r e - i n v e n t a scheme o u t o f
i t where c o m p a r i s o n s a r e n o t p o s s i b l e .
QUESTION NO.
4
In Mr. HaydenOs p a p e r he m e n t i o n e d t h e t a x t r e a t m e n t , o r problem
o f t a x treatment, o f single v s multiple earning families. I
wonder i f t h e government has done a n y t h i n g about l o o k i n g at t h e
whole q u e s t i o n o f s i n g l e vs m u l t i p l e earning f a m i l i e s ?
ANSWER
I guess p e o p l e all r e a l i s e t h e problems o f t r a n s f e r r i n g t o a
s p l i t t i n g o f incomes for t a x a t i o n p u r p o s e s :
as t o w h e t h e r i t ' s
compulsory o r v o l u n t a r y ; w h e t h e r you have a d i f f e r e n t s c a l e f o r
t h e s p l i t income compared t o t h e income t a x e d i n t h e hands o f
one p e r s o n . P r o b a b l y t h e o n l y s a t i s f a c t o r y way a r o u n d t h e
problem o f some p e o p l e i n p r i v i l e g e d p o s i t i o n being a b l e t o s p l i t
t h e i r incomes and o t h e r s n o t , o r t h e u n f a i r n e s s o f i t , is t o
change from a p r o g r e s s i v e s y s t e m o f t a x a t i o n .
I f it w a s a p r o p o r t i o n a l r a t e you wouldn't h a v e t h i s problem.
That's p a r t i a l l y
r e g r e s s i v e s o I d o n ' t t h i n k you c a n s o l v e a l l t h e p r o b l e m s .
One o f t h e problems i n t h e whole system i s t h a t you h a v e t h i s
p e r p e t u a l c o n f l i c t o f t h e t w o p r i n c i p l e s o f t r e a t i n g everybody
as an i n d i v i d u a l and a p e r s o n i n t h e i r o w n r i g h t and l o o k i n g at
economic u n i t s .
The t h i n g i s t h a t when y o u ' r e t a l k i n g about
f a m i l i e s y o u ' r e n o t n e c e s s a r i l y t a l k i n g about t h e o n l y economic
u n i t you have g o t . The M i n i s t e r i n h i s p a p e r m e n t i o n e d comnunes.
But again, why s h o u l d a family o f h u s b a n d and w i f e and c h i l d r e n ,
o r j u s t husband and wife, be t r e a t e d d i f f e r e n t l y from t w o
e l d e r l y s i s t e r s l i v i n g t o g e t h e r , o r a homosexual m a r r i a g e f o r
that m a t t e r , But i n l o o k i n g at economic u n i t s y o u ' v e g o t t h e
problem o f d e f i n i n g i t ,
I think t h a t t h e T r e a s u r y p a p e r number 6 -- p e r s o n a income
t a x , t h e t a x u n i t , i s t h e one I s h o u l d r e f e r you t o .
FURTH%R COlYRlENT
On t h e t a x c r e d i t i t depends o n how you do i t . A p a p e r by
Downing and a few o t h e r s , way back i n 1964, s u g g e s t e d v e r y
s t r o n g l y t h a t a t a x s p l i t t i n g s y s t e m w h i l e i t has a d v a n t a g e s o f
h o r i z o n t a l e q u i t y can have v e r y g r e a t d i s a d v a n t a g e s o f v e r t i c a l
e q u i t y . That i s , it i s p r o b a b l y t h e m o s t r e g r e s s i v e measure o n
i t s own.
F a r more r e g r e s s i v e than o t h e r c h a n g e s i n t h e t a x
system.
18
The T r s a s z r y p a p e r yo71 r e f e r r e i t o has a l o t o f a s s m g t i o n s i n
i t , f recalcXLatei3 t h o s e f i g w e s ami e s s e n t i e i y t h e p a p e r w a s
a r g u i n g f o r a v e r y nxeh lzeavier t a x r a t e on p s o p l s i n two e a r n e r
f m i L i e s i n assuming t h a t eazk i r x i i v i 3 u a l 6arns l e s s than t h e
Gne e a r n e r family. The w h o l s przLlem seems t o me t h a t t h e argument i s always couched i n terms of t h e problem o f v e r t i c a l equitg
when t h e r e a 9 i s s u e i s o z e o f k o r i z o n t a i e q u i t y . What t h e t a x
r e f o r m e r s f a i l t o recogrLise i s tlriat t k e econcmic problem starts
w i t h t h e f a i l u r e t o pay people who c o n t r i b u t e t o "national produztion". W E a t you w a n t i s k s r i z o n t a l t r e a t m e n t o f t h o s e p e o p l e
who work i n household i n d w t r i e a , w i t h p e a p l e who work i n t h e
b u s i n e s s s e c t o r . The p a p e r i g n o r e s for example, t h e imputed
income i f t h e wife s t a y s a t home; it i g n o r e s t h e c h i l d c a r e
c o s t s o f people witk pre-sckool ckilfiren.
I w a n t 30 r a i s e an i s s u e which I tkiirik w i l l probably zoae up
again i n Jim C u t t ' s paper. It I s p a r t l y a p c l i t i ( c a L tq-iestioz
ana p s r t l y a c p e s t i o n o f p r i o r i t i e s .
P r i o r i t y d i s c u s s i o n s :?ave t c be tzkeri by t k e g3verrner;T as t o
what t h e first o r mejgr obj2ct;lve ougk.3 t o bE in. z s o c i a l s e c x r i t y program. Whether t k e first c b j e e t i v e ougkt t o be t o g e t
more money i n t c p e o p l e ' s p o c k e t s o r whetksr t h e r e wight t o be a
more d i v e r s i f i e d c o n c e n t r & t i m o f r e s o u r c e s i n e d u c a t i o n , wellarf
and s o f o r t h .
I ' m raising t h i s i s s x e because a l r e a d y t h e r e i s a b.z:klash w i t h o u t Laving a scheme S G C ~ aa ' g ~ a r s t n t e e dm i n i m n income*, I
understand that t k e combined m s t o f medibmk, conipensation and
insurance scheme, national s - J p e r a m i i a t i m i s something o v e r
b i l l i o n p e r annurri, o v e r and a b w s t h e presen-t; d e f i z i t .
Further, a.n enomous mount c f moxtey has been g e n e r a t e d i n t h e
education f i e l i i .
In a sense p r i o r i t i e s have a,irestCiy been s e t , because t h e expenditurze p a t t e r n s have been e s t a b l i s h e d , L t h i n k t h a t t h e r e is a
s e t of Q n s t a t e d p r i o r i t i e s aroxid, an2 I d m ' t %kink t k a t t h o s e
p r i o r i t i e s would favotlr a gdaranteed m i g i m m income,
I suppose the i s m e that's bothering me i s t h a t i n some programs
you c m t a k e i n i t i a t i v e s and l a t e r decide t o d i s m a n t l e them beeau
%hex e i t h e r have. a nega-tive e f f e c t o r s i d e e f f e c t s . B u t t h e r e a1
SOme that involve legislation and the &ole
r e s t r d c t c r i n g of
aBpects uf society
i c 3 would make i t very mueh more d i f f i w l t
and is B closing of options.
I9
ANSWER
I a g r e e with you that; t h e r e has g o t t o be a s o l i d t h i n k about
p r i o r i t i e s , P a r t i c u l a r l y t o beware about implementing programs
which w i l l . remove ones o p t i o n s about something more s i m p l i f i e d
and a 1:: c ep -ti a b 1 e
e
QUESTION NO. 6
The M i n i s t e r O s p a p e r , a f t e r t h e i n t r o d u c t i o n , d i d n ' t speak v e r y
much. at aL1 on t h e concept o f G u a r a n t e e d M i n i m u m Income.
1 d o n o t know whether it i s a p p r o p r i a t k -to s a y t h a t t h e r e i s a
d i v i s i o n i n t h e camp o v e r t h i s t e r m . In t h e main i t h a s come t o
t h e s c e n e i n r e c e n t y e a r s . If you speak o f Oguaranteed minimmi
income0 in. S t ~ sv a r i o u s p o t e n t i a l : Minimunl wage l e g i s l a t i o n ;
v a r i o u s s o c i a l s e c u r i t y b e n e f i t s , aimed a t c e r t a i n m i n i m a , can
i n i t s e l f p r o v i d e a g u a r a n t e e d m i n i m u m income, S u p p l e m e n t a t i o n
for housing, f a m i l y a l l o w a n c e s , and s o on, have something t o do
with p i c k i n g up t h e p a r t i c u l a r d i f f e r e n c e s between d i f f e r e n t
f a m i l y s i t u a t i o n s , The main argument made h e r e i s c a t e g o r i s a t i o n
and c o n f u s i o n .
I o d l i k e t o q u e s t i o n whether i t i s a v a l i 2
argument at all i n Australia.
A s I remember i t t h e d e b a t e on g u a r a n t e e d m i n i m u n income a r o s e i n
t h e conhext o f a complex w e l f a r e system. The Australian system
i s a v e r y s i m p l e c h a r a c t e r i s a t i o n system and I t h i n k t h a t we
should a s k o u r s e l v e s c a n you do away w i t h t h e c a t e g o r i e s and t r y
t o s u . b s t i t u t e t h e a g g r e g a t e w e l f a r e system i n t a x a t i o n . Is it
a v a l i d and workable c o n c e p t ? Do p e o p l e want i t ?
In t h e U n i t e d S t a t e s you had a v e r y complex system o f c a t e g o r i e s .
You had a number o f p e o p l e l o o k i n g f o r t h e one b i g measure t h a t
wo'uld s o l v e a l l o f t h i s , and who w e r e n o t all t h a t concerned
about how t h e whole w e l f a r e system o p e r a t e d . I a m concerned.
I had a. f a i r l y c l o s e l o o k a t g u a r a n t e e d minimunl income schemes
a few y e a r s ago, and d e c i d e d t h e y were Itlemonst', The concept
i t s e l f was i n v a l i d , This d o e s n ' t seem t o 'be q u e r i e d i n -the
p a p e r and t h e c a s e f o r t h i s s o c a l l e d concept o f a g u a r a n t e e d
minimiam income scheme t o o k about a page.
20
I s-a.ppose t h e main v a l i d i t y i s t o a c h i e v e e q u i t y between
d i f f e r e n t c a t e g o r i e s . Now yoii m e n t i o n e d m i n i m u m wage. M i n i m u m
wage i s not r e l a t e d t o f a m i l y s i z e , and h e n c e need. One can a s k
why should a w i d o w w i t h x c h i l d r e n r e c e i v e s o many d o l l a r s a week
untaxed when a p e r s o n i n t h e work f o r c e w i t h "x-plus" c h i l d r e n
r e c e i v e s a s m a l l e r amount which i s t a x e d and without a n y f r i n g e
I t h i n k that i t i s t r y i n g t o work t o w a r d s a
b e n e f i t s and s o on.
more e q u i t a b l e s y s t e m i n t h o s e t w o examples.
Take a l s o t h e p e r s o n o n unemployment b e n e f i t s , You c a n t r y a n d
r a t i o n a l i s e t h e systen?, b y s e t t i n g a l i m i t o n unemployment b e n e f i t s
s o that it i s n o t more t h a n lo%, 90% or 85% o f what t h a t p e r s o n
w a s e a r n i n g before h e S e z m e unemployed, Or you c o u l d have a
m a j o r i n c r e a s e i n a l l p e n s i o n s and make them t a x a b l e . C e r t a i n l y
t h e r e i s an argmaent for making unemployment t a x a b l e a t t h e end
o f t h e year.
F o r example, somebody may b e o n $10,000 for n i n e
months and unernployment b e n e f i t s f o r t h r e e m o n t h s .
I t h i n k t h a t we havs a t least t o e n s u r e t h a t it i s an a b s o l u t e
statement t h a t a g u a r a n t e e d minimm income scheme, o f some s o r t ,
i s a Yemon1I, b e f o r e we c o n t i n u e on p a t c h i n g up t h e e x i s t i n g
system, t r y i n g t o r e g r e s s i n e q u i t y ; and p o s s i b l y at t h e same t i m e
o n l y introducing more a n o m a l i e s t h a n we a r e c u r i n g .
RESPONSE
The schemes being p u t f o r w a r d u n d e r t h e name G u a r z n t e e d M i n i m u m
Income have b e e n f o r w a r d e d t o try t o c o v e r t h e kind o f problems
touched on b e f o r e - n o t c h problems, dimensions o f t h e f a m i l y , and
s o on, Family s i z e i s one o f t h e w e l l known major f a c t o r s as t o
why some p e o p l e are F o o r and o t h e r s n o t . My s u g g e s t i o n i s t h i s :
t h a t EL w e l l known c a t e g o r y , i m p o r t a n t c a t e g o r y , s h o u l d be t r e a t e d
t h a t way w i t h a method t o t r e a t t h a t p a r t i c u l a r situation. My
concern i s t h a t i n t r y i n g t o f i n d one answer t h a t ' s going t o
cover a l l p o s s i b l e c a t e g o r i e s t h a t you a r e going i n a d i r e c t i o n
t h a t d o e s n ' t h a v e v a l i d i t y . ThatPs what I'm on about r a t h e r than
saying that you s h o u l d n v t a t t e m p t to i r o n o u t t h e r e a l d i f f i c u l t i e s
i n t h e w e l f a r e system.
A s far as f a m i l y a l l o w a n c e s a r e concerned yo^ c a n c e r t a i n l y
i n c r e a s e c b i l d endowment, and t h e n , i n o r d e r t o r e g r e s s t h a t a
b i t you make i'c d a x a b l e .
21
But then you have t h e question o f : i n whose hands do you t a x
i t ? Do you t a x it i n t h e hands o f t h e non-earner i n t h e family,
t h e family having a t o t a l high income; or do you t a x it i n t h e
hands o f t h e highest income earner; o r do you include it i n a
s p l i t t i n g system; o r what? I n doing all s o r t s o f %hings %hat
a r e % . d t e r n a t i v e ts o guaranteed minimum income you could g e t an
even m o r e complex system than we have at t h e moment. Even
accepting t h a t t h e r e a r e , i n o t h e r countries, systems t h a t a r e
m o r e complex than ours I donat think t h a t s an argument against
looking a t t h i s whole question.
22
John Harpe'r
S e n i o r L e c t u r e r i n Economics,
U n i v e r s i t y of Melbourne.
LEVEL OF
GUARANTEED MINIMUM
INCOME
I n many c o u n t r i e s i n r e c e n t y e a r s t h e r e have b e e n many s u g g e s t i o n s
f o r p o l i c i e s t h a t a r e p r e s e n t e d as s o c i a l l y d e s i r a b l e and, at l e a s t
b y i m p l i c a t i o n , c o n t a i n t h e k e y t o a s i m p l i f i e d , more r a t i o n a l e
ayld e q u i t a b l e f i n a n c i a l arrangement between i n d i v i d u a l s and t h e
gov-ernment,
Such p o l i c i e s have b e e n p r e s e n t e d u n d e r a v a r i e t y
of t i t l e s .
These i n c l u d e , f o r example, programmes f o r n e g a t i v e
i n c o m e t a x e s , t a x c r e d i t schemes, s o c i a l d i v i d e n d s , demogrants,
and, o f co-ilrse, t h e t i t l e u n d e r which we a r e m e e t i n g t o d a y Othe
g u a r a n t e e d minimum i n c o m e Q , Even though t h e r e a r e s e v e r a l common
%breads r u n n i n g t h r o u g h all o f t h e s e p r o p o s a l s , t h e d i f f e r e n t termi n o l o g y and t h e d i f f e r e n c e s i n d e t a i l have 1 t h i n k caused c o n s i d e r a b l e
amount o f c o n f u s i o n and ambiguity.
They have a l s o r a i s e d some f a l s e
hopes.
I t i s p a r t l y b e c a u s e of t h i s t h a t I w a n t t o t a k e a v e r y s i m p l e
a p p r o a c h t o t h e t o p i c of t h e g u a r a n t e e d m i n i m u m income t o d a y .
I
f e e l t h a t an approach t h a t i s s i m p l e , but one which I hope r a i s e s
s o m e fundamental q u e s t i o n s , i s t h e most a p p r o p r i a t e for t o d a y ' s
a u d i e n c e 53ecause among u s t h e r e a r e a wide r a n g e o f backgrounds and
e x p e r i e n c e s and l e v e l s o f e x p e r t i s e i n t h e a r e a s o f t a x a t i o n and
s o c i a l s e c u r i t y arrangements.
A s i m p l e minded approach a l s o
s u g g e s t s i t s e l f for a n o t h e r r e a s o n - a r e a s o n t h a t I n o t i c e d w a s
a l s o r a i s e d i n t h e M i n i s t e r g s paper.
I f t h e g u a r a n t e e d income i s
e v e r t o b e i n t r o d u c e d i n t o A u s t r a l i a it must b e p r e s e n t e d t o t h e
general p u b l i c i n s i m p l e terms.
QGite b a s i c q u e s t i o n s must b e
a n s w e r e d c l e a r l y and s i m p l y i f such a scheme i s t o be a c c e p t e d ; and,
of c o u r s e , it must b e g e n e r a l l y a c c e p t e d i n t h e community i f it i s
e v e r t o succeed.
NQWt h e l e v e l of t h e g u a r a n t e e d m i n i m i m income i s what I am t o t a l k
about.
The l e v e l a t which a g u a r a n t e e d m i n i m u m income i s t o b e
s e t depends, I b e l i e v e , o n t h e answers t o a number o f i n t e r r e l a t e d
questions.
I have s e t o u t t h e m o s t o b v i o u s o f t h e s e i n t h e s y n o p s i s *
and I w o u l d l i k e now t o d e a l w i t h t h e q u e s t i o n s t h a t I have r a i s e d
i n t h i s s y n o p s i s more o r l e s s i n t u r n .
R e a l l y t h e y should be disc u s s e d s i n - i t a n e o u s l y because t h e y a r e v e r y much i n t e r d e p e n d e n t b u t
i t i s n o t p o s s i b l e t o t a l k on s e v e r a l p o i n t s at once.
* P l e a s e note.
A background s y n o p s i s w a s p r e p a r e d and
c i r c u l a t e d 'before t h e seminar.
This synopsis i s included
i n Appendix C.
F i r s t o f a l l , i t i s n e c e s s a r y t o understand t h e e l e m e n t s o f a
g u a r a n t e e d m i n i m u m income scheme.
I'here a r e t h r e e b a s i c
elements that I t h i n k a r e f o u n d i n a l o f t h e o t h e r v a r i o u s l y
d e s c r i b e d schemes t h a t I m e n t i o n e d a moment ago.
First;
the
l e v e l o f t h e guarantee.
Tnis is t h e m i n i m u m that a p e r s o n i s
g u a r a n t e e d as a m a t t e r o f r i g h t i f h e has no o t h e r income.
A s he a c q u i r e s o t h e r income, e i t h e r from p e r s o n a l e x e r t i o n or
income f r o m c a p i t a l , h e would emec-t; t o f i n d h i s b e n e f i t f r o m
t h e government r e d u c e d .
It c o u l d c o n c e i v a b l y b e r e d u c e d d o l l a r
f o r dollar.
Tha.t i s , f o r each a d d i t i o n a l d o l l a r o f income h e
r e c e i v e d , h i s b e n e f i t i s r e d u c e d by a d o l l a r .
T h i s may seem an
unduly harsh a r r a n g e m e n t b u t it should b e remembered t h a t t h i s
zero r e t e n t i o n r a t e w a s a f e a t u r e o f t h e administration o f
pensions i n this country f o r n e a r l y s i x t y years ( u n t i l t h e t a p e r e d
means t e s t ; was i n t r o d u c e d i n 1969) a n d i s s t i l l a f e a t u r e o f t h e
a d m i n i s t r a t i o n o f unemployment, s i c k n e s s and s p e c i a l b e n e f i t s
today,
Such a scheme w o u l d a p p e a r t o h a v e c o n s i d e r a b l e d i s i n c e n t i v e s w i t h r e s p e c t t o e a r n i n g a d d i t i o n a l income.
For t h i s
r e a s o n i t i s thought t o b e more a p p r o p r i a t e t o choose a r a t e of
r e d u c t i o n o f l e s s t h a n one- hundred p e r c e n t , a n d t o d a y t h e r a t e
of t a p e r t h a t i s a p p l i e d t o p e n s i o n s i s 50 p e r c e n t .
This is
t h e s e c o n d e l e m e n t i n t h e scheme - t h i s r a t e o f t a p e r .
Thus i f for example t h e g u a r a n t e e i s $1800 p e r annum and t h e r a t e
o f t a p e r i s 50 p e r c e n t , a p e r s o n would s t i l l r e c e i v e some b e n e f i t
o r supplement f r o m t h e government u n t i l h i s income had r e a c h e d
$3,600.
And t h i s $3,600 r e p r e s e n t s t h e t h i r d e l e m e n t i n t h e
scheme - an e l e m e n t which i s o f t e n r e f e r r e d t o as t h e vbrea.k even!
That i s , t h e income at which you. r e c e i v e nothing from
income.
t h e government a n d i n t h e o r y p a y n o t h i n g t o t h e government i n
taxes,
( I n c i d . e n t a l l y , I chose a g u a r a n t e e o f $1800 p e r amum
f o r a s i n g l e erson s i n c e this is approximately the l e v e l o f t h e
basic pension
P.
You w i l l r e a l i s e t h a t i f a n y t w o o f t h e e l e m e n t s a r e s e t t h e n t h e
t h i r d is determined.
Thus i f we h a v e a g u a r a n t e e d m i n i m u m income
i n mind and an a g r e e d r a t e o f t a p e r t h e b r e a k - e v e n w i l l b e d e t ermined.
A l t e r n a t i v e l y , i f we h a v e an income below which we
b e l i e v e p e o p l e s h o u l d n o t p a y t a x a t i o n and WE: h a v e a r a t e o f t a p e r
T h i s way o f l o o k i n g
then t h e guaranteed m i n i m u m i s determined.
at i t is t h e b a s i c i d e a o f a n e g a t i v e income t a x , t h a t i s t o
extend t h e t a x s c h e d u l e below t h e p r e s e n t e x e m p t i o n l e v e l s s o
t h a t p e o p l e whose incomes f a l l b e l o w t h e s e l e v e l s w i l l n o t m e r e l y
pay no t a x b u t w i l l r e c e i v e some s u p p l e m e n t a r y payment.
In o t h e r
words, whereas u n d e r t h e p r e s e n t income t a x t h e p e r s o n p a y s t a x o r
he does n o t , w i t h a n e g a t i v e income t a x t h e r e i s t h e t h i r d p o s s i b i l i t y that t h e t a x department w i l l p a y h i m .
24
Now of c o u r s e t h e s e t h r e e e l e m e n t s can be v a r i e d t o p r o v i d e
a m u l t i t u d e o f d i f f e r e n t schemes and d i f f e r e n t a r r a n g e m e n t s .
The h i g h e r t h e g u a r a n t e e d income f o r a g i v e n r a t e of t a p e r t h e
h i g h e r w i l l b e t h e b r e a k - e v e n income - that income at which
p o s i t i v e t a x e s b e g i n t o be p a i d - and t h e h i g h e r w i l l b e t h e
A l t e r n a t i v e l y , f o r a n y g i v e n l e v e l of
c o s t o f t h e scheme.
g u a r a n t e e d income t h e l o w e r t h e r a t e of t a p e r , t h a t i s t h e
l o w e r t h e r a t e o f a i ? e g a t i v e income t a x a n d t h u s t h e l o w e r t h e
- p o t e n t i a l d i s i n c e n t i v e e f f e c t , t h e h i g h e r t h e break- even income.
Now one o t h e r v a r i a t i o n i s p e r h a p s worth m e n t i o n i n g , s i n c e it
has b e e n a familiar f e a t u r e o f our s o c i a l s e c u r i t y system s i n c e
t h e o l d a g e p e r s i o n w a s first p a i d i n 1909.
That i s t h a t t h e r e
i s s o m e l i m i t e d amount o f income t h a t a p e r s o n may r e c e i v e w i t h
out h i s b e n e f i t s b e i n g a f f e c t e d a t all. T h i s has t h e a f f e c t ,
o t h e r t h i n g s b e i n g e q u a l , o r r a i s i n g t h e break- even income.
Today, f o r a s i n g l e p e n s i o n e r , f o r example, t h i s ' f r e e income'
i s t w e n t y - d o l l a r s p e r week and t h u s has t h e e f f e c t of raising
t h e ' b r e a k - e v e n ' income by a p p r o x i m a t e l y $1,040 p e r annum. If
I may t a k e my example of t h e s i n g l e p e n s i o n e r a l i t t l e f u r t h e r
we f i n d , a t l e a s t by i m p l i c a t i o n t h a t we have a l r e a d y d e t e r m i n e d
s e v e r a l o f t h e e l e m e n t s i n our scheme.
The b a s i c p e n s i o n r a t e
f o r a s i n g l e -person t o d a y $36.00 p e r week o r $1,872 p e r annum,
t h e r a t e o f t a p e r i s 50 p e r c e n t and t h e f r e e income i s $1,040
T h i s i m p l i e s t h a t f o r a s i n g l e p e r s o n t h e break- even
p e r annum.
p o i n t would b e t w i c e $1,872 p l u s $1,040.
That i s t o s a y t h e
' b r e a k - e v e n income' i s $4,784 f o r a s i n g l e p e r s o n .
Now t h i s
annual income o f $ 4 , 7 8 4 i s t h e income a t which t h e p e n s i o n c u t s
o u t f o r a s i n g l e p e r s o n , b u t , as I am s u r e many o f you know, it
i s n o t b r e a k - e v e n income i n t h e s e n s e that I have beeen p r e s e n t i n g
it.
P o s i t i v e t a x payments a r e l e v i e d on incomes w e l l below t h i s
I n f a c t , e v e n a l l o w i n g f o r t h e aged p e r s o n s t a x r e b a t e
figure.
it i s o n l y t a x a b l e incomes of $2,358 o r l e s s t h a t a r e exempt f r o m
And i n d e e d a
t a x i f our s i n g l e p e n s i o n e r happens t o b e aged.
p e r s o n whose t a x a b l e income i s o v e r $4,000 i s i n f a c t s u b j e c t t o
a marginal t a x r a t e o f 26 p e r c e n t .
In p r a c t i c e t h e n i t seems t h a t t h e r e l a t i o n s h i p between t h e s e
There i s no s i m p l e
t h r e e e l e m e n t s i s c o n s i d e r a b l y confwsed.
P o s i t i v e taxes a r e p a i d well before t h e
b r e a k - e v e n income.
n e g a t i v e tax payments c u t o u t ,
Even i n t h i s s i m p l e i l l u s t r a t i o n
it i s c l e a r t h a t t h i s h a s s e r i o u s consequences, f o r , o v e r a r a n g e
o f income, e a c h a d d i t i o n a l d o l l a r o f income r e c e i v e d i s s u b j e c t
n o t o n l y t o t h e 50 p e r c e n t t a p e r b u t a l s o t h e m a r g i n d t a x r a t e
which m a y b e as h i g h as 26 p e r c e n t .
That i s , 76 c e n t s o f e a c h
Now t h e s e
d o l l a r o f a d d i t i o n a l income t h a t i s r e c e i v e d i s l o s t .
r e l a t i o n s h i p s that a r e i m p l i e d i n our p r e s e n t p o l i c i e s n e e d t o b e
c a r e f ' u l l y t h o u g h t t h r o u g h b e f o r e one can c o n f i d e n t l y s e t t h e l e v e l
o f t h e g u a r a n t e e d m i n i m u m income.
25
L e t me now move o n t o my n e x t m a i n p o i n t ,
S u r e l y t h e purpose
o f t h e i n t r o d u c t i o n of a g u a r a n t e e d m i n i m u m income scheme should
have a c o n s i d e r a b l e b e a r i n g on t h e l e v e l t h a t i s s e t ,
There
a p p e a r t o be t h r e e main r e a s o n s f o r t h e i n t r o d u c t i o n o f t h e
v a r i o u s schemes t h a t may b e p u t u n d e r t h i s g e n e r i c h e a d i n g o f
g u a r a n t e e d m i n i m u m income.
F i r s t ] - y , i t i s a p p a r e n t t h a t a fundamental. i n e q u i t y e x i s t s i n
t h e p e r s o n a l income t a x system when we allow t a x r e d u c t i o n s t o
f l o w f r o m t h e a b i l i t y t o make d e d u c t i o n s f r o m t a x a b l e income f o r
t h e e x i s t e n c e of d e p e n d a n t s o r f o r v a r i o u s f o r m s o f expenditure
such as e 6 u c a t i o n , h e a l t h o r gift- giving. Q u i t e a p a r t f r o m t h e
f a c t t h a t t h e s e d e d u c t i o n s r e p r e s e n t a l a r g e r t a x saving f o r t h e
high income p e r s o n t h a t f o r t h e low income p e r s o n b e c a u s e o f t h e
p r o g r e s s i v e n a t u r e o f t h e t a x r a t e s t r u c t u r e - q u i t e a p a r t from
t h i s a n d a n y i n e q u i t y t h a t t h i s may i m p l y - t h e r e i s t h e f a r
g r e a t e r i n e q u i t y t h a t f l o w s f r o m t h e f a c t that n o t a x saving i s
a v a i l a b l e at a l l t o t h o s e w i t h d e p e n d a n t s , o r who h a v e made exp e n d i t u r e s o n a l l o w a b l e i t e m s , i f t h e y have n o t a x a b l e income,
An a t t e m p t t o i n c r e a s e e q u i t y and t o e x t e n d t h e c o n c e s s i o n s t h a t
a r e e n j o y e d 'by t h e r i c h t o t h e n o n - r i c h p e r s o n s o r t h e zeroincome p e r s o n i s a b a s i c p u r p o s e b e h i n d t h e i n t r o d u c t i o n o f s u c h
schemes as t h e t a x c r e d i t scheme t h a t w a s p r o p o s e d i n t h e U n i t e d
Kingd.om i n 1972.
The t a x c r e d i t s t h a t were p r o p o s e d t o b e
g r a n t e d were d e t e r m i n e d by t h e d e p e n d a n t s one had and were unr e l a t e d . t o income.
The t a x c r e d i t s t h a t were p r o p o s e d w e r e - t o
r e p l a c e t h e c o u n t e r - p a r t s of our c o n c e s s i o n a l d e d u c t i o n s f o r
d e p e n d a n t s and our c h i l d endowment.
These t a x c r e d i t s would be
o f f - s e t against o n e s t a x l i a b i l i t y and i f t h a t l i a b i l i t y was l e s s
than t h e c r e d i t , one r e c e i v e d a b a l a n c e i n t h e f o r m o f n e g a t i v e
Thus t h e t a x c r e d i t i t s e l f r e p r e s e n t e d a g u a r a n t e e d minitax.
miim income i n t h a t i t was a n amount t h a t was available i f one had
no income a t a l l .
A second purpose a s s o c i a t e d w i t h t h e introdu.ction o f a guaranteed
m i n i m u m income a r i s e s f r o m t h e f a c t t h a t t h e t a x systems and t h e
s o s i a l s e c u r i t y s y s t e m s i n m o s t c o u n t r i e s have t e n d e d t o develop
A s a consequence i n c o n s i s t e n c i e s
independently o f each other.
and a n o m a l i e s have a r i s e n .
We have a v e r y s i m p l e example o f
this i n Australia i n t h e e x i s t e n c e o f c h i l d endowment and t h e
way i n which t h a t i s o r g a n i s e d , s i d e by s i d e w i t h c o n c e s s i o n a l
deducti,ons f o r dependant c h i l d r e n .
The o p e r a t i o n o f t h e s e t w o
government p o l i c i e s b o t h of which give a s s i s t a n c e t o p e o p l e w i t h
Even t h e s i m p l e i d e a that a taxfamilies i s quite inconsistent.
p a y e r may p a y t a x e s b u t a l s o r e c e i v e cash b e n e f i t s f r o m t h e governrnent a p p e a r s t o many as an anomaly and c e r t a i n l y a c a u s e o f unn e c e s s a r y administration.
To c u t through t h i s c o n f u s i o n and t o
r e p l a c e it w i t h a more r a t i o n a l e s y s t e m has b e e n o n e o f t h e prime
purpoxes o f r e f o r m s t h a t have b e e n e n v i s a g e d i n a g u a r a n t e e d
m i n i m u m income.
26
Thirdly, t h e g u a r a n t e e d m i n i m u m income may have as i t s P u r p o s e
t h e e l i m i n a t i o n of p o v e r t y , - a t l e a s t t h e e l i m i n a t i o n of p o v e r t y
i n t h e s e n s e of i n a d e q u a c y o f income.
It i s t h i s p u r p o s e t h a t
i s t h e f o r e f r o n t , I would t h i n k , i n our d i s c u s s i o n s when we
emphasise t h e g u a r a n t e e d minimum as i s i n d i c a t e d b y t h e f o l l o w i n g
s t a t e m e n t about t h e g u a r a n t e e d minimum income t h a t was r e c e n t l y
made i n t h e U n i t e d Kingdom.
'A g u a r a n t e e d income f o r everyone
i n t h e c o u n t r y c o u l d a t a s t r o k e e l i m i n a t e .the hard c o r e o f r e a l
poverty.
Everyone would b e e n t i t l e d t o it, and e v e r y o n e would
r e c e i v e it.
P o v e r t y due t o i g n o r a n c e , i n e l i g i b i l i t y ( n o t
f a l l i n g i n t o t h e right category), o r p r i d e l e a d i n g t o not claiming
p r e s e n t b e n e f i t s would b e e l i m i n a t e d .
The p r e s e n t system of
b e n e f i t s f r o m numerous a g e n c i e s using d i f f e r e n t and sometimes conf l i c t i n g c r i t e r i a w o u l d end.'
So we have a r o s y f u t u r e i n which
all t h e anomalies w o u l d be wiped out and p o v e r t y at t h e Same t i m e
would be e l i m i n a t e d .
It seems t h a t s u c h a scheme i s t h o u g h t o f
as a panacea t o overcome p o v e r t y .
Now t h e s e t h r e e p u r p o s e s t h a t I ' v e mentioned l i e at t h e b a s e of
m o s t schemes b u t t h e emphasis varies.
The U n i t e d Kingdom t a x
c r e d i t p r o p o s a l , f o r example, p l a c e d m o s t emphasis o n e q u i t y
and t h e r a t i o n a l i s a t i o n o f t h e s o c i a l s e c u r i t y and t a x a t i o n
systems.
I n our p r e s e n t c o n t e x t i n t h e shadow of t h e work of
t h e P o v e r t y I n q u i r y , it i s l i k e l y I t h i n k t h a t we s h o u l d p l a c e
g r e a t e s t emphasis on p o v e r t y a l l e v i a t i o n .
I suppose, t o o , t h e
n a t u r e o f t h e group h e r e would s u g g e s t t h a t we w o u l d p r o b a b l y
Now i f t h e emphasis i s o n
p l a c e m o s t emphasis o n t h a t purpose.
t h e a l l e v i a t i o n o f p o v e r t y t h e n it f o l l o w s t h a t t h e r e a r e sign i f i c a n t i m p l i c a t i o n s for t h e l e v e l o f t h e g u a r a n t e e d m i n i m u m
income.
If t h a t p u r p o s e p r e d o m i n a t e s one w o u l d imagine t h a t
t h e guarantee c o u l d b e s e t no l o w e r t h a n t h e b a s i c p e n s i o n r a t e
that i s presently paid.
Up u n t i l now I h a v e c a r e f u l l y spoken about ' a p e r s o n ' when d i s cussing t h e r e c i p i e n t o f a g u a r a n t e e d m i n i m u m income,
T h i s has
been a s i m p l i f i c a t i o n which we must now examine, f o r t h e d e f i n i t i o n
of t h e r e c i p i e n t u n i t has a d e c i d e d b e a r i n g on t h e l e v e l a t which
Should we p a y b e n e f i t s and
t h e guaranteed m i n i m u m income i s s e t .
count income on t h e basis o f t h e i n d i v i d i i a l , t h e f a m i l y o r t h e
household?
Under a system which t r e a t e d each i n d i v i d u a l . as a
r e c i p i e n t u n i t , g u a r a n t e e s would be independent o f family o r h o u s e h o l d formation.
Thus m a r r i a g e w o u l d n u t b e d i s c o u r a g e d and p o o r
persons could economise by s h a r i n g h o u s e h o l d s w i t h o u t a f i n a n c i d
penaty.
But i f a l l i n d i v i d u a l s were e l i g i b l e r e g a r d l e s s o f age,
such a programme may o f f e r a n u n d e s i r a b l y l a r g e f i n a n c i a l i n c e n ? t i v e
for having c h i l d r e n .
Because it w o u l d t a k e no a c c o u n t o f t h e
economies of s c a l e i n f a m i l y s i z e it w o u l d b e l i k e l y t o r e d i s t r i b u t e t o o much -to large f a m i l i e s r e l a t i v e t o amall ones.
Moreover an i n d i v i d u a l d e f i n i t i o n , u s i n g t h e i n d i v i d u a l as a u n i t ,
would i g n o r e actuaL income s h a r i n g o f all k i n d s i n c l u d i n g s h a r i n g
27
within t h e f a m i l y .
A h o u s e h o l d as t h e u n i t a p p e a r s admini s t r a t i v e l y u n l i k e l y and I w i l l l e a v e a s i d e t h e commune which
appears even l e s s l i k e l y .
These as u n i t s a r e u n l i k e l y and
i m p r a c t i c a l a n d . I w o n v t d i s c u s s them a n y f ' u r t h e r .
The most
A system which t r e a t e d t h e f a m i l y
l i k e l y unit i s t h e family.
s u i t a b l y defined., as t h e r e c i p i e n t = n i t could t a k e account of
t h e economi.es o f f a m i l y s i z e and o f income sharing.
Having s e t t l e d on t h e s u i t a b l y d e f i n e d f a m i l y , we would s t i l l
have t h e c o n s i d e r a b l e problem o f d e t e r m i n i n g t h e g u a r a n t e e f o r
f a m i l i e s o f d i f f e r e n t s i z e and composition, It i s u s u a l l y
i m p l i e d t h a t t h e g u a r a n t e e would b e g r e a t e s t f o r t h e adult male
but would b e l e s s f o r t h e female spouse and l e s s s t i l l f o r
dependent c h i l d r e n , but t h e v a r i a t i o n s and t h e r e l a t i o n s h i p s
between t h e amounts a t t a c h i n g t o each o f t h e s e i n d i v i d u a l s i n
t h e family a r e far f r o m clear.
For example, i n t h e U n i t e d
Kingdom t a x c r e d i t p r o p o s a l s , t h e r e l a t i o n s h i p s were as f o l l o w s :
a s i n g l e male would r e c e i v e $4.00 p e r week t a x c r e d i t , a m a r r i e d
c o u p l e &6.00 p e r week, and each c h i l d an a d d i t i o n a l $2.00.
That
is, a c h i l d u n d e r t h a t scheme a t t r a c t s half t h e c r e d i t o f an adult
male.
Compare t h a t with t h e e l e m e n t s i n our own scheme i n which
t h e b a s i c p e n s i o n r a t e t o d a y i s $36.00 p e r week for a single a d u l t ,
t h e p e n s i o n r a t e f o r t h e married cou.ple i s $60.00 and t h e b e n e f i t
attaching t o a c h i l d i s $7.00 p e r week p l u s o f course t h e v a r i a b l e
amount o f c h i l d endowment depending on where t h e c h i l d i s i n t h e
family.
Thus, $7.00 p l u s ~ O C , o r whatever h i g h e r amount i s
a p p r o p r i a t e , compared with $36.00 f o r t h e s i n g l e p e r s o n i s far
l e s s f a v o u r a b l e f r o m t h e p o i n t o f vievv o f c h i l d r e n than t h e
Now I suppose t o
e l e m e n t s o f t h e scheme i n t h e U n i t e d Kingdom,
t h e e x t e n t t h a t we have a l o w g u a r a n t e e f o r a c h i l d , which seems
i s t h e Australian t r a d i t i o n when viewed i n t h e c o n t e x t o f many
o t h e r c o u n t r i e s , we can have a h i g h e r g u a r a n t e e f o r adults.
The a p p r o p r i a t e disbribl;it'ion of t h e g u a r a n t e e among various
members i n t h e f a m i l y i s a v a l u e judgement and t h e r e i s very
l i t t l e o b j e c t i v e e v i d e n c e a v a i 1 , a b l e on which t o b a s e our decision.
Even it we d i d have some o b j e c t i v e evidence on r e l a t i v e
If t h e
c o s t s it would s t i l l be l a r g e l y a m a t t e r o f o p i n i o n .
g u a r a n t e e i s t o a p p e a r t o have a n y rational b a s i s i n t e r m s o f
n e e d s or c o s t s a p p r o p r i a t e t o c o n s i d e r i t with r e s p e c t t o t h e age
of the child.
It seems t h . a t one t h i n g that can be s a i d i s t h a t i t would be
a p p r o p r i a t e t o distingxish between t h e g u a r a n t e e for a two months
o l d c h i l d and t h e g u a r a n t e e f o r a s i x b e e n year o l d dependent
c h i 1d.
28
Having d i s i x s s e d t h e r e c i p i e n t u n i t t h e r e r e m a i n j u s t t w o
o t h e r as$fact;s o f t h e r e c i p i e n t t h a t I w a n t t o m e n t i o n b r i e f l y .
F i r s t l , y p shoifld t h e g u a r a n t e e d income be u n i v e r s a l o r s e l e c t i v e ?
Now t h e wL02.e S a s i s , t h e whole t e n o r o f t h e scheme, s u g g e s t s
tna* it 333;;11d 5 e u n i v e r s a l .
G e t t i n g away f r o m c a t e g o r i s a t i o n
and ge";-ting away f r o m m e a n s - t e s t i n g i n d i c a t e s a move t o w a r d s
uniuerszlit;~.
The s e c o n d p o i n t c o n c e r n s t h e w o r k - t e s f . Unive r s a L i t y i x p l i e s a r i g h t and t h e r e f o r e a work t e s t would n o t
a p p e a r t:, +;e r e l e v a n t ,
But it seems u n l i k e l y with t h e p r e s e n t
a t t i t u d e s m.3 customs i n s o c i e t y t o d a y t h a t t h e community w o u l d
a g r e e t l s , and be willing t o p a y f o r , a g u a r a n t e e d income b e i n g
p a i d t c r h e a b l e b o d i e d work-shy.
A t l e a s t if t h e g u a r a n t e e
was am,il.aoi.e without a work t e s t i t i s c e r t a i n t h a t t h e r e
wGuic? k e p r e s s m e f o r t h e l e v e l t o be c o n s i d e r a b l y l o w e r than
i t w.312';1 bs i f t h e r e were a w o r k t e s t .
N y 2~x-kq i e s t i o n , what would t h e g u a r a n t e e d m i n i m u m income
r ep l a e 7
This may seem t o have a f a i r l y o b v i o u s answer.
It: w:mLr? p r z s a a b l y r e p l a c e t h e e x i s t i n g s o c i a l s e c u r i t y s y s t e m age, -in7raJ.irl
an3 w i d o w p e n s i o n s , unemployment, s i c k n e s s b e n e f i t s
.aE-3 XL~-IG
sndoment.
If it i s t o b e t h o u g h t o f as a r a t i o n a l i s i n g XVE n o doubt i t would a l s o r e p l a c e t h e syst-em o f t a x a t i o n
d-e6u~'7ionaf o r dependants, but, beyond t h a t , who knows.
If it
i s introl;.:ea i n a r e a l l y r a t i o n a l i s i n g move many o t h e r b e n e f i t s
arld c o n z e s s i c n s may go as w e l l .
There has b e e n a t e n d e n c y t o
S c l i e v e T h a t t h e g u a r a n t e e o f a m i n i m u m income removes t h e n e e d
for, a ~ c ij z s t i f i e s t h e r e m o v a l o f , many b e n e f i t s i n k i n d and
many fringe S e r e f i t s .
This i s where l o w take- up, many of t h e
a d x i i x i i s t r a t i v e d i f f i c u l t i e s , t h e s t i g m i t i s a t i o n o f t h e means
-5est,-aL7_ c f t h e s e d i s a d v a n t a g e s c m be g o t r i d o f i n one sweep
B u t tkirik o f Cr-is i n p r a c t i s e , should we p a y a g u a r a n t e e a t a
L e v e l +:?at is s u f f i c i e n t t o e n a b l e t h o s e w i t h o u t o t h e r income t o
be akl.e t o p r c h a s e t h e i r m e d i c a l r e q u i r e m e n t s o n t h e open m a r k e t
r G h e r h2isn have them p r o v i d e d through t h e p e n s i o n e r m e d i c a l
s e r v i . ~ ? F o r t u n a t e l y , t h a t q u e s t i o n l o o k s as i f it i s one we
w i l l ncjt have t o f a c e b e c a u s e o f t h e imminent i n t r o d u c t i o n o f
Mcdi.kank..
Take a n o t h e r example, should we a b o l i s h t h e s y s t e m
o f s+;Lpplcrafntarya s s i s t a n c e and s o g e t r i d o f a n o t h e r means t e s t ?
To dc this w o s l d imply raising t h e g u a r a n t e e d m i n i m u m income f o r
a sing2.e p e r s o n t o $40.00 p e r week and t h i s w o u l d have a c o n s e q u e n t
e f f e c t , v i s t l i e r a t e o f t h e t a p e r , o n t h e break- even income.
.d
b e a u n i v e r s a l payment and w o u l d b e made
T h i s w ~ ~ 1 presumably
w h e t h e r rent; w a s p a i d o r n o t and whether t h e r e c i p i e n t w a s i n n e e d
o r not.
X n l l a r l y w i t h t h e m a n y o t h e r f r i n g e b e n e f i t s and
concessims,
To pay a g u a r a n t e e d minimum income makes them n o
Longer n e c s s s a r y .
But if it i s t o b e s u f f i c i e n t , s o t h a t no one
i s WGTSB c.f u n d s r t h e new scheme than t h e y a r e t o d a y , t h e r e are
ver.y s e r i m s r::c,st 2onsequences.
La
29
My l a s t t h r e e p o i n t s :
the relationship o f t h e guaranteed
m i n i m u m income t o e x i s t i n g and o t h e r p r o p o s e d schemes o f
income m a i n t a i n a n c e , t h e work i n c e n t i v e a s p e c t , and t h e c o s t
o f t h e scheme, a r e much more h y p o t h e t i c a l and I w i l l d e a l w i t h
A s a background you w i l l s e e t h a t I am
them v e r y q u i c k l y .
t r y i n g t o e n v i s a g e t h e s o r t of l e v e l o f t h e g u a r a n t e e d m i n i m u m
income that i s i m p l i e d by many m
r existing social security
provisions.
F i r s t l y , t h e g u a r a n t e e would need t o b e a p p r e c i a b l y
h i g h e r t h a n t h e p r e s e n t b a s i c p e n s i o n r a t e t o cover t h e p o i n t s
I have j u s t made.
Secondly, t h e t a p e r i s u n l i k e l y t o be m o r e
t h a n 50 p e r c e n t f o r then d i s i n c e n t i v e s would be t o o g r e a t .
On t h e o t h e r hand, it i s u n l i k e l y t o b e l e s s t h a n 50 p e r c e n t
f o r t h e n t h e income at which t h e b e n e f i t c u t s out would be v e r y
much h i g h e r and t h e scheme p r o h i b i t i v e l y c o s t l y .
Thirdly, the
l e v e l of income a t which t h e b e n e f i t c u t s o u t o r t h e ' b r e a k even
income' w i l l b e v e r y h i g h and o b v i o u s l y w i l l b e i n a range where
t h e r a t e o f p o s i t i v e t a x t h a t w i l l b e p a i d w i l l b e q u i t e high
a seemingly i n c o n s i s Q n t and c o n t r a d i c t o r y n o t e i n the scheme
at t h e o u t s e t .
Now t h e s e problems w i l l b e m a g n i f i e d a n d
g r e a t e r i n c o n s i s t a n c i e s w i l l e x i s t i f new schemes l i k e t h e p r oposed compensation and r e h a b i l i t a t i o n scheme, t h e p r o p o s e d
n a t i o n a l s u p e r a n n u a t i o n scheme and employment schemes l i k e
N.E.A.T.
a r e i n operation.
They t e n d t o s e t new h i g h e r l e v e l s
o f g u a r a n t e e f o r some c a t e g o r i e s o f p e o p l e and t h u s r a i s e t h e
l e v e l s o f e x p e c t a t i o n s and r a i s e t h e l e v e l o f a n o m a l i e s t h a t
may f a c e us.
-
There i s an a d d i t i o n a l , and I f e a r o f t e n c o n c e a l e d d i f f i c u l t y
t o o , t h a t r e a l l y s h o u l d be brought i n t o t h e open.
These new
schemes and t h e g u a r a n t e e d minimum income scheme i t s e l f have
t o be p a i d f o r .
However we c a l c u l a t e t h e i r c o s t , t h e y mean
t h a t h i g h e r o v e r a l l t a x e s t h a n we a r e e x p e r i e n c i n g t o d a y w i l l
have t o be p a i d at a n y g i v e n l e v e l . o f r e a l income.
To this c o s t
must be added t h e p o s s i b i l i t y that t h e d i s i n c e n t i v e e f f e c t o f
t h e s e t a x e s w i l l be considerably increased.
On t h e q u e s t i o n o f d i s i n c e n t i v e s , much as b e e n w r i t t e n b u t l i t t l e
One can
r e a l l y c o n c l u s i v e evidence h a s b e e n p u t f o r w a r d ,
t h e o r i s e about t h e income and s u b s t i t u t i o n e f f e c t s i n v o l v e d i n
t h e v a r i o u s changes we have been c o n s i d e r i n g , one can r e f e r t o
t h e e m p i r i c a l work t h a t h a s been done i n o t h e r c o u n t r i e s about
t h e d i s i n c e n t i v e e f f e c t s o f t a x e s and t h e d i s i n c e n t i v e e f f e c t s
of s o c i a l s e c u r i t y arrangements, one ca,n t r y t o p a g e t h e n e t
e f f e c t s o f these things.
mt r e a l l y i t s a l l t o no avail. We
just do n o t know.
The p r o p o s a l s t x a t wa a r e c o n s i d e r i n g now
are proposals t h a t a r e s e t i n a d i f f e r e n t
c o n t e x t t o a n y o f t h e e m p i r i c a l work t h a t has b e e n done i n
other countries.
I n c e n t i v e q u e s t i o n s have b e e n examined
i n a d i f f e r e n t p o l i t i c a l c l i m a t e anti i n a d i f f e r e n t s o c i a l
climate.
E think. b e c a u s e o f t h i s it i s l i k e l y that t h e
d i s i n c e n t i v e e f f e c t s o f o u r s o c i a l w e l f a r e and s o c i d s e c u r i t y
schemes w i l l b e g r e a t e r t h a n o v e r s e a s e x p e r i e n c e i n t h e p a s t
has indicated.
Beyond t h a t p e r h a p s I s h o u l d n @ tgo.
We do n e e d t o d i s t i n g u i s h , i n c i d e n t a l y , between t h e d i s i n c e n t i v e
e f f e c t s among t w o g r o u p s .
O n t h e one hand, t h e r e i s t h e
This concerns t h e
d i s i n c e n t i v e t o e n t e r t h e work f o r c e .
problem o f t h e work- shy and t h e m a r r i e d women when t h e y a r e
c o n s i d e r i n g w h e t h e r t h e y w i l l t a k e employment.
On t h e o t h e r
hand, we n e e d t o c o n s i d e r t h e d i s i n c e n t i v e e f f e c t on t h o s e i n
t h e work f o r c e when t h e y c o n s i d e r whether t h e y w i l l work more
hours.
Now i f we a r e c o n c e r n e d about d i s i n c e n t i v e e f f e c t s as I t h i n k we s h o u l d b e even i f p a s t e x p e r i e n c e and p a s t
t h e o r i s i n g has t e n d e d t o s u g g e s t t h a t d i s i n c e n t i v e e f f e c t s a r e
n o t t o o g r e a t - we may c o n s i d e r o n e o r two changes aimed at
reducing t h e disincentive effects.
One o f which w i l l be t o
switch o u r t a x system s u b s t a n t i a l l y in t h e d i r e c t i o n o f i n d i r e c t
t a x a t i o n r a t h e r than d i r e c t t a x a t i o n .
This s u r e l y c o n f l i c t s ,
o r at l e a s t we s h o u l d a p p r e c i a t e t h a t i t i s p r o b a b l y g o i n g t o
c o n f l i c t , w i t h o u r anti p o v e r t y purpose.
The r e g r e s s i v e
n a t u r e o f most i n d i r e c t t a x e s w i l l b e a r h e a v i l y and indiscriminately on t h e poor,
Another a l t e r n a t i v e i s t h a t we may
a l t e r t h e income t a x r a t e s t r u c t u r e s o t h a t t h e marginal t a x
Such a
r a t e i s c o n s t a n t o v e r a v e r y wide r m g e o f incomes.
system may p r e s e n t l e s s d i s i n c e n t i v e s as one would n o t be
confronted w i t h h i g h e r and h i g h e r marginal t a x r a t e s .
It may,
i n f a c t , h a v e some i n c e n t i v e e f f e c t s because s u c h a c o n s t a n t
m a r g i n a l t a x r a t e p r e s u m a b l y would b e c o n s i d e r a b l y l o w e r than
t h e p r e s e n t 67 p e r c e n t (which i s t h e h i g h e s t r a t e l e v i e d ) and
p r o b a b l y w o u l d b e l o w e r than t h e marginal r a t e s c u r r e n t l y b e i n g
p a i d by t h o s e whose incomes a r e h i g h e r t h a n a v e r a g e e a r n i n g s .
Presumably f o r t h e s e h i g h e r income groups t h e r e may b e some
i n c e n t i v e e f f e c t i n sineh a change and t h e y may be s t i m u l a t . e d
t o work somewhat h a r d e r .
B u t c l e a r l y t h i s i s not t h e bulk
It i s t h e b u l k o f t h e p o p u l a t i o n who a r e
o f t h e population.
t h e y a r e t h e p e o p l e who p a y t h e t a x e s
t h e p e o p l e who m a t t e r :
f o r whom t h e i n c e n t i v e s a r e i m p o r t a n t
and t h e y a r e t h e p e o p l e
Very e a s i l y you
and o n whom t h e s t r e n g t h of t h e economy r e s t s .
c o u l d d i s c r e d i t a n y scheme i f t h e d i s i n c e n t i v e e f f e c t s t h a t a r e
embodied i n it a r e g r e a t .
31
It i s v e r y e a s y i n t h e p r e s e n t s i t u a t i o n t o f i n d t h a t t h e
c l i m a t e of f e e l i n g r e s u l t i n g f r o m i n f l a t i o n , on t h e one hand,
a n d h i g h e r t a x c o l l e c t i o n s on t h e o t h e r have produced an
antagonism t o w a r d government i n t e r v e n t i o n , p a r t i c u l a r l y i n
t h e income t a x f i e l d .
You have t h e community q u e s t i o n i n g
why it i s t h a t governments t h a t are n o t a b l e t o e l i m i n a t e
unemployment, and cannot c o n t r o l i n f l a t i o n should b e l i e v e
t h a t t h e y can u n d e r t a k e t h i s mammoth r e d i s t r i b u t i o n o f income
s o efficiently.
The c o n c l u s i o n t h a t I w a n t you t o c o n s i d e r i s t h a t it may b e
b e t t e r t o t h i n k o f a p l a n - a g u a r a n t e e d m i n i m u m income p l a n
based on our e x i s t i n g s o c i a l s e c u r i t y arrangements - r a t h e r
than i n t r o d u c i n g an e n t i r e l y new scheme.
We a l r e a d y have a good d e a l o f g u a r a n t e e d m i n i m u m income
i n o u r s o c i a l s e c u r i t y system.
It has b e e n mentioned, and
I t h i n k t h e p h r a s e has b e e n u s e d once a l r e a d y t o d a y , t h a t we
This i s
have b e e n p a t c h i n g up t h e s o c i a l s e c u r i t y system.
o f t e n d e s c r i b e d d e r i s i v e l y as t h e * b a n d - a i d ' approach.
But
I think t h a t t h e r e i s a l o t t o b e s a i d f o r c o n s i d e r i n g very
c a r e f u l l y b e f o r e we d i s c a r d a s y s t e m t h a t has many o f t h e
e l e m e n t s w e w a n t and has been t h e r e s u l t o f a long p r o c e s s o f
With f u r t h e r
m o d i f i c a t i o n , a d j u s t m e n t and improvement.
a l t e r a t i o n s it may w e l l p r o v i d e us w i t h a more v i a b l e and
a c c e p t a b l e p l a n f o r e n s u r i n g that t h o s e who r e a l l y n e e d it
a r e g u a r a n t e e d a m i n i m u m income than w o u l d be t h e case with
t h e i n t r o d u c t i o n of a more thorough- going, r e v o l u t i o n a r y
scheme
.
I f a new scheme i s t o p r o v i d e a g u a r a n t e e d m i n i m u m income that
i s f r e e o f a means t e s t and i s at a l e v e l t h a t i s s a t i s f a c t o r y
t h e r e i s a r e a l danger t h a t i t s c o s t and t h e n e c e s s a r y t a x
c o l l e c t i o n s w i l l b e u n a c c e p t a b l e t o t h e community,
To r e d u c e
c o s t s would r e q u i r e t h a t t h e l e v e l o f $ h e g u a r a n t e e be l o w e r e d .
I f t h i s r e s u l t s i n a l e v e l t h a t i s i n a d e q u a t e f o r t h o s e who
have no o t h e r income, we a r e l i k e l y t o be f a c e d w i t h t h e i n t r o d u c t i o n o f supplements t h a t w i l l be h a r s h l y means- tested.
A l t e r n a t i v e l y , we c o u l d r e t a i n a l o w l e v e l o f g u a r a n t e e d income
and j e t t i s o n our a t t e m p t s t o overcome income inadequacy and
poverty.
These a r e t h e a l t e r n a t i v e s .
They are t h e q u e s t i o n s that n e e d
t o b e r a i s e d when we c o n s i d e r t h e l e v e l o f t h e guaranteed
m i n i m u m income.
I don't p r e t e n d t h a t I know t h e answers.
But I am c e r t a i n t h a t t h e answers n e e d t o b e e x p l o r e d very care
f u l l y b e f o r e we a c c e p t , and b e f o r e we e x p e c t t h e community t o
a c c e p t , a l l that i s i n v o l v e d i n a g u a r a n t e e d minimum income
scheme.
-
32
EDITED DISCUSSION: OF JOHN HARPEROS PAPER
-
-
QUESTION NO 1
Just two q u i c k o b s e r v a t i o n s .
F i r s t , I take t k e p o i n t that
a g u a r a n t e e d minimum income p l a n must h e p r e s e n t e d t o t h e
It seems to me t h i s whole
public in quite simple terms.
q u e s t i o n i s r e l a t e d t o t h e p r o m o t i o n of t h e p o s s i b i l i t i e s
a n d t h e a H e r n a t i v e s i n t h e community.
It i s s u r e l y desi r a b l e t h a t as many p e o p l e as p o s s i b l e become aware o f a
scheme - l e t s hope t h e government doesnOt p r o m o t e one scheme
and t h a t s it
b u t i f t h e r e are many schemes and d i f f e r e n t
p o s s i b i l i t i e s t h a t t h e q u e s t i o n i s s e r i o u s l y d e b a t e d whether
we s h o u l d h a v e a g u a r a n t e e d m i n i m u m income.
I t h i n k one of
t h e d a n g e r s o f t h e g u a r a n t e e d m i n i m u m income i s t h a t a p a r t from
p a t c h i n g up a few holes it w i l l j u s t b e a u s e l e s s e x e r c i s e
and i n s t e a d o f b e i n g a r o s e by a n y o t h e r name i t i s j u s t going
t o b e a n i c e name for a b e t t e r b s n e f i t scheme.
-
The second p o i n t c o n c e r n s the g e n e r a l t h r u s t o f your paper,
I found It some what t e n t a t i v e and c a u t i o u s , a n d I found i t
v e r y difficrx1-b t o work o-dt what y o u r p o s i t i o n is.
Maybe t h i s
i s because t h e r e a r e c o m p l e x i t i e s e t c . and you h a v e n ' t worked
your p o s i t i o n o u t and I don't c r i t i c i s e you f o r that, but it
wasn't c l e a r e x a c t l y where you stand.
Although I arn g l a d
that you m e n t i o n e d t h a t t h e g u a r a n t e e s h o u l d b e a p p r e c i a b l y
h i g h e r , I would 'be i n t e r e s t e a t o k n o w what you meant b y t h a t I found i t y-kite s i g n i f i c a n t t h a t yo:n u s e d t h e f i g u r e o f $1,800
i n giving an example.
It seems t o m e that t h e r e i s a g e n e r a l
t e n d e n c y whenever p e o p l e t a l k a b o u t a g u a r a n t e e c m i n i m u m income
t h a t t h e y opt, f o r some low f i g m e , and t h e y a l w a y s opt f o r
something which i s e q u i v a l e n t t o t h e p e n s i o n .
These f i g u r e s
We s h o u l d be
t e n d t o s k i e k and t h e s e f i g u r e s t e n d t o s t a y .
iihinkimg more i n t h e d i r e c t i o n o f some com$crtab;e standard of
l i v i n g r a t h e r than a b a s i c miniawn standard o f l i v i n g .
You
s u g g e s t e d that rna,ybe t h e work t e s t wasnpt r e l e v a n t t o t h e question
It seems t o m e t h a t i f i n f a c t
o f a g u a r a n $ e e d m i n i m u m income.
t h e g u a r a n t e e i s s o l o w th:en t h e reason why i s b e c a u s e o f t h e
work t e s t , b e c a u s e p e o p l e a r e a f r a i d t h a t p e o p l e a r e n o t going
t o work.
k d t h a t raises a f i n a l p o i n t which I think w i l l have
t o be t a c k l e d - shoTJld we be w o r r i e 3 a b w t w h e t h e r p e o p l e want
t o work o r n o t ?
ANSWER
Well t h e r e a r e a lot o f p o i n t s t h e r e that I would l i k e t o answer.
F i r s t , p e r h a p s i f I c l a r i f y where I stand.
I think p r o b a b l y
you b e t t e r c l a s s i f y me as a v e r y o l d f a s h i o n e d c o n s e r v a t i v e .
I d o n ' t think t h a t t h e t h r u s t o f my p a p e r w i l l be r e g a r d e d as
anything but t h a t , i n t h e end, I t h i n k probab1.y t h e t h r u s t o f
much o f what I ' m s a y i n g i s p r e t t y much i n t h e o p p o s i t e d i r e c t i o n
t o what your s a y i n g .
The main thrust o f my p a p e r r e a l l y i s
that t o have a g u a r a n t e e d m i n i m u m that i s a c c e p t a b l e t o a b o l i s h
p o v e r t y i s going t o b e t o o c o s t l y f o r t h e community t o t o l e r a t e .
If you t a l k a b o u t having a g u a r a n t e e d m i n i m u m income t h a t p r o v i d e s a s a t i s f a c t o r y l e v e l w e l l above t h e p o v e r t y l i n e t h i s i s
c l e a r l y far more c o s t l y .
The e s s e n t i a l t h i n g t h a t WP h a w t o
r e a l i s e i s t h a t whatever scheme you u s e i t i s going t o have t o be
p a i d f o r and i s going t o i n v o l v e massive t r a n s f e r s t h r o u g h t h e
government,
Now i f t h e s e t r a n s f e r s a r e made more massive u n d e r
a g u a r a n t e e d m i n i m u m income scheme b e c a u s e we a r e going t o p a y
t h e g u a r a n t e e t o t h e whole community i n some f o r m w i t h o u t a means
t e s t t h e n many p e o p l e w i l l r e a c t v e r y s t r o n g l y t o t h e s e new high
They may be g e t t i n g money back f r o m t h e
l e v e l s o f taxation.
government but t h e y w i l l b e c o n f r o n t e d w i t h v e r y high l e v e l s of
t a x a t i o n , p a r t i c u l a r l y of c o u r s e if we a s s o c i a t e t h i s with various
o t h e r v e r y d e s i r a b l e w e l f a r e programmes ranging f r o m e d u c a t i o n
r i g h t through t o s u p e r a n n u a t i o n , compensation, r e h a b i l i t a t i o n .
A l l t h e s e things a r e going t o c o s t b i l l i o n s and t h e money has
t o b e r a i s e d and I j u s t doubt whether t h e community i n i t s p r e s e n t
frame o f mind w i l l buy t h i s whether i t i s a r o s e b y any o t h e r
name o r a lemon.
QUESTION NO
2
It i s d i f f i c u l t t o m a k e up o n e ' s mind about t h e l e v e l s , and
what i s p o s s i b l e , u n t i l we g e t some i d e a o f what i s i n v o l v e d e v e n up t o t h e l e v e l o f $ 2 , Q O O - b e a r i n g i n mind t h e p r e s e n t
Has anyone produced f i g u r e s o r addd i s t r i b u t i o n o f income.
itional net costs?
There i s a l i m i t t o what you can do without
t a x i n g p e o p l e o n l o w e r incomes.
ANSWER
I think it i s common knowledge that t h e p o v e r t y i n q u i r y has b e e n
determining t h i s on t h e b a s i s o f c o s t , t h e r e w i l l be r e p o r t s
a v a i l a b l e f a i r l y soon that w i l l have t h i s documented i n a f a i r
If I c o u l d just go o n though and comment on
amount o f d e t a i l .
t h e g e n e r a l r e a c t i o n o f c o s t s md t h e l e v e l o f g u a r a n t e e , I c a n ' t
h e l p wondering whether t h e r e i s t o o much emphasis on one l e v e l o f
guarantee.
John d i d m e n t i o n t h e p o s s i b i l i t y o f p e r h a p s having a
When you t a l k o f c o s t s , o b v i o u s l y
l o w e r g u a r a n t e e for some p e o p l e .
i f you a r e going t o have a high l e v e l o f g u a r a n t e e s o t h a t n o one
34
i s worse o f f and t h e r e f o r e a l o t of p e o p l e a r e g o i n g t o b e
b e t t e r o f f - and t h a t a p p l i e s t o everyone - it i s going t o b e
extremely costly,
However one o f t h e v a r i a b l e s t h a t we c a n
u s e and m a n i p u l a t e i s t o have d i f f e r e n t l e v e l s o f g u a r a n t e e .
Perhaps t h i s does n o t do away w i t h some o f t h e o t h e r problems
t h a t we a r e c o n s c i o u s of but I t does m a r k e d l y a f f e c t c o s t s .
S i m i l a r l y $ t h i n g s l i k e f r i n g e b e n e f i t s , supplementary allowances
were mentioned. - a g u a r a n t e e d m i n i m u m income which s t i l l makes
t h e s e t h i n g s n e c e s s a r y d o e s not do away w i t h a l l t h e d i f f i c u l t i e s
we would l i k e but s h o u l d S e c o n s i d e r e d i n t h e r a n g e o f p o s s ibilities.
F i n a l l y , I would l i k e t o state! my v i e w t h a t I d o n ' t
t h i n k we s h o u l d be overwhelmed b y t h e c o s t problem r a t h e r t h a t
we s h o u l d b e l o o k i n g at ways t o minimise c o s t s .
COMMENT
1 a g r e e that; you can g i v e d i f f e r e n t l e v e l s o f g u a r a n t e e a n d s o
o n but t h a t r a i s e s t h e q u e s t i o n o f c a t e g o r i s a t i o n which comes
r i g h t back t o t h e b e g i n n i n g o f your c r i t i c i s m a b o u t various
pensions.
QUESTION NO 3
I t h i n k thar, t h e r e a r e a few p a r a m e t e r s o f t h e c o s t t h i n g t h a t
ought t o b e d i s c u s s e d b e f o r e w e d i s c u s s whether i t i s f e a s i b l e .
I c o u l d a r g u e t h a t t h e n e g a t i v e income t a x scheme i s f e a s i b l e
i f you. a r e p r e p a r e d t o do c e r t a i n t h i n g s , and some o f t h e s e
things w i l l i n v o l v e a r e - e v a l u a t i o n o f w e l f a r e h o u s i n g , e d u c a t i o n
I t h i n k however t h a t we n e e d t o
p o l i c i e s , c h i l d endowment e t c .
f i r s t o f a l l g e t some i d e a o f what i s t h e p o v e r t y p o p u l a t i o n ;
what i s t h e duration o f poverty.; what i s t h e n a t u r e o f p o v e r t y j
how long a r e p e o p l e p o o r ; t o what e x t e n t w i l l t h e y s t a y i f t h i s
c u r r e n t s y s t e m r e m a i n s ; t o what e x t e n t w i l l t h e y c e a s e t o b e
p G o r i f w e change t h e i n c e n t i v e s t r u c t u r e , w e l f a r e s t r u c t u r e e t c .
I t h i n k t h a t it can be a r g u e d t h a t a l o t o f p o v e r t y d o e s n 9 t l a s t
v e r y l o n g , a l o t of t h e z u r r e n t programmes d i r e c t e d at p o v e r t y ,
for example, h o u s i n g s u b s i d i e s , b e n e f i t p e o p l e o v e r t h e i r l i f e
t i m e , even though t h e y m a y b e p o o r f o r o n l y about 5 p e r c e n t of
that t i m e .
While such goverrment e x p e n d i t u r e s , e.g. o n w e l f a r e
h o u s i n g , h e l p a l o t o f p o o r p e o p l e t h e y a l s o n e l p a l o t o f non
p o o r people,
Likewise, m o s t 1 w g e f a m i l i e s a r e n o t poor, about
80 p e r c e n t of ,them a r e n o t p o o r , s o g e a r i n g u p c h i l d endowment
as p r o p c e e d o r i g i n a l l y by t h e Henderson committee i s an e x t r a o r d i n a r i l y i n e f f i c i e n t way t o t a c k l e p o v e r t y .
Now i f we s e t
a n e t s o t h t no f a m i l y o r persons i s a l l o w e d t o f a l l below a
35
c e r t ; a i n m i n i m m stan6ard o f living then we wilP g e t some
c l e a r e r i d e a a',;ejirt w h a t * h e r e s i d u a l w e l f a r e needs i n t h e
s y s t e m are,
B i t that net; w i L h e j o l . l y low i f we k s q all
t h e o t k e r s;ystms going,
I t h i n k that; t h e vay t h e E r i o r i t y Review S t a f f has b e e n l o o k i n g
at ginaranteed i n c m e i s b y l o a k i n g a t what p r o g r m e s could we
repl-acc, - ~0-212
w t r z p l a c e sone o f $7163 e d u c a t i m i e x p e n d i t u r e s ,
c o u l d we r e p l a c e some o f t k e w e l f a r e S o u s i n g e x p e n d i t x - e s ,
c l e a r l y c h i l d E n d o m e n f s i s a c a n d i d a t e , a n d t h e l i s t g o e s on.
N OW I t h i n k t.cna%m t h e b a s i s a f -ijhese sorts o f s51ms one can
t a l k a3ciAt an incorre g i i a r a n t e z tha-t; c a n b e f i n a n c e d lsx a t a x
rate tiha% is t o i e r a b l e be%xse we woln'id be c o n s i d e r i n g removing
o t h e r e q q n d i t z r e s at %he same tirce,
But i f we a r e t o move
t o w a r d s a p a r a n t e e d income wit11 r e t e n t i o n o f all. t h e e x i s t i n g
schemes t h e n t k e gcverrment t5at i n t r o d x c e s sslcpl a g u a r a n t e e d
income W C K L ~ Z l a s t v e r y long.
S i m i l a r l y i.f we move for an
i n d i v i d i l a l bases systeiz r a . t h e r t h a n a f a m i l y b a s e d one t h e
govermen-h w c x Z d n a t l a s t v e r y lGng b e c a u s e you wouic3. be e n d i n g
up w i t h t a x rates o f armin3 50 F e r =ento
SO I think a group
such as i n h i sm i g h t proflt;aS;;Ly discuss n o t onl-y what i s t h e
income t a r g e t b u t j - ~ s wkat
t
i s $he a t t i t u . d e t o p r o g r m l e s like
w e l f a r e housing7 e d L i c a t i m m b s i d i e s t a r g e t e d on t h e disadv a n t a g e , b e c a u s e i f t L e y c a n change t h e i r a t t i t u d e t o some of
tLc,ose programmes, a n d are w i l l i n g t o a t t a c k : a l o w e r p r i o r i t y
t o some of t h o s e programmes, then g u a r a n t e e d income becomes
f e a s i b l e at t o l e r a b l e t a x r a t e s i n %he o r d e r o f marginal t a x
r a t e s o f c e r t a i n l y rouck L e s s than. 50 p a ? c e n t .
COImVLENT
F i r s t o f all. I w m l d L i k e
knaw who i s g o i n g t o b e n e f i t
from g z a r a n t e e d minirrrm inzome s*;heme, who a r e we aiming t o
&re we aiming to k e l p the e c a a o r c i s t g e t a rational
help,
e c o n o a i c model. '31: are we t r y i n g t o i n f a z t , g x a r a n t e e income
IT is qG.ite c l e a r 3ha.t w h a t i s going t o 5 e a c c e p t a b l e
security.,
i s w h a t %he b i m i n e s s syatem f ' s e l s i s n e c e s s a r y t o keep t h o s e
b u s i n e s s e s go ing.
I f y m get, t o that pploint then you a n s t a r t t o i c o k a t that
qxiesti-on vvikk: t h e other a l t e r n a t e f c r m s e f w e l f a r s sLLpport a n d
wke-cher we s m a f f o r d t o have national compensation schemes
I would l i k e t o
and l e a v e t h e b o t x o m ?.eve1 t o t a l l y u n t w c h e d .
know w h e t h e r you are l o o k i n g at t h e w h C e t n i n g w i t l l i n t h e market
mou1.d o r w h e t h e r yov. a m l o o k i n g zt, some s o r t o f conzept of
g u a r a n t e e i n g a minin-xn l e v e l . of we11 being ana t k e n t h e r e being
36
a l t e r n a t i v e ways of doing it.
The l a s t q u e s t i o n a l m o s t s a i d
l e t s cut b a c k , for example, on w e l f a r e h o u s i n g and g i v e some
of t h a t money i n c a s h f l o w s o p e o p l e c a n buy i n t h e market p l a c e .
'Phis assumes t h a t t h e m a r k e t p l a c e i s a r a t i o n a l e human p l a c e
c o n c e r n e d w i t h hmnan n e e d s a n d d o e s n w t t a k e i n t o account, o f
course,that a l a r g e s e c t i o n of the population is outside t h e
market place.
Further, l e t s assume t h a t a l l one i s t r y i n g t o do i s t o r e d i s t r i b u t e income s o t h a t l o w income g r o u p s c a n e n t e r t h e m a r k e t ,
assuming t h a t t n e s e m a r k e t mechanisms a l l o w t h e l o w income
s e c t o r s equal a c c e s s t o t h e market.
The r e a l i t y i s that t h e
low income s e c t o r p a y t h e h i g h e s t amount o f t a x , i s g i v e n t h e
s h o d d i e s t goods f o r t h e h i g h e s t p r i c e .
A r e you saying l e t s c u t b a c k t h e s e o t h e r programs r a t h e r than
evaluating h o w we c a n g e t b e t t e r value o u t o f our w e l f a r e system.
It seems t h a t most of our systems a t t h e moment assume t h a t we
a r e i n the market p l a c e ,
REPLY TO ABOVE COMMENT
I am r e a l l y asking you as a w e l f a r e e x p e r t w h a t your p r e f e r e n c e s
are.
I am assuming t h a t we d o n ' t change s o c i e t y f u n d a m e n t a l l y .
What a r e your p r i o r i t i e s - i f you w i s h t o r e t a i n i n k i n d s e r v i c e s
such as welfare i n v e r y g e n e r o u s magnitudes t h e n t h i s i s g o i n g t o
m o d e r a t e t h e l e v e l o f income g u a r a n t e e t h a t you a r e going t o b e
a b l e t o offer.
It i s a q u e s t i o n o f p r i o r i t i e s .
I. would be w i l l i n g t o a r g u e that t h e g o v e r n m e n t v s e d u c a t i o n
e x p e n d i t u r e i s e x t r a o r d i n a r i l y e f f i c i e n t i n d i s t r i b u t i n g income
t o t h e a d v a n t a g e d , and t h e r e i s a l i t t l e b i t o f compensation at
t h e b o t t o m end.
If we a r e going t o t a l k about t h e l e v e l o f
income g u a r a n t e e t h a t we m i g h t s u p p o r t t h e n we r e a l l y have t o
d e b a t e s i r n i l t a n e o u s l y t h o s e o t h e r programmes which c o s t a lot o f
moneg.
Just how e f f e c t i v e i s e d u c a t i o n , how e f f e c t i v e i s housing,
how e f f e c t i v e need your income t a x b e , and how e f f e c t i v e i s t h e
c u r r e n t system.
COMMENT
I think it Eight w e l l b e a r g u e d t h a t e x p e n d i t u r e o n g u a r a n t e e d
income n e c e s s i t a t e ever g r e a t e r e x p e n d i t u r e o n some o t h e r w e l f a r e
37
areas.
It seems that t h e r e i s a h i d d e n moral assumption
t h a t p e o p l e r e a l l y ought t3 be a b l e t o e x i s t o n a c a s h income
i f t h e c o r n u n i t y d e c i d e s that t h e y a r e e n t i t l e d t o have it.
It may w e l l be argued t h a t many p s o p l e , p a r t i c u l a r l y people
who have been u s e d t o l i v i n g with p o o r incomes, may n o t be
a b l e t o e x i s t i n t h e way t h a t everybody e x p e c t s t h a t t h e y can
and t h e r e f o r e t o make a g u a r a n t e e d income system work you may
need t o spend even more sums on such things as community
development and education.
I think t h a t as w e l l as l o o k i n g
at what w i l l a g u a r a n t e e d income r e p l a c e , I t h i n k we ought
t o spend some t i m e l o o k i n g at what a d d i t i o n a l things would
be r e q u i r e d i f a g u a r a n t e e d income were t o work.
COMMENT
It does seem t o me t h a t t h e minute you start t a l k i n g about a
l i m i t e d l e v e l o f guaranteed income of say $2,000 t h a t t h i s
doesnOt even begin t o d e a l w i t h t h e problems o f e x p e n d i t u r e
t h a t a f a m i l y has t o cope w i t h a f t e r income t a x .
It would
seem t o me r a t h e r more a p p r o p r i a t e t h a t we g o f u r t h e r along
t h e l i n e ayld f o c u s
schemes l i k e h o w i n g , welfare b e n e f i t s ,
much more t o w a r d s l o w income groups. I d o n ' t see it as an
e i t h e r / o r p r o p o s i t i o n except i n t h e s e n s e that it. has g o t t;o
b e a r e d i s t r i b u t i v e thing n o t o n l y i n t e r m s o f income but i n
t e r m s o f fwadamental r e s o u r c e s l i k e housing and h e a l t h .
IVD3THODS
OF
ACHIEVING
A
P r o f e s s o r James Cutt
GUARANTEED MINIMUM INCOME
Prof e ss o r o f Administ rat i v e
S t u d i e s , Facu1,ty o f
Economics, Australian National U n v e r s i t y
This b r i e f p a p e r reviews t h e range o f a l t e r n a t i v e a p p r o a c h e s
t o welfare reform, and s u g g e s t s a b r o a d framework f o r t h e
e v a l u a t i o n o f such a l t e r n a t i v e s .
The broad range o f r e l e v a n t p o l i c y o p t i o n s may b e c o n s i d e r e d
t o f o r m a continuum o f spectrum and t h e p a r t i c u l a r c a t e g o r i e s
d e f i n e d may be r e g a r d e d simply as i l l u s t r a t i v e o f major
sections o f t h e spectrum, i m p l i c i t i n which i s a v i r t u a l l y
i n f i n i t e r m g e o f p e r m u t a t i o n s and combinations.
The p a p e r
p r e - c i r c u l a t e d " g i v e s t h e broad c a t e g o r i e s o f programs which
may be i d e n t i f i e d o n t h i s spectrum.
Such w e l f a r e programs w i l l have a v a r i e t y o f v e r y d i f f e r e n t
e f f e c t s a n d o b j e c t i v e s - some o f which w i l l b e complementary,
o t h e r s c o n f l i c t i n g - and a wide range o f performance
i n d i c a t o r s may be u s e d f o r t h e s e w e l f a r e programs.
The macro measures o f a program w i l l i n c l u d e t h e e f f e c t of t h e
program on t h e growth of GNP;and t h e e f f e c t o f t h e program o n
economic s t a b i l i t y , f o r example t h e r a t e o f unemployment a n d
i n f l a t i o n . The micro, o r s p e c i f i c outcomes, may b e s e e n f i r s t
i n terms of a b s o l u t e outcomes. For example, t h e a b s o l u t e o u t comes d e f i n e d i n terms o f a s p e c i f i e d p o v e r t y l i n e and t h e
c o r r e s p o n d i n g p o v e r t y gap. The outcomes may a l s o be s e e n i n
a r e l a t i v e way and d e f i n e d i n terms o f a v a r i e t y o f measures
o f income d i s t r i b u t i o n .
There a r e o t h e r outcomes which s h o u l d a l s o be e v a l u a t e d .
F o r example, t h e program c o s t , This will i n t u r n r e f l e c t
whether o r n o t t h e program i n q u e s t i o n i s i n t e n d e d t o s u p p l e ment o r r e p l a c e e x i s t i n g programs.
Secondly, t h e e f f e c t 09 work i n c e n t i v e s and t h e o b s e r v e d
change i n labotlr supply on t h e p a r t o f p e r s o n s u n d e r t h e program i n question.
Third, t h e effecj; o f t h e program o n t h e consumption/saving
behaviour o f t h e r e c i p i e n t f a m i l i e s , and t h e e x p e n d i t u r e
p a t t e r n o f such f a m i l i e s .
*
P l e a s e note. A background p a p e r w a s p r e p a r e d and c i r c u l a t e d
before t h e seminar. The paper i s i n c l u d e d i n Appendix A.
39
Fourth, % h e e f f e c t o f t h e p r o g r m o n f a m i l y s t a b i l i t y . P a r t i c u l a r l y i n terms o f t h e e x t e n t t o which income s u p p o r t program
p r o v i d e s an i m p l i c i t m o n e t a r y i n c e n t i v e f o r one s p o u s e i n a twoparent fmily t o e s t a b l i s h a s e p a r a t e household.
F i f t h , t h e s t i g m a t i z i n g e f f e c t o f t h e program i n q u e s t i o n .
Such an e f f e c t b e i n g r e l e v a n t f o r i t s own s a k e i n as much as i t
i s g e n e r a l l y h e l d t h e s e d a y s t h a t income s u p p o r t programs s h o u l d
n o t be p r o v i d e d i n a manner t h a t somehow s t i g m a t i z e s t h e r e c i p i e n t s . F u r t h e r t h e program e f f e c t i v e n e s s and c o s t w i l l b e determi n e d b y t h e e x t e n t t o which e l i g i b l e b e n e f i c i a r i e s e n r o l i n t h e
pr0gra.n - this w i l l b e d i r e c t l y r e l a t e d t o t h e e x t e n t t o which t h e
program.is p e r c e i v e d t o be s t i g m a t i z i n g .
S i x t h , t h e p o l i t i c a l a c c e p t a b i l i t y o f t h e program. T h i s may b e
d e f i n e d i n t e r m s o f Cost, o r m o r e i n t e r e s t i n g l y , i n t e r m s of t h e
e f f e c t s o f t h e program o n i n t e r e s t e d p e r s o n s i n t h e p o l i t i c a l
arena.
Program outcomes may f i n a l l y be seen i n terms o f t h e administ r a t i v e e f f i c i e n c y o f t h e program.
This may b e d e f i n e d i n t e r m s
of t h e p e r c e n t a g e o f t o t a l program c o s t s r e q u i r e d t o a d m i n i s t e r
t h e program.
Suppose t h a t we had i n f o r m a t i o n o n t h e s e t o f outcomes l i s t e d
above f o r a l t e r n a t i v e w e l f a r e r e f o r m measures. How do we u s e
t h e s e i n an e v a l u a t i o n s t r a t e g y ? Even i n a p a r t i a l , s t a t i c s e n s e ,
it i s d i f f i c u l t t o m a k e s e n s e o f a m u l t i - d i m e n s i o n a l s e t o f
incommensurables. The standard a p p r o a c h would be % o s e p a r a t e o u t
t h e c o s t income, and t o u s e a standard c o s t - e f f e c t i v e n e s s a p p r o a c h
i n which we a t t e m p t e d t o f i n d o u t h o w b e s t we c o u l d do f o r a s p e c i f i e d c o s t c c j n s t r a i n t o r how c o s t c o u l d b e minimized f o r t h e attainment o f a s p e c i f i e d p e r f o r m a n c e t a r g e t . The d i f f i c u l t y however
l i e s i n s p e c i f y i n g t h e t a r g e t . We have a s e t o f incommensurable
o u t p u t measures, and we c a n o n l y o p t i m i z e one s u c h measure at a
time. But t h i s p r o c e d u r e does s c a n t j u s t i c e t o t h e richness o f t h e
s e t o f o u t p u t measures we have s p e c i f i e d and, i d e a l l y , we would
l i k e t o be a b l e t o d e f i n e e a c h outcome o n a common s c a l e , a p p l y
a p p r o p r i a t e weights t o e a c h outcome, and c o l l a p s e t h e v a r i o u s o u t come measures i n t o a s t a n d a r d i z e d o v e r a l l performance s c o r e f o r
Now i n the f i n a l a n a l y s i s we
each a l t e r n a t i v e w e l f a r e program.
w i l l have t o conduct such an e x e r c i s e t o d e c i d e o n t h e b e s t p r o gram, but I would now l i k e t o argue t h a t t o conduct s u c h an e x e rc i s e meaningfully we m u s t define a framework i n which t h e i n t e r r e l a t i o n s h i p s b e t w e e n t h e s e t o f outcome m e a s u r e s o v e r t i m e f o r
each program under c o n s i d e r a t i o n a r e e s t a b l i s h e d .
40
The program lTiUst also b e p l a c e d i n i t s macro c o n t e x t and under
t h i s h e a d we c a n n o t e s c a p e t h e r a t h e r t h o r n y q u e s t i o n of program
dynamics. A p r o g r a n which w a s c o n s i d e r e d t o i n c r e a s e t h e r a t e of
i n f l a t i o n w o u l d c l e a r l y d i m i n i s h t h e r e a l value of t h e performa n c e m e a s u r e s o v e r t i m e ; and a program which w a s c o n s i d e r e d t o
c o n t r i b u t e t o unemployment would i n c r e a s e t h e p o t e n t i a l c l i e n t e l e ,
a n d a f f e c t t h e c o s t and p e r f o r m a n c e m e a s u r e s o f t h e program.
C o n v e r s e l y , f a v o u r a b l e e f f e c t s o n i n f l a t i o n and unemployment
would h a v e c o r r e s p o n d i n g l y f a v o u r a b l e e f f e c t s o n program outcomes
over time.
The u l t i m a t e macro c o n t e x t , o f c o u r s e , i s t h a t of t h e
g r o w t h of a g g r e g a t e o r n a t i o n a l income o v e r t i m e . If t h e program
were c o n s i d e r e d t o a f f e c t t h e r a t e o f growth o f n a t i o n a l income,
t h i s would h a v e r a d i c a l i m p l i c a t i o n s f o r t h e c o s t and performance
of t h e program o v e r t i m e , i n c l u d i n g t h e national c a p a c i t y t o
f i n a n c e such programs.
P e r h a p s t h e m o s t c o n v e n t i o n a l dynamic argument i s t h a t r e l a t i n g
program c o s t and a b s o l u t e outcome m e a s u r e s t o t h e e f f e c t s of t h e
program o n work i n c e n t i v e s .
The q u e s t i o n i s complex, although
we h a v e t h e a s s i s t a n c e i n t h i s c a s e of t h e e v i d e n c e f r o m t h e flew
J e r s e y g u a r a n t e e d income e x p e r i m e n t , and a c o n s i d e r a b l e body o f
t h e o r e t i c a l and e m p i r i c a l e v i d e n c e . The dynamic d i l e r m a here i s
that i f t h e w e l f a r e program r e s u l t s i n a r e d u c t i o n i n l a b o u r
s u p p l y , program c o s t s w i l l b e h i g h e r o v e r t i m e , p o v e r t y a l l e v i a t i o n w i l l b e l e s s s u c c e s s f u l , and t h e r e w i l l b e d e f i n i t i o n a l
i m p l i c a t i o n s f o r economic growth t h r o u g h t h e r e d u c t i o n i n l a b o u r
s u p p l y , T h e work i n c e n t i v e i m p l i c a t i o n s o f t h e program would
c l e a r l y a l s o seem t o b e r e l e v a n t t o i t s p o l i t i c a l a c c e p t a b i l i t y .
Again my argument i s s i m p l y t h a t f o r t h e s e t o f a l t e r n a t i v e programs u n d e r c o n s i d e r a t i o n t h e work i n c e n t i v e i m p l i c a t i o n s o f each
p r o g r a m o v e r t i m e b e e x p l o r e d and p r e s e n t e d t o t h e decision- maker.
The dynamic i n t e r - r e l a t i o n s h i p s o f outcome m e a s u r e s a r e , alas,
v e r y numerous. May I s u g g e s t o n l y t w o more o f t h e s e r e l a t i o n s h i p s .
F i r s t , c o n s i d e r t h e e f f e c t o f s t i g m a t i z a t i o n . I f a program i s
considered t o be s t i g m a t i z i n g by i t s b e n e f i c i a r i e s , then t h e extent
t o which t h e s e e l i g i b l e b e n e f i c i a r i e s e n r o l i n t h e program w i l l
b e d i m i n i s h e d ; a c c o r d i n g l y , n o t o n l y w i l l program c o s t o v e r time
b e l e s s , but s o a l s o w i l l t h e programvs s u c c e s s i n p o v e r t y a l l e v i a t i o n . Second, c o n s i d e r t h e i m p l i c a t i o n s o f f a m i l y s t a b i l i t y .
If t h e n a t u r e of a program i s s u c h as t o encourpge t h e s p l i t t i n g
o f f a m i l i e s , t h e n program c o s t will be h i g h e r o v e r t i m e and t h e
p r o g r a m ' s s u c c e s s - - i n p o v e r t y a l l e v i a t i o n w i l l b e diminished.
In sum, s e r i o u s a n a l y t i c a L . a d v i c e o n t h e p e r f o r m a n c e o f a l t e r n a t i v e w e l f a r e r e f o r m m e a s u r e s must c o n c e r n i t s e l f w i t h c o n f l i c t
a n d c o m p l e m e n t a r i t i e s b e t w e e n program outcomes o v e r t i m e , and
must s p e c i f y t h e t r a d e - o f f s which e x i s t between d e s i r e d but conflicting output measures.
41
I would l i k e t o make t w o f i n a l p o i n t s , each r a t h e r b r i e f l y , and
e a c h r e f l e c t i n g a n a s p e c t o f t h e c e n t r a l argument o f t h i s s e c t i o n
o f t h e paper.
It i s v e r y
The f i r s t d e a l s with t h e q u e s t i o n o f s e l e c t i v i t y .
d i f f c i u l t t o u n d e r s t a n d t h e old F a b i m argument f o r u n i v e r s a l i t y
as against s e l e c t i v i t y . It seems p r e t t y o b v i o u s , i n d e e d i s s t a t i s t i c a l l y d e m o n s t r a b l e , t h a t i f one a p p r o a c h e s o b j e c t i v e s s u c h as
a g g r e g a t e adequacy, o r t a r g e t e f f i c i e n c y , for a g i v e n c o s t , t h e n
t h e s e l e c t i v e , o r i n c o m e - t e s t e d , a p p r o a c h i s far more c o s t e f f e c t i v e f o r a g i v e n w e l f a r e b u d g e t ; t h e argument f o r u n i v e r s a l i t y
seems t o f o u n d e r o n t h e r o c k of i n a d e q u a t e payments t o t h o s e m o s t
i n need. And y e t t h e Fabians had come a long way f r o m t h e 1830s,
and one wonders at t h e i r i n s i s t e n c e on t h e i m p o r t a n c e o f u n i v e r s a l i t y . There a r e t w o arguments which seem t o s u g g e s t that u n i v e r s a l
programs f o r m a t l e a s t a component o f our o v e r a l l w e l f a r e s t r a t e g y .
The first argument r e l a t e s t o t h e s o c i a l and p o l i t i c a l e f f e c t s o f
w e l f a r e programs. One o f t h e dilemmas o f s e l e c t i v i t y i s t h e e x t e n t
t o which, b y d e f i n i t i o n , t h e p r o c e d u r e d i v i d e s t h e p o p u l a t i o n .
I
r e c a l l t h e s t o r y o f t h e New York t a x i d r i v e r who i n d i c a t e d how he
w a s p a y i n g f o r t h o s e who were l i v i n g o n w e l f a r e payments. T h i s i s
a v e r y r e a l f a c t f o r t h o s e l i v i n g , if you l i k e , i n t h a t s e c o n d
b o t t o m one f i f t h of income who h a v e b e e n l a b e l l e d b y t h e r h e t o r i c
o f s e l e c t i v ' e programs i n t h e U n i t e d S t a t e s at t h a t t i m e as " r e a c t i o n a r y ' ! if t h e y i n f a c t opposed t h e payments t o p e o p l e who a r e , i n
So t h e r e i s
r e d t e r m s , v e r y c l o s e i n t h e i r n e e d s and a s p i r a t i o n s .
a problem i n t h e s e n s e i n which you d i v i d e p e o p l e e r r o n e o u s l y
s h a r p l y b y s e l e c t i v e programs. This d o e s n ' t seem t o b e an a b s o l u t e l y c o n v i n c i n g argument, a l t h o u g h o b v i o u s l y an i m p o r t a n t one. You
c o u l d somehow smooth it o v e r p o l i t i c a l l y or you c o u l d b l u r t h e l i n e .
B u t t h e r e i s a n o t h e r v e r y i m p o r t a n t f a c t o r and t h i s i s one that i s
p r o b a b l y v e r y o l d but o n l y o c c u r r e d t o me f a i r l y r e c e n t l y : and
t h i s r e l a t e s t o t h e f a c t t h a t many o f t h e i n t e n d e d r e c i p i e n t s
u n d e r a s e l e c t i v e scheme do n o t i n f a c t , f o r a v a r i e t y o f r e a s o n s ,
e n r o l . i n t h e scheme. In o t h e r words, i f your t a k e up r a t e i s
s i g n i f i c a n t l y l o w e r t h a n 100% t h e n t h e f a c i l e argument t h a t a
s e l e c t i v e scheme i s b y d e f i n i t i o n more c o s t e f f e c t i v e begins t o
aisintegrate very rapidly.
I ' v e r e a d some astonishing e v i d e n c e
o n pick- up r a t e s i n r e c e n t l i t e r a t u r e f r o m t h e P o v e r t y A c t i o n
g r o u p i n London. They p o i n t out t h a t i n t h e c a s e of t h e f a m i l y
income supplement, for example, t h e t a k e up r a t e i s about 50$.
N o w t h i s i s an u n e x c e p t i o n a b l e scheme, t h e r e would a p p e a r t o be
n o stigma, and t h e o n l y t e s t i s a one l i n e s t a t e m e n t o f income.
The i n f o r m a t i o n t h e government p r o v i d e d on t h i s i s m a z i n g - a
l e t t e r i n e v e r y l e t t e r b o x , e v e r y t i m e you w a l k i n t o a p o s t o f f i c e
42
t h e r e a r e new p o s t e r s s a y i n g '?have you c l a i m e d ' q , l ' t h i s i s your r i g h t ' ' ,
e t c . , and y e t o n l y 50% who were e l i g i b l e t o o k i t up. And w o r s t
s t i l l t h e 9%who d i d t a k e it up a p p e a r e d t o b e t h o s e l e a s t i n
need, So that t h e problem i s , I t h i n k , t h a t a s e l e c t i v e scheme
which i s s t a t i s t i c a l l y more s u c c e s s f u l than a u n i v e r s a l scheme
o n t h e assumption o f a LOO$ t a k e u p , may n o t i n d e e d , b e more
s u c c e s s f u l i f t a k e up r a t e s a r e much l o w e r than 100%; and p a r t i c u l a r l y i f that l o w t a k e u p i s c o n c e n t r a t e d among t h e l o w e r income
groups. This does T t h i n k g i v e some economic r a t i o n a l e t o t h e
v e r y c o n s i d e r a b l e and hurnane insight o f t h e F a b i o n s i n t h e U.K.
S e l e c t i v i t y i s f i n e , i n a s t a t i s t i c a l s e n s e , but i f i n f a c t it
l e a d s t o a l a r g e number o f p e o p l e who were i n t e n d e d t o b e e l i g i b l e
n o t becoming e l i g i b l e , o r t h o s e who i n f a c t h a v e t o e n r o l l being
sometimes s t i g m a t i z e d o r d i s c r i m i n a t e d against i n t h e i r own eyes
because o f i t , t h e n i n f a c t t h e Frogram i s i m p e r f e c t i n a v e r y i m p o r t m t way, My own c o n c l u s i o n i s t h a t you do i n f a c t n e e d a mixed
s t r a t e g y , I l i k e t h e i d e a o f t h e Canadian o l d age p e n s i o n which i s
a u n i v e r s a l b a s e and a n e g a t i v e income t a x supplement, s o t h a t
everybody g e t s some. The g e n e r a l scheme i s a c c e p t a b l e , b u t t h o s e
who remain i n a b s o l u t e p o v e r t y a t t h e end o f it c a n i n f a c t claifi,
and o b t a i n , an income supplement.
I t d o e s n ' t answer m y p o i n t t h a t
many who a r e i n a b s o l u t e p o v e r t y a f t e r t h e u n i v e r s a l payment may
i n f a c t not claim f o r t h e income supplement. So t h a t ' s my f i r s t
o f two final p o i n t s .
The last p o i n t I wish t o r a i s e i s p e r h a p s a l i t t l e more contentous.
A couple o f things i n t e r e s t e d me enormously t h i s m o r n i n g i n Mr.
Hayden's paper. There w a s a p a r a g r a p h which said t h e "paramount
o b j e c t i v e o f a l l t h e s e w e l f a r e programs w a s p o v e r t y a l l e v i a t i o n f 1
and t h e n on t h e p e n t u l t i m a t e and u l t i m a t e p a g e s we g e t a t r e n d y
s o r t o f sermon o n t h e i m p o r t a n c e o f t i g h t e n i n g our b e l t s , a n d t h e
need f o r income r e d i s t r i b u t i o n . Now, I t h i n k i n f a c t that t h e t w o
are not n e c e s s a r i l y i n t h e same package and t h a t we s h o u l d l o o k at
them as e s s e n t i a l l y r e l a t e d but i n some v e r y i m p o r t a n t s e n s e d i s t i n c t o b j e c t i v e s . I think that t h e a l l e v i a t i o n o f a b s o l u t e p o v e r t y
i s arn o b j e c t i v e t h a t we can r e a s o n a b l y argue i s a c c e p t a b l e a c r o s s
t h e p o l i t i c a l s p e c t m i n U. S . , Canada, Britain, A u s t r a l i a and
Western Europe. And o f c o u r s e t h e y w i l l be r e d i s t r i b u t i v e ; I
t h i n k t h a t i t i s f a c i l e t o a r g u e t h a t i t i s n o t . But I t h i n k that
i n t h i s case t h e c o s t may be w i d e l y s p r e a d , say, t h r o u g h t h e f i n ancing mechanism, and t h e g o a l a c h i e v e d w i t h m i n i m a l f o r m a l , int e n d e d and a c t u a l e f f e c t on ir,come d i s t r i b u t i o n . I f you l i k e it
can be l a r g e l y achieved, I think, i n our s o c i e t y r i g h t n o w ; I
b e l i e v e that we c o u l d Dove t o a v e r y substantial a l l e v i a t i o n o f
pover3y through e s s e n t i a l l y t r a d i n g r a t h e r than c o n f l i c t , i n o t h e r
words, w i t h m i n i m a l formal r e d i s t r i b u t i v e e f f e c t .
43
R e d i s t r i b u t i o n i s q u i t e another m a t t e r p a r t i c u l a r l y i f i t s t i e d
i n t o a n a b r a s i v e p o l i t i c a l r h e t o r i c which has o v e r t o n e s of envy,
vengeance and s o o n , By d e f i n i t i o n i t i n v o l v e s , and I t h i n k i s
i n t e n d e d t o i n v o l v e , g a i n e r s and l o s e r s . And a program couched
e x p l i c i t l y i n t h i s way as a r e d i s t r i b u t i v e program r a t h e r than a
program d e a l i n g w i t h p o v e r t y , I think i s c e r t a i n t o c r e a t e p o l i t i c a l o p p o s i t i o n . 1 t h i n k f u r t h e r i f one i s s e r i o u s l y a t t e m p t i n g
t o implement r e d i s t r i b u t i o n t h e n one must take a v e r y s e r i o u s
l o o k at t h e whole q u e s t i o n o f t r a d e o f f s o v e r t i m e i n r e l a t i o n t o
economic growt;h and t h e whole dilemma o f a b s o l u t e income l e v e l s
and r e l a t i v i t i e s o v e r time. Now o f course t h i s argwnent i s
p a r t i a l l y o f f s e t b y t h e evidence t h a t i t i s e x t r e m e l y hard i n any
That i f one a t t e m p t s t o do
e v e n t t o change income d i s t r i b u t i o n .
t h i s t h e system, o r s o c i e t y , w i l l a d j u s t o v e r time t o t h e a t t e m p t .
L e t q s s a y t h e t r a d e u n i o n asks f o r a t a x - p l u s wage i n c r e a s e , t h e
d o c t o r p u t s h i s f e e up, and t h e system adjusts s o t h a t t h e p o s t t a x d i s t r i b u t i o n i n d e x i s v e r x much l i k e t h e p r e - t a x . So if you
l i k e , r e d i s t r i b u t i o n has been f r u s t r a t e d .
I n a s e n s e t h a t does o f f s e t t h e argument t h a t r e d i s t r i b u t i o n may
b e p e r n i c i o u s i n t e r m s o f t h e macro i m p l i c a t i o n s b u t I t h i n k t h e
t w o a r e n o t e n t i r e l y rnutualJy e x c l u s i v e . You can v e r y s o o n have
s e r i o u s b e h a v i o u r a l r e s p o n s e s even i f i n t h e a g g r e g a t e t h e r e d i s t r i b u t i v e e f f e c t i s o f f s e t . But t h e i m p o r t a n t t h i n g I t h i n k , i s
t h a t i t i s a much more sweeping and much more r a d i c a l o b j e c t i v e
t h a n t h e a l l e v i a t i o n of p o v e r t y . T h a t ; i s , it i s a v e r y d i f f i c u l t
t h i n g t o do, a v e r y complex s o c i a l i s s u e , t h e p a r a m e t e r s o f which
I v m riot a r g u i n g t h a t i t i s n e c e s s a r i l y
we s c a r c e l y u n d e r s t a n d .
A bad t h i n g e x c e p t t h a t we r e a l l y d o n * t u n d e r s t a n d it and we
p r o b a b l y c a n v t do i t ; and i f i n fact; we p u t that o b j e c t i v e a h e a d
o f p o v e r t y a l l e v i a t i o n , o r make it t h e v e h i c l e by which p o v e r t y
a l l e v i a t i o n i s t o b e c a r r i e d , t h e n 1 s u g g e s t t h a t we w i l l f a i l
i n t h e l a t t e r o b j e c t i v e . I would a r g u e t h a t you c o u l d a t t a i n
p o v e r t y a l l e v i a t i o n and t h a t it i s a m o r a l i m p e r a t i v e i n a rexa t i v e l y a f f l u e n t s o c i e t y ; whereas r e d i s t r i b u t i o n i s a much more
complex s o c i a l i s s u e o n which I s u s p e c t we have as y e t a v e r y i m p e r f e c t s o c i a l technology.
EDITED DISCUSSION ON PROFESSOR CUTT'S PAPER
QUESTION NO. 1.
I f e e l v e r y s y m p a t h e t i c a l l y w i t h what J i m C u t t ' s s a y i n g . 1 would
have t h o u g h t t h a t p o v e r t y i s symptomatic o f c e r t a i n c a u s e s t h a t
go back t o t h e s o c i a l s t r u c t c m e i t s e l f . One would wonder whether
an a n t i - p o v e r t y program which d o e s n P t l o o k a t some of t h e macros t r u c t u r a l issues you were r a i s i n g w i l l n o t i n t h e l o n g r u n f a i l
itself.
ANSWER
I t h i n k that i t ' s a b s o l u t e l y c r u c i a l that p o v e r t y i s c l o s e l y
l i r r k e d as one dimension o r one a s p e c t o f e q u a l i t y .
The Trudeau Government g o t a whole l o t o f t h i n g s t h r o u g h t h e
Canadian house, and t h e Senate almost b y consensus. Things t h a t
we would r e g a r d as being enormously r a d i c a l , These t h i n g s were
a t t a i n e d b y consensus, l a r g e l y because o f caref'ul p r a g m a t i c
structuring of t h e p r o g r a m , t a y l o r i n g t h e means o f financing t o
m i n i m i s e t h e e f f e c t o f t h e p r o g r a s on work i n c e n t i v e s , and
savings. But p r o b a b l y most o f a l l t h e s h e e r r h e t o r i c of t h e
program. The s u b s t a n c e may n o t be a l l t h a t d r a m a t i c a l l y d i f f e r e n t , but i f t h e p r o g r m is ccuched i n t e r m s o f I t f a t c a t s ' l and
"poor c a t s q 1and s o on t h e n i n f a c t I t h i n k t h a t t h e t h i n g almost
becomes s e l f - d e f e a t i n g by d e f i n i t i o n .
I would argue t h a t one can go a l o n g way a l o n g t h e r o a d t o p o v e r t y
a l l e v i a t i o n l a r g e l y by consensus, w i t h o u t s e r i o u s macro -imp11 c a t i o n s .
It i s r e d i s t r i b u t i v e , t h e r e i s no q r i e s t i o n a b o u t t h a t ; b u t p e o p l e
would g o a l o n g w i t h t h a t p r o v i d e d i f i n t h e c o n t e x t o f a cake t h a t
w i l l continue t o grow a n d i f you- a r e n o t a b s o l u t e l y r e d u c i n g anyo n e ' s income, The evidence fron Canada a n d U.S. does s u g g e s t v e r y
s t r o n g l y t h a t p o v e r t y a l l e v i a t i o n , c e r t a i n l y on a t i m e spectrum,
s h o u l d b e p u t i n f r o n t af major r e d i s t r i b u t i o n because i f you p u t
them t h e o t h e r way a r o u n d you. may l o s e t h e former, and n o t a t t a i n
the l a t t e r .
QUESTION NO. 2
You t a l k o f p o v e r t y a l l e v i a t i o n p r o g r a s . What i s p o v e r t y as a
f a c t o r t h a t you can a l l e v i a t e ? A r e n u t we c l o s e t o t h a t g o a l
a1r e ady?
45
ANSWER
I t h i n k t h a t we have a g r e a t d e a l o f work t o do i n t h i s human
s e r v i c e , human r e s o u r c e a r e a . We o n l y have a v e r y p r i m i t i v e
s e n s e of what we're r e a l l y t r y i n g t o do, o f w h a t p u t t i n g money
i n w i l l a c t u a l l y d o ; and v e r y l i t t l e a p p a r a t u s t o guage t h e
e f f e c t i v e n e s s of what we a r e doing. I t h i n k t h a t what we have
t o do i s come up with some d e f i n i t i o n o f a b s o l u t e d e p r i v a t i o n
o r p o v e r t y which h a s s u f f i c i e n t dimensions t o b e r e a i s t i c .
T h e r e i s a t e n d e n c y f o r e x p e r t s t o s a y g i v e them c a s h and i t ' s
a l l o v e r . I think: t h a t we s h o u l d have a d e f i n i t i o n t h a t i s
s u f f i c i e n t l y b r o a d l y f a c e t e d and c a r e f u l l y d e v i s e d as t o be on
t h e a v e r a g e a r e a s o n a b l e d e f i n i t i o n , and t r y t o move t h e
components of t h a t i n t h e d i r e c t i o n t h a t t h e d e f i n i t i o n s u g g e s t s
that t h e y should move f o r p o v e r t y t o be a l l e v i a t e d ,
Suppose you d i d s o r t all t h a t out and it t u r n e d out t h a t t h e
p e r s o n ' s p r e f e r e n c e p a t t e r n f o r spending h i s income. and u s i n g
h i s f a c i l i t i e s i s s t i l l s u c h t h a t h i s f a m i l y at t h e end o f
t h e y e a r s t i l l t u r n s out t o b e d i s a d v a n t a g e d .
He p u t s h i s money
down t h e drain, d o e s n ' t s e n d h i s k i d t o p r e - s c h o o l . What do
you -t h e n do? I n t h e f i n a l a n a l y s i s it i s a f r e e s o c i e t y . But
you c a n make t h e r a n g e o f a v a i l a b l e c h o i c e s as wide and a.s
c i v i l i s e d as p o s s i b l e , t o maximise t h e e x t e n t ' t h a t p e o p l e do
t a k e a d v a n t a g e o f t h e o p p o r t u n i t y t o g e t out o f p o v e r t y . You
make t h e o p p o r t u n i t y a v a i l a b l e and p e o p l e t a k e i t o r l e a v e it.
We a r e l o o k i n g f o r a d e f i n i t i o n o f a b r o a d e r more comprehensive
k i n d and a r e c o g n i t i o n o f t h e n e e d t o d e a l w i t h t h e s e many
f a c e t s o f it. And u l t i m a t e l y t o g i v e p e o p l e w i d e r o p p o r t u n i t i e s
t o s o l v e t h e i r own p o v e r t y problem.
It may mean c a s h b u t i t
a l s o means t h a t t h e r e i s f o r example, a day c a r e c e n t r e or p r e s c h o o l n e a r b y ; o r t o b e s u r e t h a t t h e man cain g e t r e t r a i n i n g .
COMMENT
I t sems t o me that we might f i n d i n c r e a s i n g l y t h a t we're moving from a s o c i e t y where we d e f i n e p o v e r t y i n t e r m s o f economic
f a c t o r s t o a s o c i e t y where we a r e t a l k i n g a b o u t t h e s o c i o l o g i c a l and p s y c h o l o g i c a l phenomena as t h e r o o t c a u s e o f p o v e r t y .
ANSWER
A c l a s i c example o f what y o u g r e s a y i n g i s t h e f a n t a s t i c a l l y
I f o r g e t what t h e
g e n e r o u s w e l f a r e payments i n New 'York C i t y .
e x a c t f i g u r e s a r e - b u t i n t h e m i d d l e o f 1973 a f a m i l y w i t h
f o u r c h i l d r e n g o t a l m o s t $8,000. That d i d n ' t solve t h e
p r o b l e m though. The o t h e r dimensions o f p o v e r t y - t h e raci.aL
d e v i s i v e n e s s , crime, d e l i n q u e n c y , f a i l u r e t o t a k e advantage
o f educational f a c i l i t i e s - have increased.
46
COMMENT
Doesn't t h a t p o i n t though TUC r a t h e r
r a i s e d b e f o r e , i n t h a t some o f -these
d y s f u n c t i o n , do seem t o a r i s e o u t o f
a c r o s s t h e whole s o c i e t a l s t r u c t u r e ,
of absolute poverty.
c o u n t e r t o t h e p o i n t t h a t YOU
f a c e t s o f p o v e r t y , or s o c i a l
d i s a d v a n t a g e and i n e q u i t y
r a t h e r than b e i n g t h e p r o d u c t s
ANSWER
I think b y and l a r g e t h e areas where p o v e r t y or t h o s e dimens i o n s of p o v e r t y s u c h as crime, s o c i a l d i s r u p t i o n , have f a i l e d t o
b e a l l e v i a t e d , a r e i n f a c t predominantly g h e t t o areas. There a r e
a r e a s dLI through Eulrope, England, Manhattan, where t h e s e p r o g r a m s
a r e enormously s u c c e s s f u l .
Yes.
I t h i n k that t h e t r a g e d y o f t h e U.S. i s that t h i s p a r t i c u l a r patho l o g y i s a f u n c t i o n o f s o c i a l and h i s t o r i c a l f o r c e s which i s f a r
t o o big t o be s o l v e d b y money o n one g e n e r a t i o n .
It i s t h e g o o d
f o r t u n e o f A u s t r a l i a t h a t t h e r e i s no p a r a l l e l dimension.
QUESTION NO. 3
There seem t o be a few p o i n t s h e r e a l l p u t t o g e t h e r . It seems t o
b e a good i d e a t o have a l o o k at them i n a comprehensive way, as
you have p u t it f o r w a r d t o u s .
I t h i n k t h a t t h e p o i n t has t o b e t a k e n t h a t i n a l l e v i a t i n g p o v e r t y ,
o r having any form o f s o c i a l reform, i n A u s t r a l i a , t h e r e i s r e q u i r e d a m u l t i - f a c e t e d approach; t h a t you have g o t t o have income
s u p p o r t and o t h e r s u p p o r t p o l i c i e s . A t t h e same t i m e , however,
t h i s d o e s n o t n e g a t e i n any way t h e need t o t h i n k about a n e t m i n i m u m income p o l i c y as a start.
B u t t h e n h a v i n g s a i d that comes t h e q u e s t i o n as t o what l e v e l
should b e s e t . Once you s e t t h a t l e v e l you t h e n come t o an argument o f m a r g i n a l m a t t e r s , whether you go t o housing p o l i c y , o r educ a t i o n a l p o l i c y , o r more money o n your m i n i m u m income, .And I t h i n k
t h a t becomes a v e r y d i f f i c u l t q u e s t i o n and n o t one t h a t you can
n e a t l y do i n a f o r m u l a e . It t a k e s a l o n g a n a l y s i s o f t h e a l t e r n a t i v e programs o n t h e i r own t o s e e i f t h e y have t a r g e t e f f i c i e n c y
a d do g e t t o t h e p e o p l e t h e y a r e aimed a t . Then you come t o t h e
T i n a question.
That i s t r y i n g t o l i s t a l l t h e d i f f e r e n t p o l i c i e s ,
and p u t t i n g t h i s t o g e t h e r i n a dynamic model t o f i n d t h e n e t e f f e c t
o f t h e program.
47
I wonder i n f a c t whether t h i s i s a c t u a l l y v a l i d .
It seems t o
me that t h e r e a r e s o many p i e c e s i n t h e formula t h a t you e n d
up making a v a l u e judgmente You h a v e a whole l o t o f v a l u e s
i n v o l v e d and you have a whole l o t o f i m p l i c a t i o n s from e a c h
of t h e s e options.
I c a n ' t s e e how you a r e going t o come o u t
o f it w i t h t h e s o r t o f formula you seem t o b e suggesting.
ANSWER
I a c c e p t your p o i n t .
I t h i n k t h a t one can g e t t o t h e p o i n t
where one i s i n d u l g i n g o n e s e l f a c a d e m i c a l l y .
The o n l y t h i n g t h a t I would argue i n r e s p o n s e i s t h a t i t i s
r e a l l y c r u c i a l i n p o l i c i e s o f t h i s n a t u r e t o s a y something
a b o u t how you r a i s e t h e money, a n d how p e o p l e r e s p o n d t o it
- a t l e a s t m i n i m a l l y i n t e r m s o f w o r k s a v i n g s and i n v e s t m e n t .
These t h i n g s a r e just s o i n t e r - r e l a t e d w i t h t h e program p e r formance and c o s t s .
I b e l i e v e t h a t one can hope t o say a
l i t t l e more about broad g e n e r a l d i f f e r e n c e s i n t h e l i k e l y
e f f e c t s o f programs g i v e n t h e a l t e r n a t e assumptions a b o u t how
p eopl e behave
.
QUESTION NO.
4
You make a d i s t i n c t i o n between t h e a l l e v i a t i o n o f p o v e r t y and
redistribution.
I g m not q u i t e s u r e t h a t t h a t ' s t e r r i b l y useful i n t h e Australian s i t u a t i o n . It depends o f c o u r s e o n what
percentage o f t h e population is i n poverty.
I suppose that
somewhere between 10% and 20% i s t h e p r o p o r t i o n o f p o p u l a t i o n
you w o u l d b e h o p i n g t o e f f e c t w i t h a n y p o v e r t y program. Now
t h i s i n v o l v e s changing t h e r e l a t i o n s h i p between t h e g r o u p
w'eiwould l i k e t o s a y a r e a t t h e b o t t o m , i n p o v e r t y , a n d t h e
group which i t i s i m p l i e d we w i l l have t o r e d i s t r i b u t e money
f,rom. The more p e o p l e you deal w i t h i n t h e b o t t o m l e v e l t h e
more it becomes r e d i s t r i b u t i o n r a t h e r than j u s t a l l e v i a t i o n o f
p o v e r t y ; and t h e more e q u a l t h e s o c i e t y becomes i n income d i s t r i b u t i o n , t h e more y o u s v e g o t t o t a l k a b o u t income d i s t r i b u t i o n
r a t h e r than a p o v e r t y measure, It a p p e a r s t o me t h a t i n t h e
p r e s e n t s i t u a t i o n i n a c o u n t r y l i k e Australia t h a t we a r e
t a l k i n g q u i t e s t r o n g l y i n t e r m s o f r e d i s t r i b u t i o n o f income
and p e r h a p s l e s s s o i n t e r m s o f a l l e v i a t i o n o f p o v e r t y .
The o t h e r t h i n g o f c o u r s e i s t h a t when I say t h e r e may be 15%
o f p e o p l e i n p o v e r t y we a r e a l r e a d y making a r e d i s t r i b u t i v e
judgment i n t h e s e n s e t h a t w e a r e t a l k i n g about some r e l a t i v e t y p e t y p o l o g y . The q u e s t i o n i s o f c o u r s e w h e t h e r i t makes
much s e n s e t o t a l k about a b s o l u t e p o v e r t y i n a c o u n t r y l i k e
Australia.
F o r example, i f you compare t h e standard o f t h e
p o o r e s t p e o p l e i n Australia t o p e o p l e l i v i n g i n I n d i a .
48
ANSWER
I d o n ' t t h i n k t h a t t h e r e i s any q u e s t i o n about t h a t i f you a r e
t a l k i n g a b o u t s p e c t r u m s . I s t i l l t h i n k t h a t it i s v e r y unfortuna t e i n Australia t h a t t h e r h e t o r i c about p o v e r t y a l l e v i a t i o n i s
i n t e r m s of r e d i s t r i b u t i o n , One has t o couch i t i n p o l i t i c a l l y
a c c e p t a b l e terms.
I n o r d e r o f t i m e you will p r o b a b l y b e a b l e t o
g e t agreement t h a t p o v e r t y a l l e v i a t i o n i s a good thing, and you
p u t t h a t f i r s t . When t h a t one i s s o l v e d you can t h e n l o o k a t
t h e larger i s s u e s .
49
THE
Jan Salmon
B.A., Dip. S o c i a l S t u d i e s ,
R e s e a r c h Worker, Family
C e n t r e Projec'G,Brotherhood
o f S t . Laurence.
I
FAMILY CENTl3E
An
Experiment
Guaranteed
and
i$s
Minimum
PROJECT:*
In
Income
Implications
With t h e income supplement we t r i e d t o e n s u r e that t h e f a n l i l i e s
had an a d e q u a t e income e a c h week.
Unfortunately t h e r e is r e a l l y
no Australian data t o t e l l u s what an a d e q u a t e income i s . We
r e j e c t e d Hendersonvs p o v e r t y l i n e b e c a u s e it w a s t o o t h e o r e t i c a l ,
and w e wanted t h e f a m i l i e s t o u n d e r s t a n d t h e b a s i s of t h e income
supplement s o t h a t t h e y c o u l d s e e i t as a t h i n g o f r i g h t , a n d
t h e y knew t h e r a t i o n a l e .
I think a l s o i n Professor Hendemonvs l i n e t h e r e i s l i t t l e evidence t o s u g g e s t t h a t it i s a d e q u a t e and I t h i n k t h a t p r o b a b l y
i t w i l l be found t h a t it i s a v e r y s t a t i c view.
'Poverty l i n e '
seems t o convey a n o t i o n t h a t p e o p l e a r e i n p o v e r t y o r o u t o f
p o v e r t y . Our e x p e r i e n c e i s t h a t a f a m i l y c a n be i n and o u t o f
p o v e r t y e v e r y a l t e r n a t e week.
We s e l e c t e d t h e r e f o r e as o u r c r i t e r i a o f m i n i m u m a d e q u a c y t h e
m i n i m m i wage and we a d j u s t e d i t a c c o r d i n g t o c e r t a i n f a c t o r s
s u c h as f a m i l y c o m p o s i t i o n , work s t a t u s , t y p e o f accommodation.
We'also p a i d on t o p of t h i s a r e n t subsidy.
WeOre n o t t r y i n g t o
s e t out and s a y t h a t t h e m i n i m u m wage i s an a d e q u a t e l e v e l but
it w a s a l e v e l t h a t p e o p l e u n d e r s t o o d and c o u l d r e a d about i n
t h e p a p e r . It seemed t o convey sorile n o t i o n o f b e i n g e q u a t e d w i t h
what w a s f a i r and r e a s o n a b l e , So we u s e d t h a t as a l e v e l but
we're n o t s a y i n g i t ' s a d e q u a t e ,
We t r i e d t o make t h e scheme as s i m p l e as p o s s i b l e s o t h a t t h e
f a m i l i e s c o u l d u n d e r s t a n d i t . This meant t h a t we d i d n ' t go i n t o
t a x a t i o n s c a l e s ; a 100% t a x a t i o n s c a l e was u s e d .
Therefore it
could be said t o be t e r r i b l y p u n i t i v e , that t h e r e w a s a v e r y
strong d i s i n c e n t i v e f a c t o r o p e r a t i n g .
*
The Family C e n t r e P r o j e c t i s a 3- year income s u p p l e m e n t a t i o n
scheme, i n i t i a t e d by t h e B r o t h e r h o o d o f S t . L a u r e n c e i n
F i t z r o y , Melbourne, as p a r t o f a g e n e r a l scheme t o i n c r e a s e
t h e r e s o u r c e s a v a i l a b l e t o a l i m i t e d group o f p o o r f a m i l i e s .
S i x t y f a m i l i e s were i n v o l v e d .
NowYve c o v e r e d $ h e d e t a i l s o f t h e income supplement scheme i n
t h e a c t u a l p a p e r I wont go j.ntrJ t h e d e t a i l s o f t h a t . I want t o
f o c u s p r i r n a r i l . y o n t h e d i f f i c u l t i e s e n c o u n t e r e d w i t h our income
supplement ,.
I t h i n k t h a t i t has a l r e a d y b e e n mentioned t o d a y t h a t t h e r e a r e
p r o b l e m s i n d e f i n i n g w h a t an income u n i t s h o u l d be, o r a h o u s eh o l d u n i t , or whatever you u8e t o a t t a i n t h a t u n i t . We've found
f r o m o u r e x p e r i e n c e that the income u n i t d o e s n P t have t o c o r r e s p o n d
w i t h t h e n o r m a l n o t i o n o f a f a m i l y o f mum, dad and t h e k i d s , T h e r e
a r e many, many d i f f e r e n t s t r u c t u r e s , You c a n have u n c l e s a n d
aunts, you c a n h a v e o t h e r c h i l d r e n l i v i n g i n t h e honle, you c a n
have a s e p a r a t e d woman and a s s p a r a t e d man b r i n g i n g t h e c h i l d r e n
o f d i f f e r e n t s p o u s e s t o g e t h e r a n d t h e n having t h e i r own l o t s o f
c h i l d r e n , o r you can h a v e d i f f e r e n t p e o p l e coming i n as b o a r d e r s .
So t h e h o u s e h o l d c o m p o s i t i o n a n d f a m i l y c o m p o s i t i o n c a n be a v e r y
complex a n d v a r y i n g thing., Secondly t h e s e s t r u c t u r e s o f w h a t i s
a f a m i l y c a n change o v e r t i m e , e v e n on a weekly b a s i s . T h e i r
husband c a n come and g o , c h i l d r e n can go i n t o i n s t i t u t i o n s o r
come o u t o f i n s t i t u t i o n s . These s o r t s o f t h i n g s go on, o n a weekly
b a s i s i n t h e centre.
The o t h e r t h i n g s we have found i s t h a t you c a n ' t assume t k a t
r e s o u r c e s w i l l b e p o o l e d j u s t b e c a u s e t h e y l i v e u n d e r t h e same
r o o f o r seem t o c o r r e s p o n d -to a nil-clear f a m i l y .
For i n s t m c e ,
a woman l i v i n g i n a d e f a c t o r e l a t i o n s h i p w i t h h e r c h i l d r e n f r o m
a former r e l a t i o n s h i p .
There i s no l e g a l r e a s o n why t h e d e f a c t o
husband s h o u l d b e r e s p o n s i b l e f o r t h e woman, or f o r t h e c h i l d r e n ,
y e t we e x p e c t t h i s . We expect t h a t t h e man i s going t o b e t h e
p r o v i d e r , avld t h i s i s a v a l u e judgment. The t h i n g i s t h a t i f we
i g n o r e t h i s , we a r e a c t u a l l y d i s c o u r a g i n g p e o p l e from f o r m i n g t h e
r e l a t i o n s h i p s which a r e t h e i r c h o i c e , and we can a l t e r t h e r e l a t i o n s h i p t h a t p e o p l e have g o t . There a r e a number o f a n o m a l i e s which
e x i s t i n our s o c i a l s e c u r i t y system, For i n s t a n c e t h e d e f a c t o
r e l a t i o n s h i p : a t t h e moment a woman s e t s up a d e f a c t o r e l a t i o n s h i p i n t h e f i r s t week s h e can be c u t o f f a widows p e n s i o n , b e c a u s e
she c a n b e s a i d t o be l i v i n g i n a d e f a c t o r e l a t i o n s h i p , t h e r e f o r e
t h e man s h o u l d s u p p o r t h e r . On t h e o t h e r hand f o r h e r t o b e ent i t l e d t o a widows p e n s i o n s h e has t o b e l i v i n g w i t h t h a t man f o r
t h r e e y e a r s b e f o r e i t i s r e c o g n i s e d as a s o r t o f comnLonl a w
marriage.
So t h e r e i s a c o n t r a d i c t i o n between l e g a l d e f i n i t i o n s
and s o c i a l l y a c c e p t a b l e d e f i n i t i o n s . U n d e r l y i n g e a c h o f t h e s e
a r e v a l u e judgments - t h i n g s l i k e men s h o u l d p r o v i d e f o r women,
2nd men s h o u l d b e r e s p o n s i b l e .
P l e a s e n o t e . A Sackground p a p e r w a s p r e p a r e d and c i r c u l a t e d
b e f o r e t h e seminar. The p a p e r i s i n c l u d e d i n Appendix B.
51
T h e r e i s a n o t h e r example o f how v a l u e judgments can b e made
when we start t a l k i n g a b o u t t h e d e f i n i t i o n o f things.
It's not
r e l a t e d t o Oguaranteed minimwl income ( G . M . I . )' b u t I t h i n k t h a t
i t i s a v e r y g o o d example o f how p e o p l e v s r i g h t s a r e t e r r i b l y
i n f r i . n g e d . A t t h e moment t h e r e i s a h o u s i n g comniission p o l i c y
t h a t you n e e d a h o u s e h o l d with s e v e n p e o p l e i n i t b e f o r e you can
r e n t a house. Now t h i s means t h a t l o w income f a m i l i e s d e l i b e r a t e l y g o o u t t o have f i v e c h i l d r e n . Sometimes s i n g l e p a r h n t s go
o u t t o h a v e s i x c h i l d r e n , even i f t h e y d o n ' t want t h e c h i l d r e n
o r c a n ' t a f f o r d t o have t h e c h i l d r e n , So we a r e i m p o s i n g i n c r e d i b l e c o n s t r a i n t s on p e o p l e i n making a v e r y s i m p l e d e c i s i o n t o
s a v e administration c o s t s . The h o u s i n g c o m n i s s i o n i s t r y i n g t o
s e t down p r i o r i t i e s , t h a t v s r e a s o n a b l e enough, but i t has had
incredible implications.
S i m i l a r l y i n d e f i n i n g income when you assume t h a t t h e h o u s e h o l d
w i l l p o o l t h e i r income. Now I ' v e t a l k e d a b o u t t h e i n s t a n c e o f
d e f a c t o r e l a t i o n s h i p s . U l t i m a t e l y what happens t o t h e income
when it comes t o t h e h o u s e h o l d w i l l depend o n who r e c e i v e d it
and who manages t h e household.
For i n s t a n c e , we h a v e i n v a l i d
p e n s i o n e r s . A t t h e moment t h e i n v a l i d p e n s i o n c a n be d i v i d e d
i n t o a husband's a n d w i f e ' s a l l o w a n c e . With unemployment t h e
husband r e c e i v e s i t g e n e r a l l y . Now w i t h i n v a l i d p e n s i o n s t h e
h u s b a n d u s u a l l y assumes t h a t t h e w i f e i s going t o manage t h e
With unemployment b e n e f i t t h e
h o u s e h o l d on t h e w i f e ' s allowance.
husband g e t s a11 t h e unemployment b e n e f i t , and t h e w i f e might no%
n e c e s s a r i l y r e c e i v e any p a r t o f that b e n e f i t . Now I d o n ' t s e e
a n y e a s y way o f r e s o l v i n g t h i s problem o f how t o make s u r e that
we a r e not i n f l u e n c i n g t h e f a m i l y ' s a b i l i t y t o cope but p e r h a p s
th.e e a s i e s t way i s t o j u s t g i v e t h e p e o p l e a c h o i c e .
Actually
a s k t h e consumer h o w t h e y would l i k e t h e sum o f t h e s e r v i c e s
d e l i v e r ed.
T h e r e a r e a l s o a d m i n i s t r a t i v e d i f f i c u l t i e s which h a v e come up.
For i n s t a n c e how can a scheme be r e s p o n s i v e t o f a m i l i e s t h a t
change t h e i r c i r c u m s t a n c e s as r a p i d l y as t h e f a m i l i e s i n t h e
c e n t r e seemed t o have changed. For i n s t a n c e t h e i r r e n t changes,
a n d t h e nuniber h n t h e h o u s e h o l d changes, and m o s t i m p o r t a n t l y
t h e i r income changes at a phenonienal r a t e ( e s p e c i a l l y where
t h e r e i s a r e g u l a r b r e a d w i n n e r i n t h e f a m i l y ) . Now we h a v e b e e n
a b l e t o overcome t h i s problem by d e a l i n g w i t h t h e f a m i l i e s o n an
i n d i v i d u a i basis. The f a m i l i e s f i l l i n a q u e s t i o n n a i r e and i t
i s a s s e s s e d o n a weekly basis; i t i s a l s o a s s e s s e d o n a p r o s p e c t i v e basis. But h o w does one ,do t h i s when one i s t r y i n g t o i m p l e m e n t a n a t i o n a l scheme, I t h i n k t o some e x t e n t you a r e caught
i n a bind of e i t h e r having a f a i r l y s t r a i g h t forward simple
scheme that p e o p l e u n d e r s t a n d as a r i g h t , o r you h a v e s o m e t h i n g
52
T h a t i s mcre d i s c r e t i o n a r y a n d aware o f t h e p r o b l e m s o f d i f f e r e n t
f a m i l i e s . L have no s o l u t i o n t o t h a t problem at t h e moment as t o
how one can h e r e s p o n s i v e t o t h e c h a n g i n g c i r c w a s - t a n c e s ; d o e s one
h a v e an exLra g r m $ o n t o p of t h e GMI - I d c n v t know.
A n o t h e r im-prtant p o i n t coming G Z ~ e f t h e income supplement i s
t h e F e r i o 3 o f a c c o x n t i n g . Kcat p e r i o d o f a c c o u n t i n g i s t h e b e s t
o n e t o x s e , We@veinas3 a weekly b a s i s . Again we c a n do t h i s
b e c a u s e we havs 60 f m i l i e s and t h e r e s o u r c e s . L a s t y e a r when
I was i n MadisorL (USA) I w a s v e r y i n t e r e s t e d t o t r y a n d work o u t
h o w t&ir s a m ~ icompared
~
w i t h t h e sample i n t h e Family C e n t r e
F r o j e c t and T found fhat t h e Maddison sample d i a n o t o n t h e whole
r e f l e c t t h e p e o p l e t h a h we have i n t h e Family C e n t r e P r o j e c t .
more p r o n e t o b e t ' r e marginal. worker, t h e worker
They were
on t h e m i n i i n u m w8ge and t h e r e were few c h r o n i c a l l y i m p o v e r i s h e d
p ~ c p l o ,i n %lie samp?,e. Tk_ey u s ~ da q u a r t e r l y a c c o u n t i n g p e r i o d
m d t k y p a i d on a mont3lJy b a s i s .
And t h e y a s s u h e d i f you h a d a
gco? m e k ycv- c c u l d s a v e t h e monr3.y ancl z o u l d u s e i t i n a b a d
waek, s o y~.=;-~i
s a v e 5 ZG~: a rainy day and t h e y p a i d or. t h a t basis.
I w a s t o l d infsrrriallg T h a T t 5 e y felt t h a t one o f t h e r e a s o n s t h e y
were l o s i n g a IC-:sf t h e p o o r e r p e o p l e frort, t h e i r sample w a s t h e
fact t h a t t h e scheme d i d have t h i s prcblem - i t d i d n q t a c c o u n t
f o r r k e f a z t zkat pe3pif; z c u l d n G t save € o r a rainy day and a l s o
t h e f a c t thar tk? Pxlstilmg S o c i a l Welfare Scnemes were b a s e d o n
a p r o s p e c x i v e bas:s r a d were far mcre r e s p o n s i v e .
So for t h a t
e q e r i m e n t a l g r o - ~ pit was p r e f e r a k i e fi;r then1 t o go back o n t o
n o n a 3 . s z c i L s 5 c x - i t b r payments :hac t o r e m a i n p a r t o f t h e
i a c m e mainT;?rLmcc exyeriment
m1115l
S E a t t L e !Emer Schsme (RA), whi& was s e t lip a f t e r t h a t ,
r e c o g - t s c l '&3 F r o F e . 2 t c same exLent. F i r s t of a l l t h e y s e t u p
Ei fie:?
2 f f L C Z iVhE1-G F ? ? p l ~ ?C G U l C ? ccme i n and c o n s u l t w i t h p e o p l e
3bT.LT p r C ~ ~ 3 r r i s
in fi11i*y,gi n forms, aDd things l i k e t h a t .
T h E J 2 2 ' i l < TeC911?LEL 2haEge i n circ!mst&qces.
The S e a t t l e Denver
,?x&?&TE~ a:%o
In;;roi=rl-.ced a n c t i o n c.f advances & t h o u g h t h e y o f l y
F Z l 3 2 2 T3-e b s s i s Q:.f 80% O f t ' n e i r enti5Lemen-t.
In Some ways t h e
S s s T t l e % T L- -.T ~ ~2 ',LlE3ii..% i s a&ncv&sdging t h i s t h i n g that l o w
i l ' l C o L - 3 f a r 2 i L L e S 22; Z O , h V E ? MGney for a r a i n y daya
yoin h a v e t o
1
sziy
3 2 I, T'gii-ET
-
DBSlS.
53
through. f r e q u e n t l y u n t i l t e n days l a t e r , and t h a t f o r t h e first
s e v e n d a y s p e o p l e a r e n o t e n t i t l e d f o r unemployment b e n e f i t s at
allo So th.at; means 10 days at l e a s t where people have no income.
It seem t o me i n c r e d i b l e that we have a system which i s p e r p e t u a t i n g t h e problem b e c a u s e o f i t s r g l e s . You can a l s o note on
Page
t h a t t h e mean inconLe i s $27 which i s c o n s i d e r a b l y l o w e r
t h a n t h e minimum wage.
If one i s t o c o n s i d e r a GMI scheme it
i s impor-tant n o t o n l y t o c o n s i d e r t h e adequacy o f t h e Level o f
income, i t i s a l s o s o v e r y v e r y i m p o r t a n t t o c o n s i d e r t h e regul a r i t y o f t h e income.
Income has t o come i n on a r e g u l a r b a s i s ,
I t h o u g h t j u s t f i n a l l y , because i t s t h e $64 q u e s t i o n , I would
m e n t i o n t h e q u e s t i o n of t h e work i n c e n t i v e s .
The d a t a seems t o i n d i c a t e t h a t t h e men a r e d e c r e a s i n g t h e i r
work e f f o r t , I d o n ' t know t h a t I l i k e t h i s t h o u g h t , When I saw
t h e s e r e s u l t s s t a r t i n g t o conLe o u t I r e a l l y thought ' o h no!';
because %he Maddison ones hadn't come u p with t h e s e sorts of
r e s u l t s and i t also seemed a n i c e answer t o people who were conc e r n e d a b o u t p e o p l e s t o p p i n g work.
I have been a n a l y s i n g t h e
r e s u l t s i n t h e l a s t few days with t h e h e l p o f t h e staff from t h e
I n s t i t i n t e o f A p p l i e d Economics and S o c i a l Beaearch and i t 3oes
seem t o b e that way,, It seems t h a t t h e decrease i s somewhat
i n d e p e n d e n t e v e n o f t h e g e n e r a l market s i t u a t i o n , because
g e n e r a l l y t h e r e are n o t many j o b s around. When I first s a w
t h i s I t h o u g h t 'Oh my goodness' t h e n I thought ' w e l l s o what',
c o n s i d e r i n g t h e s o r t o f work t h a t t h e men have t o do, which are
u s u a l l y d e g r a d i n g , o v e r exerting, p o o r l y p a i d j o b s . F o r i n s t a n c e
- t h e r e were a g r o u p of men who u s e d t o go and s t o k e l a r g e f u r n a c e s
w i t h m e t a l i n g e t s , with s o a r i n g kemperatures o f w e l l o v e r 1000,
not b e i n g p r o v i d e d w i t h p r o t e c t i v e c l o t l i i n g a n d sometimes f o r c e d ,
b e c a u s e t h e j o b was s o bad, t o do double s h i f t s because t h e
s e c o n d s h i f t d i d n o t t u r n up.
That i s an example o f t h e s o r t o f work t h e s e men a r e e x p e c t e d t o
do.
I t ' s no% v e r y p l e a s a n t sort o f work and i t ' s not v e r y satisf y i n g work, s o i s it any wonder that t h e s e people would s t o p
working? I f this i s t h e c a s e maybe i t means t h a t low s k i l l
workers, p e o p l e who d o n ' t g e t m y s a t i s f a c t i o n o u t o f work,
p e o p l e who d o n o t e v e n g e t a decent salary o u t o f work, might
d e c r e a s e t h e i r work e f f o r t i f t h e y g e t a G M I , b u t t h e t h i n g I
r e a l l y q u e s t i o n i s , does t h i s mean t h a t t h e m a j o r i t y o f p e o p l e ,
o t h e r p e o p l e who a r e working q u i t e r e g u l a r l y at t h e monlent, does
I
this mean t h a t t h e y a r e g o i n g t o s t o p working t o o ?
f i r m l y b e l i e v e most p e o p l e work for o t h e r r e a s o n s a p a r t fronl
I t h i n k t h a t p e o p l e u s u a l l y g e t some s a t i s f a c t i o n o u t of
money.
working, Again t h e s e p e o p l e who a r e s t o p p i n g work; maybe t h i s
54
has i m p l i c a t i o n s f o r t h e working c o n d i t i o n s . Perhaps employers
a r e g o i n g t o h a v e t o s t a r t t o develop a g r e a t e r awareness that
t h e p e o p l e t h e y h a v e g o t down on t h e i r f l o o r s working t h e i r
machines a r e hm,an b e i n g s and not j u s t u n i t s o f p r o d u c t i o n .
P e r h a p s i n t e r m s o f M r . Hayden I an b e i n g v e r y o p t i m i s t i c , and
n o t v e r y p r a c t i c a b l e , b u t I t h i n k t h a t we have become t e r r i b l y
c o n c e r n e d w i t h human b e i n g s i n t h e p r o j e c t . J u s t one more
p o i n t t h a t 1'11 t o s s i n , I t h i n k t h a t as long as t h e s o c i d
s e c u r i t y d e p a r t m e n t i s caught up w i t h notions o f work i n c e n t i v e s ,
t h e r e w i l l a l w a y s b e a c o n f l i c t o f i n t e r e s t s . There i s a conf l i c t o f i n t e r e s t , I b e l i e v e , between. income maintenance a n d
work i n c e n t i v e s . One i s u s e d t o f a c i l i t a t e t h e labour m a r k e t ,
and t h e o t h e r i s s e t up t o h e l p p e o p l e t o have a good income.
And weOve g o t t h a t problen, at t h e moment and t h i s i s why we
h a v e p e o p l e w i t h no income for weeks. T h i s i s why we have p e o p l e
b e i n g cut o f f uneaployment b e n e f i t s at t h e moment f o r ins u f f i c i e n t grounds. A s long as we have a l l t h e s e checkings we
a r e n o t g o i n g t o have an a d e q u a t e f o r m o f income maintenance.
55
E D I T E D DISCUSSION ON JAN SALMON'S PAPER
QUESTION NO. 1
H o w s u c c e s s f u l was t h e program, what e f f e c t d i d it h a v e o n t h e s e
families?
AJYSWER BY ONE OF THE FAMILY CENTRE MEMBERS
I f e e l m y s e l f t h a t i - t has b e e n a m o s t s u c c e s s f u l scheme.
I have
e x p e r i e n c e d i t and not o n l y has i t h e l p e d us money-wise but i t
has h e l p e d us t o t a k e a d v a n t a g e o f o t h e r r e s o u r c e s . We have
housing a n d employnlent and h e a l t h r e s o u r c e s .
These t h i n g s h a v e
h e l p e d u s i n o u r n o r m a l everyday l i f e and has a l l o w e d u s t o
e x p e r i e n c e things w i t h o u t j u s t b e i n g b u r d e n e d down by money
It i s a m o s t needy t h i n g ,
matters.
FURTHER COMMENT BY JAN SALMON
P e r h a p s *Ican i l l u s t r a t e how t h e income supplement can. f r e s
people.
Just r e c e n t l y t h e r e was a d e m o n s t r a t i o n i n t h e s o c i a l
s e c u r i t y d e p a r t m e n t j u s t b e f o r e E a s t e r . Some i n v o l v e m e n t w a s
g a i n e d w i t h p e o p l e waiting f o r t h e i r cheques b u t a l o t o f p e o p l e
w e r e v e r y r e l u c t a n t t o become i n v o l v e d i n t h i s b e c a u s e i t w a s
g e t t i n g c l o s e t o 4 p.iu. and t h e y were f r i g h t e n e d t h a t t o become
i n v o l v e d i n $ome s o r t o f d e m o n s t r a t i o n o r p r o t e s t might p r e v e n t
t h e m f r o m g e t t i n g t h e money t h a t would c a r r y them o v e r E a s t e r .
QUESTION NO. 2
I w a s v e r y i n t e r e s t e d i n your p i c t u r e o f t h e f a m i l i e s i n p o v e r t y
c h a n . g i n g i n t h e i r nuniber, family s t a t u s , p a r e n t a l s t a t u s , q u i t e
o f t en.
M y q u e s t i o n i s t o what e x t e n t do you t h i n k t h a t t h i s g r o u p i s
t y p i c a l o f t h e p o o r i n A u s t r a l i a ? Is it a g r o u p where economic
s t a t u s changed c o n t i n u a l l y , t h a t changed i n an u n p r e d i c t a b l e
w a y s u c h t h a t a s e r v i c e - t y p e program for example, housing
a s s i s t a n c e , t e n d s t o b e i n a p p r o p r i a t e o r t w o slow t o s t a n d t h e
d y n a m i c s of t h e s i t u a t i o n ?
56
Do you t h i n k that t h e s i t u a t i o n t h e y found i n America* i s t r u e
h e r e ? Namely t h a t t h e m a j o r i t y o f t h e p o o r a r e p o o r b e c a u s e of
a change i n family s t a t u s , a m a r r i a g e s p l i t , b e c a u s e t h e b r e a d w i n n e r l e f t honie, o r b e c a u s e t h e r e a r e a d d i t i o n a l c h i l d r e n i n
t h e f a m i l y , That numbers i n p o v e r t y a r e l a r g e l y due t o t h e
demographic f a c t o r s r a t h e r than t h e o t h e r v a r i a b l e s which are
o f t en discussed.
I ' d l i k e t o raise that question.
Secondly, I would l i k e t o ask w h e t h e r you think that t h e d i f f e r ence between t h e W i s c o n s i n program and y o u r program, i n terms
o f work i n c e n t i v e s c a n b e e x p l a i n e d by t h e d i f f e r e n c e s i n t h e
t a x r a t e s . A s you s a i d y o u r s i s a 100% t a x r a t e , t h e r e i s a
v e r y s t r o n g i n c e n t i v e t o s t a y i n t h e scheme.
In W i s c o n s i n I
g a t h e r t h e r e i s a r a n g e o f "tax s c a l e s . To what e x t e n t do you
t h i n k t h a t t h e d i f f e r e n t i a l work e f f o r t o b s e r v e d t o t h o s e
differences?
ANSWER
Perhaps i f I c a n t a k e t h e s e c o n d p o i n t f i r s t , I t h i n k t h a t w e
a r e d e a l i n g w i t h a t o t a l l y d i f f e r e n t scene. The s o r t o f f a n ; i l i e s
i n t h e Family C e n t r e P r o j e c t were o i d y a sub-sample o f t h e g r o u p
i n Wisconsin. T h e r e f o r e , it i s q u i t e p o s s i b l e that t h e y d i d
have t h i s s o r t o f t h i n g g o i n g o n but it would h a v e been s t a t i s t i c a l l y l o s t t o some e x t e n t and a l s o t h e s e were t h e f a m i l i e s t h a t
moved, a d t h e s e were t h e f a m i l i e s t h a t p e r h a p s had some d i s i n c e n t i v e t o remain i n t h e experimental group. Therefore, t h e y
were l o s t . So I d o n ' t r e a l l y h a v e a c l e a r a n s w e r and d o n ' t think
that i t i s as s i m p l e as t h e t a x a t i o n r a t e , although I a g r e e t h a t
we have a v e r y high d i s i n c e n t i v e f a c t o r w i t h a 100% t a x a t i o n r a t e .
In t e r m s o f t h e c h a n g i n g f a m i l y s t a t u s you t a l k a b o u t demographic
f a c t o r s . I 8 v e b e e n r e a d i n g some a n a l y s i s o f f a m i l y breakdown
from t h e c e n s u s i n t h e S t a t e s . The k e y p r e d i c t o r i s income. And
1 think t h a t income e x p l a i n s a l o t o f t h i s v a r i a b i l i t y i n family
structure. F a m i l i e s sometimes b r e a k a p a r t b e c a u s e it i s t h e o n l y
way t h a t t h e y c a n marshal1 f i n a n c i a l s u p p o r t ,
I have s e e n l o t s
G f examples o f t h a t .
F r e q u e n t l y c h i l d r e n w i l l go i n t o i n s t i t u t i o n s b e c a u s e o f a c h r o n i c l a c k o f r e s o u r c e s . We seem t o l o a d
our s o c i a l s e c u r i t y o n t h e w r o n g end. R a t h e r than d e v e l o p i n g
p r e v e n t a t i v e s e r v i c e s , we p a t c h t h i n g s u p a f t e r t h e horse h a s
bolted.
*
Report r e f e r r e d t o i s : The c h a n g i n g economic status o f 5,000
American f a m i l i e s : H i g h l i g h t s from t h e P a n e l Study o f Income
D namics, U . S . R e p o r t s H e a l t h , E d u c a t i o n and W e l f a r e , O f f i c e
h
e S e c u r i t y P o l i c y R e s e a r c h , 1974.
57
FURTHER COMMENT
Can I j u s t a,dd something t o t h a t .
I understand t h e point that
i s b e i n g made about t h e dynamic n a t u r e o f p o v e r t y and p e o p l e
b e i n g i n a s i t u a t i o n o f p o v e r t y , but 1 t h i n k t h a t we have t o b e
c a r e f u l a b o u t s e e i n g t h a t as an e a s y way o u t o f t h e c u r r e n t
thinking.
C e r t a i n l y t h e r e are l o t s o f c h a n g e s t h a t t a k e p l a c e
i n t h e c i r c u m s t a n c e s o f t h e f a m i l i e s i n t h e F a m i l y C e n t r e Proj e c t . But t h o s e changes do n o t a u t o m a t i c a l l y t a k e them o u t o f
p o v e r t y or back i n t o p o v e r t y . The n a t u r e o f t h e p o v e r t y , o r
circumstances that cause poverty, f o r most o f t h e f a m i l i e s i n
t h e p r o j e c t r e m a i n f a i r l y e n t r e n c h e d and i f t h e f a m i l y s p l i t s ,
o r if i t comes t o g e t h e r , o r i f someone i s i n a j o b or o u t of
a j o b , o f t e n does not a f f e c t t h e b a s i c c i r c u m s t a n c e s c a u s i n g
p o v e r t y . R a t h e r i t i s s i m p l y a r e f l e c t i o n o f t h e s t r a i n s and
s t r e s s e s o f p o v e r t y . But p o v e r t y as we've e x p e r i e n c e d it i n
t h e f a m i l y c e n t r e i s a c o r e o f c i r c u m s t a n c e s which a r e n o t
s i m p l y a r e f l e c t i o n o f t h e s e changes. I d o n s t t h i n k t h a t we
c a n d i s m i s s t h e whole notion o f p o v e r t y b y s e e i n g it just as a
transient situation.
The o t h e r t h i n g t h a t I ' d l i k e t o s a y i n r e l a t i o n t o work i n c e n t i v e s - it i s not t h a t p e o p l e n o l o n g e r wish t o work. Q u i t e
o f t e n i t i s t h a t p e o p l e ' s e x p e c t a t i o n s o f what work s h o u l d p r o v i d e f o r them h a s changed, There a r e a number of men i n t h e
c e n t r e who i n e f f e c t p u t i n a full working week a t t h e c e n t r e .
They d o n v t g e t p a i d f o r i t b u t t h e r e are a number o f p e o p l e
who s p e n d what amounts t o a working week a r o u n d t h e c e n t r e
b e c a u s e t h i s o f f e r s them m o r e r e w a r d s than t h e work s i t u a t i o n s
t h a t t h e y have had a v a i l a b l e t o them i n t h e p a s t .
The i m p l i c a t i o n s o f t h a t I think a r e that the s o r t s o f circumstances that
a f f e c t p e o p l e q s d e c i s i o n t o work i s not s i m p l y t h e a v a i l a b i l i t y
o f a n o t h e r s o u r c e o f money b u t r a t h e r t h e a v a i l a b i l i t y of an
a l t e r n a t e s o u r c e of stimulation and s a t i s f a c t i o n .
QUESTION NO. 3
C o u l d you make a comment on what you t h i n k i s t h e r e l a t i v e cont r i b u t i o n t o t h e s u c c e s s o f t h e program f r o m t h e income s u p p l e ment f a c t o r s and t h e o t h e r a c t i v i t i e s t h a t g o o n i n t h e l i f e o f
t h e family centre?
ANSWER
I d o n a t t h i n k t h a t i t i s p o s s i b l e t o g i v e a c l e a r answer.
Income s u p p l e m e n t s have made o b v i o u s improvements i n t e r n s of
s t a b i l i s i n g f a m i l i e s . I t h i n k we can s e e t o some e x t e n t t h i s
t r a d e o f f i n r e l a t i o n s h i p s where t h e income s u p p l e m e n t i s
p r o b a b l y i n a d e q u a t e b e c a u s e it d o e s n v t b e a r a n y r e l a t i o n s h i p t o
p e o p l e ' s debt s t r u c t u r e s .
It d o e s n ' t a c c o u n t f o r emergency
c i r c u m s t a n c e s , e . g . i f you move h o u s e .
Therefore, add5,tional
r e s o u r c e s a r e needed.
58
Adeqiiate housing i s & s o n e e d e d o n t o p of t h e income supplement.
We can p r o v i d e r e n t s u b s i d i e s but t h a t d o e s n l t n e c e s s a r i l y mean
that -people a r e going t o g e t a d e q u a t e housing. It depends on
t h e market c o n : l i t i o n s ,
For example, a t t h e moment it i s v e r y
difficrn'1.t f o r families t o r e m a i n i n t h e i n n e r s u b u r b a n a r e a s .
They & r e b e i n g f o r c e d o u t i n d e p e n d e n t l y o f t h e r e n t s u b s i d y ,
because t h e rent subsidy w o u l d c o v e r t h e high r e n t . They a r e
n o t able t o o b t a i n h o u s e s . T h i s i s where you g e t t h e o t h e r
d i m e n s i o n s o f p o v e r t y - t h e s o c i d . and p o l i t i c a l a s p e c t s of
poverty.
QUESTION NO,4
I w a s i n t e r e s t e d i n t h e p o i n t made e a r l i e r a b o u t t h e i n d i v i d u a l s
who work i n the c e n t r e .
Could you c o m e n t o n t h e s o r t of work
t h e y do a n d a r e p a i d for o u . t s i d e t h e c e n t r e , i n c o n t r a s t t o t h e
work tha;t t h e y do i n t h e c e n t r e ?
It o c c u r s to me t h a t p r o f e s s i o n a l s , and acad.emics, g e t p a i d f o r
doing a lot o f t h e i n g s which we r e g a r d as fun but a r e n o t i n our
j o b d 3 3 f i n i t i o n f o r which we a r e o f f i c i a l l y p a i d .
It seems t o me
t h a t t h e r e i s a gross d i s c r i m i n a t i o n w i t h o t h e r p e o p l e who a r e
n o t p a i d for t h e same t y p e o f a c t i v i t i e s .
ANSWER ( M i c h a e l L i f f m a n )
B a s i c a l l y t h e r e w a r d . t h a t t h e y g e t depends n o t s o much o n t h e
s p e c i f i c p h y s i c a l a c t i v i t y but t h g f a c t t h a t t h e y a r e d o i n g somet h i n g i n a setting i n which t h e y f i n d c o n g e n i d p e o p l e w i t h whom
t h e y c m i n x e r a c t i n a n ' a g r e e a b i e and w o r t h w h i l e way, an i d e a
t h a t t h e y have some commitment t o , and a more c o n g e n i a l a u t h o r i t y
s i t u a t i o n than i s n o r m a l l y o p e r a t i n g o n t h e f a c t o r y floor. I n
e v e r y way t h e t i m e s p a n t a r o u n d t h e c e n t r e b y t h e f a m i l i e s i s
usually a f a i r l y rewarding and p r o d u c t i v e a c t i v i t y . It i s
totally uriLike t h e s i t i d a t i o n t h a t p r e v a i l s o n f a c t o r y floors,
assembly l i l n e s , D r t h e o t h e r general o c c u p a t i o n s t h a t a r e l e f t
open t o t h e u n s k i l l e d .
I think t h a t t h e e x t e n s i o n t o this i s t h a t we r e a l l y must t h i n k
v e r y much more b r o a d l y as t o what c o n s t i t u t e s work. I n some way
we may have t o s t a r t t h i n k i n g a b o u t b r e a k i n g t h e n e x u s t h a t
c u r r e n t l y e x i s t s b e t w e e n a c t i v i t y f o r which you a r e p a i d , a c c o r d ing t o a c o m m e r c i d o r i n d u s t r i a l stnxctil-l'e, m d which t h e r e f o r e
z o n s t i t u t e s work.
I think p e o p l e a r e doing work i n a l l s o r t s o f
s e t t i n g s but f o r which t h e y a r e n o t i n f a c t b e i n g p a i d b e c a u s e
it doss not; f a l l w i t h i n our current business s t r u c t u r e s .
59
QUESTION MO. 5
(I
It i s n o doubt t h a t
your c l i e n t s g point
c o u l d say something
r e s o u r c e s t h a t have
t h e f a m i l y c e n t r e has be.en a s u c c e s s from
o f view. I do wonder, however, i f you
about t h e c o s t o f i t . What a r e t h e
gone i n t o t h i s , s p r e a d o v e r t h e s e 60 f a m i l i e s .
The f a c t t h a t i t i s a s u c c e s s t e n d s t o i n d i c a t e , i n some p e o p l e ' s
minds, t h a t t h e whole t h i n g s h o u l d be extended. What, o u t of
t h e p r o j e c t , do you s e e having an a p p l i c a t i o n i n a more g e n e r a l
context?
ANSWER
I n -terms o f r e s o u r c e s - t h e r e i s a l a r g e b u i l d i n g , a staff
component o f twenty- odd people.
I w o u l d a l s o c o n s i d e r as
r e s o u r c e s t h e r u n n i n g of a c t i v i t i e s i n t e r m s o f o p p o r t u n i t i e s .
Tha-t would be i n t h e v i c i n i t y o f a q u a r t e r o f a m i l l i o n d o l l a r s
a yzsr.
The income supplement o n t o p o f t h a t i s a f u r t h e r s i x t y t o
s e v e n t y t h o u s a n d d o l l a r s a y e a r , Most o f t h i s money i s b e i n g
f u n d e d by t h e B r o t h e r h o o d o f S t Laurence.
We a r e i n t h e p r o c e s s o f change a t t h e moment, G r a d u a l l y t h e
p r o f e s s i o n a l s t a f f a r e moving out o f t h e c e n t r e .
It i s s t i l l
g o i n g t o c o s t t h e same amount of ruoney i n terms o f s t a f f i n g
r e q u i r e m e n t s t o have n o n - p r o f e s s i o n a l s t a f f . The c e n t r e w i l l
be o p e n n e x t y e a r , and t h e b u i l d i n g w i l l be open t o a l a r g e r
comniinnity b a s e .
The r e a o i n c e s t h a t I havenvt m e n t i o n e d a r e t h e 60 f a m i l i e s .
T h e r e will b e p o t e n t i a l l y 60 f a m i l i e s as a d d i t i o n a l r e s o u r c e s
on t o p o f t h e s t a f f s t r u c t u r e , and on t o p o f t h e b u i l d i n g
r e s o u r c e s t o t h e w i d e r comiunity group. That i n some ways may
r e d u c e t h e unit cost s t r u c t u r e ,
I n t h e c e n t r e i t has b e e n shown that t h e f a m i l i e s have b e e n a b l e
t o do more t o h e l p e a c h o t h e r t h a n a p m f e s s i o n a l p e r s o n c o u l d .
I d o n 9 %know t o what e x t e n t l a r g e c o r n u n i t y based o r g a n i s a t i o n s
n e e d -to b e s e t up. The Family C e n t r e P r o j e c t w a s an e x p e r i m e n t .
We h a v e d e m o n s t r a t e d t h a t f a m i l i e s c a n h e l p t h e m s e l v e s . So if
y o u t h i n k i n t e r m s o f , f o r exampie, c o f f e e groups, you start
c a p i - t a l i s i n g on t h e women who meet around t h e g a t e at s c h o o l
a n d . p r o v i d e them w i t h t h e r e s o u r c e s just t o meet e a c h o t h e r .
You are s t a r t i n g t o harness t h e r e s o u r c e s that e x i s t i n t h e
comniunity,
60
QUESTIOR NO. 6
The c o s t for 60 f a m i l i e s inakes my mind boggle when t h i s i s r e l a t e d
t o a g u a r a n g e e d m i n i m u m income because it seems t o me t h a t t h e
s u c c e s s o f t h e Family C e n t r e P r o j e c t has b e e n t h e u s e o f t h e
various r e s o u r c e p e r s o n n e l .
COMMENT
A t no t i m e has it b e e n s u g g e s t e d t h a t you m u l t i p l y t h e c o s t of
t h i s e x p e r i m e n t and t h e c o s t p e r f a m i l y b y t h e number o f p o o r i n
Australia.
It i s an e x t r e m e l y i n t e n s i v e a t t e m p t t o g e t more
inf ormat- i on.
B a s c i a l l y t h e m a i n consequence i s t o show t h a t t h e r e s o u r c e s t h a t
t h e community assumes a r e a v a i l a b l e f o r all, a r e n ' t i n f a c t a c c e s s i b l e t o t h e s e s o r t s o f f a m i l i e s . The Lesson, h o p e f u l l y , i s t h a t
employment s e r v i c e , h o u s i n g , a n d r e c r e a t i o n , and o t h e r sorts o f
s e r v i c e s w i l l h a v e more o u t r e a c h t o r e a c h t h e s e s o r t s o f f a m i l i e s .
QUEsTION NO.
7
What do you t h i n k would b e t h e p r o b a b l e outcome o f , i f at t h e
beginning o f t h e f i n a n c i a l y e a r you just gave each o f t h e f a m i l i e s
$5,000 w i t h o n l y one c o n d i t i o n t h a t t h e y l e t you know how t h e y g e t
o n f o r t h e remainder o f t h e year?
-ANSWER
I t h i n k t h a t c o n s i d e r i n g some o f t h e f a m i l i e s debt s t r u c t u r e s t h e
$5,000 w o u l d v e r y q u i c k l y g o and t h a t f o r t h e r e s t o f t h e y e a r
v e r y l i t t l e e l s e w o u l d b e done.
This i s why I made t h e p o i n t t h a t it i s r e g u l a r i t y o f income which
i s e q u a l l y as i m p o r t a n t as t h e l e v e l o f income.
61
ISSUES AND QUESTIONS
Marie Coleman
EVOLVIlYG OUT OF THE
SEMINAR"
P e r h a p s i f I c o u l d j u s t make a few g e n e r a l o b s e r v a t i o n s t o p i c k
up a few things f r o m t h e ''Canberra end" and a l s o t o make a few
c o m i e n t s t h a t seem t o me t G a r i s e o u t o f t h e d i s c u s s i o n a n d t h e
p a p e r s heard s o far.
We woiild s e e f r o m t h e p o i n t o f v i e w o f t h e s o c i a l w e l f a r e
commission, t h e e r a d i c a t i o n o f p o v e r t y as p e r h a p s t h e p r i m a r y
a i m o f a n y incorr,e s e c u r i t y system. Having s a i d t h a t I think
it i s p r o p e r , p a r t i c u l a r l y a f t e r t h e s e s s i o n which has j u s t
t a k e n p l a c e , t o make a few comments a5out what we mean when we
say teat we w a n t t o g e t r i d o f p o v e r t y . It i s r a t h e r s a d t h a t
we a r e h a v i n g t h i s s o r t o f d i s c u s s i o n w i t h o u t t h e b e n e f i t of
P r o f e s s o r HendersonOs r e p o r t . One o f t h e t h i n g s t h a t b e d e v i l
any d i s c u s s i o n about; g e t t i n g r i d o f p o v e r t y i s a l a c k o f
i n f o r m a t i o n a b o u t who a r e t h e p o o r p e o p l e .
When one s t a r t s t o look at t h e v a r i o u s c o r r e l a t e s o f p o v e r t y I
t h i n k t h a t it i s a m i s t a k e t o t h i n k o f a c e r t a i n p r o p o r t i o n o f
t h e p e o p l e o f t h e community b e i n g p e r m a n e n t l y p o o r , but r a t h e r
t h a t t h e r e i s a. s i g n i f i c a n t group o f p e o p l e who might at t h i s
moment In t i m e b e poor. A s i g n i f i c a n t number o f t h o s e move i n
and o G t o f p o v e r t y d u r i n g various s t a g e s o f t h e i r l i f e c y c l e s .
I n d e e d t h e T J n i v e r s i t y o f Michigan S t u d y has s u g g e s t e d t h a t o f
t h e group o f p e o p l e i n t h e i r sample who were d e f i n e d as p o o r ,
0nl.y s o m e t h i n g l i k e 3% remained i n t e r - g e n e r a t i o n a l l y , p e r m a n e n t l y
i n p o v e r t y . F o r many o t h e r s t h e r e w a s a movement i n a n d o u t o f
p o v e r t y at v a r i o u s t i m e s o f l i f e - s t y l e c r i s i s , or for example,
a t -the p o i n t o f growing old; ai; t h e p o i n t o f t h e a r r i v a l i n t o t h e
f a m i l y o f t h e f o u r t h or f i f t h c h i l d . There a r e p o i n t s , a c c o r d i n g
*
A f o r m a l p a p e r was n o t p r e p a r e d b y M r s . Coleman.
The folLowing
comments a t t e m p t e d t o draw t o g e t h e r t h o s e i s s u e s a r i s i n g out o f
t h e d i s c u s s i o n . and t h e p a p e r s , a n d t o open up t h e c o n c l u d i n g
d i s c u s s i o n f o r t h e day,
The i n t r o d u c t i o n a n d d i s c u s s i o n have b y n e c e s s i t y b e e n e d i t e d
and sxmnarised.
62
t o t h a t &aeriean d a t a , at vvliicb. you guess t h a t f a m i l . i e s o r i n d i v T h i s c1.eerl.y i n d i c a t e s
i d u a i s a r e going t o mg\Te i n t o poverty.
t o -m t h a t we m u s t beware o f a,ss.uning t h a . t one s p l e n d i d Oking-hit*
program w i l l meet a l l t h e needs o f a l l p o o r peop1.e. They a r e
n o t a homogenous group, t h e r e I s n o t Othe p o o r ' i n Australia.
There a r e m a n y people i n A u s t r a l i a W?LOf r o m t i m e t o t i m e i n
t h e i r l i v e s may w e l l be poor.
What I am t r y i n g t c s u g g e s t from thhat t h e n i s t h a t -the group o f
f a m i l i e s which t k e Brotherhood has been working w i t h a r e n o t
n e c e s s a r i l y t h e g r m p t o whon, a l l a n t i - p o v e r t y p r o g r a f l s n e e d t o
b e d i r e c t e d , There i s a f a i r i n d i c a t i o n t h a t we need. t o d e s i g n
a v a r i e t y o f d i f f e r e n t packages d e s i g n e d t o t r y and c a t c h p e o p l e
i n different situations.
I ' d l i k e t o go back t o a remark c o n t a i n e d i n B i l l H a y d e n v s
speech which r e f e r r e d t o t h e n e c e s s i t y f o r g r o u p s s u c h as t h i s
t c produce support f o r government i n i t i a t i v e s which a r e d e s i g n e d
t o a t t a c k poverty. itqsmy b e l i e f that i n making t h a t s t a t e m e n t
h e w a s not a s k i n g f o r a u t o m a t i c endorsenlent f o r any p r o p o s a l
t h z t t h e governmerit might came o u t w i t h .
The p o i n t i s t h a t no
i n n o v a t i v e and expensive p r o j e c t s o r programs w i l l s u c c e e d u n l e s s
t h e r e has b e x t a v e r y c o n s i d e r a b l e amount o f e n l i g h t e n e d p u b l i c
d i s c u s s i o n . If you t h i n k o f t h e drama o f t h e l a s t 2 or ?, y e a r s
i n r e l a t i a n t o Medibank. The p u b l i c w i l l i n g n e s s t o a c c e p t t h a t
program as much as t h e pJ,blic has done g o e s back t o d e b a t e about
t h e natiire o f n a a l t k i n s u r a n c e and t h e problems o f t h e p e o p l e
t r y i a g t o pay f o r h e a l t h c a r e began t o s u r f a c e i n a b o u t 1966,
and there has been a iDng p e r i o d o f d i s c u s s i o n b r i n g i n g t o g e t h e r
i d e a s aboiit what t h e proSlems were t h a t need.ed t o b e met and
what might be t h e p o s s i b l e approaches t o w a r d s m e e t i n g t h e s e problems. I vvo~-ldsuggest t h a t t h i s s o r t o f p r o c e s s w i l l have t o t a k e
p l a c s i f t h e r e i s gDing t o be p u b l i c a c c e p t a n c e o f some r a d i c a l
nsw income s e c a r i t y program. People mu-st b e convinced ( a ) t h a t
t h e r e i s a problem; and ( b ) tkierf: i s a s o l u t i o n , This i n d i c a t e s
t h e n e c e s s i t y f o r a g r e a t many g a t h e r i n g s o f t h i s k i n d , a g r e a t
u ~ a n yd i s c u s s i o n s i n EL lot o f p l a c e s which a r e a l o n g t h e l i n e s o f
f a i r l y hard nosed a m l y s i s o f what t h e problems a r e a n d whether
t h e s e g r o h l e m s a r e capable o f r e s o l . u t i o n i n r m e f f i c i e n t a n d
e f f e c t i v e way. A s J i m C u t t p o i n t e d 3u-t government d o e s n e t opera t e orA f h e b s s i s o f having people d e s i g n proposa1.s f o r i t , governmen-ts si-F11 have t o g e t p u b l i c a c c e p t a n c e f o r t h o s e p r o p o s a l s .
The
s@rtE
o f p o i n t s which have been mad.e c l e a r t o me t o d a y a r e
p C h h t S that. J o h n Yarper r a i s e d thai; no system 1,s l i k e l y t o
be p e r f e c t . That you^ c a n g t have a high minimum income and a low
marginal t3.x r a t e ana a system which i s i n e x p e n s i v e , Something
has t o give way somewhere a l o n g t h e l i n e . And t h e r e i s t h e
POiZt t h a t if One a c c e p t s a high marginal t a x t h a t t h e r e is a
63
d a n g e r t h a t work i n c e n t i v e s may b e e f f e c t e d and t h i s may l e a d t o
o v e r a l l macro-economic problems s u c h as a drop i n p r o d u c t i v i t y .
A s J i m Cutt p o i n t e d o u t t h e r e i s t h e r i s k i n a b s o l u t e t e r m s t h a t
c e r t a i n progranls c o u l d b e t o t h e d e t r i m e n t o f p e o p l e f o r whom
i t w a s i n t r o d u c e d t o h e l p i n t h e s h o r t run. O t h e r i s s u e s which
h a v e b e e n r a i s e d i n c l u d e such q u e s t i o n s as t h e p r o b l e m s o f admini s t r a t i o n and t h e various o p t i o n s t h a t a r e open t o us. A means
t e s t e d system d o e s have d i f f i c u l t i e s of take- up, c m b e degrading i f a d m i n i s t e r e d i n c e r t a i n ways, b u t on t h e o t h e r hand i t i s
at l e a s t l e s s expensive than a u n i v e r s a l non-means t e s t e d
a p p r o a c h . WeQve n o t e d t h a t c h i l d endowment which i s g e n e r a l l y
e a s y t o a d m i n i s t e r b e i n g a demogrant i s i n f i n i t e l y more expensi v e than a f a n l i l y income supplement and has p o l i t i c a l d i f f i c u l t i e s i n t h a t once i t has b e e n implemented i n t h i s method it i s
almost i m p o s s i b l e t o remove it and make t h e way f o r more r a d i c a l
proposals.
It i s v e r y d i f f i c u l t - t o t a k e away payment o f t h a t
k i n d o n c e i t has b e e n i n s t i t u t e d ,
T h e r e a r e o t h e r problems t o do w i t h a d m i n i s t r a t i o n . The q u e s t i o :
o f what c o n s t i t u t e s t h e f a m i l y i s an a d m i n i s t r a t i v e problem as
well as a p h i l o s o p h i c a l problem. Having d e f i n e d t h e f a m i l y u n i t
o n e h a s t h e n th.e problem o f who i s g o i n g t o g e t t h e payment.
We a l r e a d y h a v e a v a r i e t y o f a p p r o a c h e s t o t h i s . We pay t h e
n i o t h e r w i t h c h i l d endowment, b u t do n o t always pay t h e mother
w i t h other kinds o f benefits.
We a r e aware t h a t c e r t a i n low
income f a m i l i e s do t e n d t o t r e a t t h e main o f e . g . t h e i n v a l i d
p e n s i o n as g o i n g t o t h e man and t h e w i f e ' s s m a l l e r a l l o w a n c e i s
what t h e woman. h a s t o run t h e h o u s e h o l d on.
I've n o t e d w i t h i n t e r - e s t t h a t i n all o f t h e p o s s i b l e o p t i o n s
f o r n l i n i m u n l income mentioned t o d a y n o t one o f t h e s p e a k e r s
b r o u g h t u p t h e q u e s t i o n o f i n s u r a n c e b a s e d schemes.
If one moves away f r o m t h e s e q u e s t i o n s o f a d m i n i s t r a t i o n some o f
t h e o-they i s s u e s which have been r a i s e d t o d a y c o n c e r n t h e m a t t e r
o f r e d i s t r i b u t i o n . Even without g e t t i n g i n t o t h e whole game o f
wanting t o r e s t r u c t u r e t h e whole economic system and remove income d i f f e r e n t i a l s , I d o n ' t t h i n k t h a t we c a n e s c a p e t h e f a c t
t h a t t o p u t more money i n t o t h e p o c k e t s o f p o o r p e o p l e means
t h a t i t has t o come from s o r n e b o d y ' e l s e 9 s p o c k e t .
There i s
always t h a t element o f r e d i s t r i b u t i o n and w e must always t h i n k
v e r y c a r e f u l l y about h o w programs a r e t o be p a i d f o r .
L o o k i n g at some o f t h e p o i n t s t h a t came o u t I think t h a t it has
b e e n i n d i c a t e d t h a t a mor-$ comprehensive income s u p p o r t program
than we p r e s e n t l y have c m be i n t r o d u c e d whether we p a t c h u p
w h a t we have o r g o f o r something e l s e o f a more r a d i c a l n a t u r e .
A full g u a r a n t e e d m i n i m u m income scheme, whatever o p t i o n we go
64
f o r w i l l b e v e r y complex a n d it w i l l t a k e some l i t t l e t i m e t o
p h a s e i n and t h e d i f f i c u l t i e s w i l l i n c l u d e t h e a d m i n i s t r a t i v e
o n e s we m e n t i o n e d , t h e p o s s i b l e e f f e c t s on p r o d u c t i v i t y and t h e
c o s t . I s h o u l d emphasise again, we must be v e r y c a u t i o u s i n d e e d
a b o u t assuming t h a t t h e r e i s one u n i v e r s d panacea, To g e t somet h i n g t h a t i s a comprehensive, c o h e r a n t , income s e c u r i t y system
may n e e d a l o t o f t h o u g h t and i t may n e e d some v e r y s e p a r a t e b u t
c o - o r d i n a t e d a p p r o a c h e s t o b e made.
The p o i n t t h a t has come t h r o u g h t i m e and t i m e again i s t h a t an
a d e q u a t e income s u p p o r t p o l i c y i s not t h e o n l y t h i n g which w i l l
meet community n e e d s , O t h e r forms o f i n t e r v e n t i o n w i l l be
n e c e s s a r y t o do s u c h t h i n g s as l i m i t t h e i n c i d e n c e o f p p v e r t y
and s o c i a l d i s a d v a n t a g e . That may i n c l u d e t h e development o f
c e r t a i n k i n d s o f r e h a b i l i t a t i o n programs f o r t h e p h y s i c a l l y and
i n t e l l e c t u a l l y handicapped.
There i s no g e t t i n g away f r o m t h e
n e c e s s i t y o f s e r v i c e s o f various o r d e r s , whether t h e y a r e t h e
p e r s o n a l s o c i a l s e r v i c e s o r t h e s e r v i c e s such as housing, and
education.
There i s a fair i n d i c a t i o n t o o that we w i l l n e e d t o
do s o m e t h i n g about i n s u r i n g t h e p r o v i s i o n o f h e a l t h s e r v i c e s
q u i t e a p a r t from insuring t h e c a p a c i t y o f i n d i v i d u a l s t o p a y f o r
these health services.
Thus t h e r e w i l l c o n t i n u e t o be a n e c e s s i t y f o r government i n t e r v e n t i o n i n o t h e r ways a p a r t from income s u p p o r t and we a r e v e r y
f o o l i s h i f we think t h a t one w i l l do t o t h e e x t e n t o f c o m p l e t e l y
abolishing o t h e r s . There a r e o f c o u r s e l i m i t a t i o n s t o government
e x p e n d i t u r e . There a r e d i f f i c u l t i e s c a u s e d b y t h e l a c k o f methodo l o g i c a l t o o l s f o r t r y i n g t o work out t h e various macro and m i c r o
e f f e c t s o f v a r i o u s p o l i c i e s t o t r y t o g i v e a d v i c e t o t h e government which r e a l l y i s o f a p r o p e r p r i o r i t i e s r e v i e w k i n d . Having
r e g a r d t o t h e e x t e n t o f e x p e n d i t u r e s b y government a t a l l l e v e l s
i n t h e w e l f a r e f i e l d it i s v e r y c l e a r t h a t a d e q u a t e p r i o r i t y
a n a l y s i s i s b e g i n n i n g t o be a l m o s t as i m p o r t a n t as a g u a r a n t e e d
minimum income scheme. There i s a rush t o s e t up e q e n d i t u r e s
without r e a l l y thinking v e r y c a r e f ' u l l y about t h e c r o s s i m p l i c a t i o n s
o f those expenditures i n other areas.
I ' v e been t r y i n g t o highlight some o f t h e i s s u e s which have come
out during t h e d e b a t e and t h e p a p e r s e a r l i e r t o d a y . I now open
it t o d i s c u s s i o n as t o whether t h o s e a r e t h e i s s u e s you'd l i k e
t o t a l k about o r whether t h e r e a r e o t h e r i s s u e s a r i s i n g you'd
l i k e t o b r i n g up.
65
E D I T E D DISCUSSJON ON DAYoS PR.OCEEDINGS
We seem t o be i n an e r a where one t h i n k s i n t e r m s o f models, i n
t e r m s o f u n i t cos’bs, and t h e n one d i v i d e s t h i s i n t o family u n i t
c o a t s , e t c . Time and t i m e a g a i n when one d e b a t e s t h i n g s l i k e
g u a r a n t e e d m i n i m u m income it seems t h a t one g e t s t o l d - p l e a s e
f i n d a s o l u t i o n w i t h i n t h e c o s t s , within t h e system, within t h e
f r a m e of r e f e r e n c e we now have, where progranis a r e u n r e l a t e d ,
wh.ere t h e s o c i a l weLfare comaission i s a t t a c h e d o n t o a s o c i a l
s e c u r i - b y system i n s t e a d o f t h e r e b e i n g a n a - t i o n a l p r i o r i t y and
goal structure itself
I)
C o u l d we a l s o p i c k up your own comment that we n e e d t o b e more
a n a l y t i c and l e s s emotional. I would s a y t h a t we n e e d t o be
imch niore emotional and l e s s a n a l y t i c i n t h a t t h e sort o f issues
t h a t we a r e t a l k i n g a b o u t are e s s e n t i a l l y
i s s u e s , e.g.
i s s u e s o f equi.ty, i s s u e s o f r e d i s t r i b u t i o n . When one wants t o
look at t h e e f f e c t i v e n e s s o f a scheme o r a campaign f o r somet h i n g l i k e g u a r a n t e e d mininlm, income, one g e t s n e a t l y c a u g h t .
If one s u p p o r t s t h e scheme, one i s r e a l l y s u p p o r t i n g t h e cons e r v a t i v e economic model approach o f p a t c h i n g up t h e market
s y s t e m t h e n one c o u l d w e l l be s s e n as s u p p r e s s i v e i f t h a t i s
where i.t s t o p s . I f one l o o k s a t it i n t e r m s o f n e a t c o s t - b e n e f i t
a n a l y s i s one i s assuming t h a t t h e b e n e f i t s a r e measura.ble i n
income t e r m s a l s o , And t h a t i s what I t h i n k we n e e d t o b e v e r y
c a r e f u l about i n d e b a t i n g g u a r a n t e e d m i n i m u n , income. Are t h e
e c o n o m i s t s s u g g e s t i n g t h a t we c o n v e r t ail t h i n g s i n t o some s o r t
o f c a s h c o s t and p r e s e n t t h a t t o t h e comniunity as b e i n g t h e
a l t e r n a t i v e o p t i o n s ; o r a r e we t a l k i n g about g u a r a n t e e d income
s e c u r i t y i n t e r m s o f what t h e f a n l i l y c e n t r e d e b a t e i s a b o u t ,
That i s p r o v i d i n g p e o p l e an o p p o r t u n i t y t o g e t o u t o f t h e r u t .
B e c a u s e most t i m e s when I v v e h e a r d p e o p l e -talking about guarant e e d m i n i m u m income i t i s i n t e r m s o f k e e p i n g p e o p l e t o do t h e
d i r t y work and making them a b i t h a p p i e r .
CO m N T
The p e n s i o n e r s dongt r e a l l y s e e t h i s g u a r a n t e e d m i n i r r i u m income,
o r a p e n s i o n as we c a j l i t , d i s a s s o c i a t e d from h e a l t h and h o u s i n g .
T h e s e a r e t h e t h r e e main i s s u e s t o e s t a b l i s h a standard o f l i v i n g
n e c e s s a r y i n our s o c i e t y . A d d i t i o n a l s u p p o r t may b e r e q u i r e d i n
some a r e a s b e c a u s e a l l p e o p l e a r e not e q u a l ,
66
QUESTION NO. 1
If I c o u l d r e s p o n d t o t h e first couple o f p o i n t s you made and
t h a t i s i n r e g a r d t o t h e m i n i s t e r v s r e q u e s t t h a t t h e s e issues
once t h e y a r e b r o u g h t o u t i n t o t h e open h a v e r e a l l y g o t t o
g e t i n t o t h e p u b l i c d e b a t e . Furthermore t h e q u a l i t y o f t h e
c o n t r i b u t i o n must a v o i d r h e t o r i c , it has g o t t o b e hard nosed,
r e s e a r c h b a s e d and w e l l t h o u g h t out. I t h i n k t h a t we h a v e a
problem though i n d o i n g t h a t because o f t h e l a c k o f s k i l l s and
r e s o u r c e s r e m a i n i n g i n t h e community b a s e d a g e n c i e s . There a r e
o n l y a handful o f o r g a n i s a t i o n s - The B r o t h e r h o o d , I n s t i t u t e o f
A p p l i e d Economic R e s e a r c h , ACOSS, t h e C O S S s , and one o r t w o
o t h e r s - and beyond t h a t i t i s p r o b a b l y not v e r y r e a s o n a b l e t o
expect t h a t we c a n p r o d u c e that k i n d o f q u a l i t y t o t h e s o c i a l
p o l i c y debate.
I r a i s e t h i s b e c a u s e e v e n with t h e a g e n c i e s I have m e n t i o n e d
I t h i n k t h e y a r e f a c i n g v e r y d i f f i c u l t f i n a n c i a l problems i n
r e l a t i o n t o t h e e r o s i o n o f r e s o u r c e s , The v e r y b a s e f r o m
which one would hope t o g e t community s u p p o r t and r e s p o n s e i s
g o i n g t o f i n d i t i n c r e a s i n g l y d i f f i c u l t t o do s o .
ANSWER
I r e c o g n i s e t h i s problem.
One o f t h e t h i n g s t h a t has c o n c e r n e d
t h e s o c i a L w e l f a r e commission h a s b e e n t h e n e c e s s i t y t o d e v e l o p
i n a number o f p l a c e s i n t h e community s o c i a l p o l i c y a n a l y s i s
c a p a c i t y , It has n e v e r been our view t h a t t h e y s h o u l d b e
c o n c e n t r a t e d i n one p l a c e i n government.
We a r e i n t e r e s t e d i n a n y s u g g e s t i o n s and s o l u t i o n s which come
f o r w a r d t o t h i s p r o p o s a l , There w i l l n e v e r b e an i n f o r m e d
community d e b a t e uriLess t h e r e i s someone t h e r e t o d e b a t e w i t h
t h e government.
QUESTION NO.
2
You mentioned t h e v e r y l o w f i g u r e o f 3% o n i n t e r - g e n e r a t i o n a l
p o v e r t y . I would l i k e t o have a momentvs more e x p l a n a t i o n on
t ha%.
J a n Salmon m e n t i o n e d v e r y b r i e f l y o n l y t h e s o c i a l a c t i o n
I ' d be i n t e r e s t e d i n h e r a s s e s s m e n t
resources i n t h e centre.
as t o which s h e deemed as t h e m o s t i m p o r t a n t s o c i a l r e s o u r c e s
i n t h e centre.
ANSWER ( i n r e g a r d t o the M i c h i g a n S u r v e y )
One a d v a n t a g e that t h e y have i n America i n a n a l y s i n g p o v e r t y i s
t h a t t h e y h a v e followed t h r o u g h a p o p u l a t i o n o f 5,000 f a m i l i e s
They phone t h e f a m i l i e s up e v e r y s o o f t e n and
s i n c e a b o u t 1967
m o n i t o r t h e i r socio-economic status. So t h e y h a v e an on-going
s t u d y o f t h e dynamics o f a random sample o f a whole p o p u l a t i o n
- n o t just t h e p o o r .
They have f o u n d , l i k e t h e Henderson Committee, t h a t x$ of
Americans a t any p o i n t i n t i m e a r e below t h e pover$y l i n e . What
t h e -American s z r v e y shows i s t h e e x t e n t t o which t h e y a r e t h e s m e
o r d i f f e r e n t p e o p l e , The r e s u l t s s u g g e s t t h a t a s i m p l i s t i c r e a d i n g o f t h e p r o p a r t i o i ? below t h e p o v e r t y l i n e t e l l s u s v e r y l i t t l e .
The f a c t t h a t 10% f a l l below t h e p o v e r t y l i n e i n A u s t r a l i a does
n o t mean t h a t t h e r e i s a t a r g e t o f 10% t o whom we should d i r e c t
programs, b e c a u s e i n a y e a r o s t i m e m o s t o f t h e s e w i l l n o t be p o o r .
There w i l l Se new e n t r a n t s of t h e p o p u l a t i o n i n t o p o v e r t y , for
r e a s o n s t h a t may b e q u i t e d i f f i c u l t t o d e t e r m i n e .
If t h e r e a r e On0 c a u s e s o f p o v e r t y it d o e s n q t f o l l o w t h a t you
sh.clild have On0 programs, I f p o v e r t y i s a t r a n s i t o r y p r o b l e m i t is
v e r y d i f f i c u l t t o g e a r u p government t o d e a l w i t h i t i n any way but
f o l l o w i n g up t h e symptoms of l o w income w i t h s u p p l e m e n t a r y income.
So I t a k e t h e r e s u l t s of t h e A m e r i c a n W i s c o n s i n s u r v e y a r e v e r y
s u p p o r t i v e o f a n e g a t i v e income t a x system, as opposed t o a welf a r e s e r v i c e o r i e n t a t e d system, as a way o f e f f e c t i v e l y i s o l a t i n g
t h e r e s i d u a l needs,
There i s a h a r d c o r e o f p o o r for whom remedi a l e d u c a t i o n progranls, e t c . may b e a p p r o p r i a t e a n d nobody i s
m g g e s t i n g t h a t g u a r a n t e e d minimun, income w i l l s u f f i c i e n t l y d e a l
wi.tki t h o s e s o r t o f p e o p l e .
The o t h e r t h i n g t h a t I r e c a l l f r o m t h a t s u r v e y w a s t h a t f a m i l y
s e p a r a t i o n , d i v o r c e , e t c . w a s an e x t r e m e l y i m p o r t a n t d e t e r m i n a n t
o f new e n t r y i n t o p o v e r t y .
I t h i n k t h a t one r e c c m i e n d a t i o n t h a t a group l i k e t h i s might make
i s t h a t t h e Bureau o f Census a n d S t a t i s t i c s b e a s k e d t o run a
s u r v e y o f X , O O O Australian f a m i l i e s - n o t j u s t p o o r f a m i l i e s
b e c a u s e t h a t m i s s e s t h e e n t i r e p Q i n t - f o r x y e a r s , s o that we
can l e a r n s o m e t h i n g a b o u t t h e dynamics o f Australian s o c i e t y .
FURTHER COMMENT
A s 1 u n d e r s t a n d it t h e n , i f you d e f i n e g e n e r a l l y t h e p o o r as t h e
hottom 12% o f incomes a n d t h e s u r v e y r e p o r t s t h a t 3% o f t h o s e
were p o o r f a r e a c h o f t h e s i x y e a r s , t h e n 25% o f t h e p o p u l a t i o n
were among that 12% o f p o o r a t some t i m e . So t h a t it i s a t r e mendous number o f p e o p l e r a t h e r %ban j u s t a s m a l l number.,
68
A.NSWER (Jan Salmon r e r e s o u r c e s at Family C e n t r e )
I wonOt go i n t o t o o much d e t a i l . There have b e e n f i v e p r o g r e s s
r e p o r t s which h a v e b e e n p u b l i s h e d now which d e a l w i t h t h e o t h e r
a s p e c t s of t h e c e n t r e .
T h e r e are f i v e r e s o u r c e p e o p l e u s e d i n
t h e a r e a s o f : h o u s i n g , employment, s o c i a l s e c u r i t y b e n e f i t s ,
r e e r e a t i on, h e a l t h .
We h a v e b e e n g r a d u a l l y employing f a m i l y c e n t r e meabers o n t o t h e
s t a f f . I think t h a t t h e y are p r o b a b l y d e l i v e r i l i g t h e s e r v i c e s
a l o t b e t t e r than t h e p r o f e s s i o n a l staff d i d because t h e y understand t h e p r o b l e m s .
I t h i n k t h a t t h e m o s t s i g n i f i c a n t r e s o u r c e i n t e r m s o f all t h e s e
a r e a s has b e e n t h e h o u s i n g one. The impact o f s t a b l e h o u s i n g has
i n c r e d i b l e i m p l i c a t i o n s for t h e r e s t of t h e f a m i l y s i t u a t i o n . It
means s t a b l e e d u c a t i o n , i t m i n i n i s e s e x p e n d i t u r e c o s t s of moving,
it m i n i m i s e s f a m i l y d i s r u p t i o n , s o c i a l c o s t s o f s e t t i n g up a new
house.
COWNT
I have found t o d a y ' s d i s c u s s i o n i n t e r e s t i n g and p r o v o c a t i v e and I
hope t h a t t h e p u b l i c d e b a t e c o n t i n u e s , b u t I hope not t o t h e negl e c t of improvements w i t h i n our p r e s e n t s o c i a l w e l f a r e s t r u c t u r e .
I ' m n o t e v e n c o n v i n c e d y e t t h a t g u a r a n t e e d minimm income i s
l i k e l y t o b e a c c e p k a b l e t o t h e community; that we d o n ' t even have
it a l r e a d y . B u t i t i s c l e a r t h a t t h e r e a r e c e r t a i n g r o u p s i n our
community who a r e i n p o v e r t y , who a r e n o t b e i n g p i c k e d up by t h e
I t h i n k that t h e c o n t r i b u t i o n
e x i s t i n g s o c i a l w e l f a r e scheme.
t h e p r a c t i t i o n e r s m a k e would be t o i n f o r m t h e academics h e r e t o day o f t h e g r o u p s missing o u t u n d e r t h e p r e s e n t scheme, and c l e a r
u p some o f t h e a n o m a l i e s w i t h o u t o v e r t h r o w i n g t h e system at t h i s
s t a g e . We c a n o t a f f o r d t o w a i t f i v e y e a r s for some o f t h e s e
changes.
I n f a c t i t c o u l d be a l o t longer w i t h s u c h a r a d i c a l
d e p a r t u r e as g u a r a n t e e d m i n i m m income,
QUESTION NO, 3
On t h e s u b j e c t o f p a t c h i n g up t h e p r e s e n t s o c i a l s e c u r i t y s y s t e m
1 would l i k e t o draw a t t e n t i o n t o t h e sole p a r e n t situation. I
f e e l t h a t t h e a l l o w a n c e f o r c h i l d r e n i s far t o o l o w , e v e n now
when i t i s going up t o $7 p e r week, That amounts t o a 100$ p e r
day t o f e e d , c l o t h e , and e d u c a t e c h i l d r e n , I think a l s o that
t h e r e n e e d s t o be a r e v i s i o n o f t h e a l l o w a b l e e a r n e d income o f one
p a r e n t should b e r e v i s e d and u p d a t e d c o n s i d e r a b l y .
69
There i s a l s o a need f o r some s o r t o f a l l o w a n c e f o r s o l e f a t h e r s ,
who a r e i n t h e l o w income group, o r p e r h a p s i n t h e medium income
group. They a l s o need h e l p i n c h i l d c a r e
both pre- school, and
b e f o r e and a f t e r s c h o o l h o u r s .
-
ANSWER
The p o i n t you make about t h e a l l o w a n c e f o r c h i l d r e n I t h i n k i s
one t h a t h i g h l i g h t s a n o t h e r i s s u e , Q u i t e c l e a r l y we a r e o p e r a t i n g
t o a g r e a t e x t e n t on q u i t e i n a d e q u a t e i n f o r m a t i o n a b o u t what i t
a c t u a l l y c o s t s t o maintain p e o p l e .
The Bureau o f Census and
S t a t i s t i c s i s c o m p l e t i n g a s u r v e y on e x p e n d i t u r e s a t t h e moment.
It may be o f i n t e r e s t t o you t o know t h a t one o f t h e r e s e a r c h
studies financed by t h e Commission i s being c a r r i e d out b y t h e
Department o f Community Welfare i n Western A u s t r a l i a , It i s
s p e c i f i c a l l y r e l a t e d t o t h e c o s t o f maintaining c h i l d r e n . When
we g e t some more data l i k e t h i s we a r e i n a much b e t t e r p o s i t i o n
t o a r g u e on s p e c i f i c s u b j e c t s s u c h as t h e a c t u a l s i z e f o r t h e
allowance f o r children.
The p o i n t you a r e h i g h l i g h t i n g a b o u t t h e p r o b l e m s o f l o n e p a r e n l
i s an i m p o r t a n t one. There a r e q u i t e a l o t o f improvemeilts whic
can and s h o u l d be made f a i r l y p r o m p t l y w h i l e we d e b a t e w h e t h e r WI
g o t o a g u a r a n t e e d m i n i m u m income scheme o f some sort, and w h i l e
we d e b a t e whether i t i s t o be f i n a n c e d f r o m c o n s o l i d a t e d r e v e n u e ,
o r p a r t l y from c o n s o l i d a t e d r e v e n u e and p a r t l y f r o m i n s u r a n c e .
QUESTION NO.
4
In t a l k i n g a b o u t t h e d e f e c t s o f t h e p r e s e n t s y s t e m o f s o c i d .
s e c u r i t y one o f t h e t h i n g s t h a t we have o n l y o b l i q u e l y r e f e r r e d
t o b u t which I t h i n k i s v e r y r e a l , p a r t i c u l a r l y t o t h e r e c i p i e n t s ,
i s s i m p l y t h e problems o f management, administration and b u r e a u c r a c y . Much o f what might be t h e o r e t i c a l l y a c c e p t a b l e f o u n d e r s
o n what seems t o be t h e f a i r l y n o r m a l p r o b l e m s a s s o c i a t e d w i t h
administration. I t h i n k t h a t t o some e x t e n t , a l t h o u g h we have
r e c o g n i s e d t h i s i n t h e d i s c u s s i o n o f t h e p r e s e n t system, l i t t l e
has b e e n s a i d i n r e g a r d t o t h e p r o p o s e d g u a r a n t e e d m i n i m u m income
Would a n y
scheme as t o h o w t h e s e problems would b e d e a l t w i t h .
p r o p o s a l s f o r a g u a r a n t e e d m i n i m u m income t h a t we come up w i t h be
a b l e t o d e a l w i t h t h e normal p r o b l e m s , r i g i d i t y , d u p l i c a t i o n s ,
anomalies, delays a s s o c i a t e d w i t h t h e massive b u r e a u c r a t i c
o p e r a t i o n , a n y b e t t e r than t h e c u r r e n t s y s t e m i s a b l e t o ? This
i s one o f t h e main problems o f t h e c u r r e n t income s e c u r i t y
arrangement.
70
A n o t h e r i s s u e which a l s o u n d e r l i e s much o f why t h e c u r r e n t system
i s u n s a t i s f a c t o r y i s t h a t o f a b u s e . It seems t o m e t h a t one o f
t h e c o n s t r a i n t s o n t h e o p e r a t i o n o f t h e c u r r e n t income s e c u r i t y
provisions i s t h a t t h e s y s t e m t a k e s v e r y s e r i o u s l y t h e n e e d f o r
t h e s y s t e m t o p r o t e c t i t s e l f from a b u s e ; from p e o p l e dodging o r
conning, making f a l s e c l a i m s and s o on.
I t o su n d e r s t a n d a b l e
t h a t one wants t o a v o i d t h i s s o r t o f d i s h o n e s t y or a b u s e , b u t i t
o f t e n seems t h a t t h e c o s t o f s e t t i n g up s a f e - g u a r d s i n t h e system
against t h a t s o r t o f t h i n g i s a v e r T g r e a t one. The c o s t i s huge
i n t e r m s o f r i g i d i t y i n making t h e system u n r e s p o n s i v e t o i n d i v i d ual n e e d s ; o f giving i t what looks l i k e a p u n i t i v e o r d e t e r r e n t
I t c o u l d p r o b a b l y b e shown t h a t t h e a c t u a l c o s t o f abuse
aspect.
i s f a i r l y small i n m o n e t a r y t e r m s compared t o , f o r i n s t a n c e , t a x
evasion, and i s h i g h l y damaging t o t h e f h n c t i o n o f t h e s y s t e m as
a who1 e.
ANSWER
So o f t e n we d e s i g n s y s t e m s which f o u n d e r because o f t h e p e o p l e who
a d m i n i s t e r t h e s y s t e m r a t h e r than b e c a u s e of t h e c h a r a c t e r i s t i c s
of t h e system at any time.
I am t o l d by t h e p r e s e n t i n q u i r y into
Australian Government A d m i n i s t r a t i o n t h a t t h e g r e a t e s t number of
s u b m i s s i o n s from p e r s o n s i n t h e community a r e c o n c e r n e d w i t h t h e
d e l i v e r y o f w e l f a r e s e r v i c e s . They h i g h l i g h t p r o b l e m s t o do w i t h
a d m i n i s t r a t i o n , e.g. t h e l a c k o f d e c i s i o n- m a k i n g c a p a c i t y at t h e
I think t h a t one c a n c e r t a i n l y say that t h e r e w i l l
local level.
b e a v e r y s t r o n g t r e n d i n t h e d i r e c t i o n o f much more r e g i o n a l i s a t i o n i n t h e administration o f government p r o g r a m s , w i t h much m o r e
emphasis on t h e c a p a c i t y for d e c i s i o n s t o b e made a t t h e r e g i o n a l
l e v e l , It i s an a t t e m p t t o g e t d e c i s i o n s made at a p o i n t c l o s e r
t o t h e immediate n e e d .
L o c a l d i s c r e t i o n however i s n ' t a l w a y s an e n t i r e l y b e n e f i c i a l t h i n g
t o t h e customer. For example, i f you r e a d t h e p r e s s you w i l l s e e
some p e o p l e c o m p l a i n i n g t h a t l o c a l d i s c r e t i o n i n r e s p e c t o f some
Government b e n e f i t s i s m a r k e d l y a f f e c t e d b y t h e i s o l a t i o n of
t h o s e a r e a s , and t h e c o n s e r v a t i v e a t t i t u d e s t h a t local d i s c r e t i o n
a l l o w s t o come i n t o p l a y .
I n r e g a r d t o t h e comment a b o u t t h e t i g h t n e s s o f a d m i n i s t r a t i o n of
b e n e f i t s , and t h e c o n c e r n o f administration t o p r o t e c t i t s e l f . I
t h i n k t h a t it i s d i f f i c u l t t o a p p r e c i a t e how much a government
can be t h r e a t e n e d b y p u b l i c c r i t i c i s m o f l i b e r a l administration
o f t a x p a y e r ' s money. T h e r e i s t h e b i n d t h a t g o v e r n m e n t s can, i n
f a c t , l o s e p o l i t i c a l s u p p o r t when i t a t t e m p t s t o open up t h e
system.
71
QUESTION NO. 5
A s far as t h e r e c i p i e n t s a r e concerned weOve f o u n d t h a t nobody
r e a l l y comes t o us t o f i n d our views. We g o and g i v e our views
t o t h e government, b u t v e r y few p e o p l e come and t a k e n o t e o f what
we want t o say. They s a y t h a t we a r e t h e p o w e r l e s s p o o r , we're
n o t s o p o w e r l e s s when you t a k e i n t o c o n s i d e r a t i o n what happens i n
t h e b a l l o t b o x.
I t h i n k that you a r e making a p o i n t which n e e d s t o b e made again
and again. That government p o l i c i e s have t o b e f o r m u l a t e d f i n a l l y
on t h e b a s i s o f t h e involvement o f t h e community. That p e o p l e have
t o u n d e r s t a n d them, n o t o n l y t h e academics. The p e o p l e t h a t t h o s e
p o l i c i e s a r e supposed t o b e d e s i g n e d f o r must h a v e an o p p o r t u n i t y
t o at l e a s t u n d e r s t a n d what i s b e i n g s u g g e s t e d and t o have an i n p u t .
EDITED CONCLUSION BY MARIE COLEMAJX
If we c o u l d p e r h a p s draw some o f t h e t h r e a d s t o g e t h e r .
I t h i n k t h a t what has b e e n made c l e a r f r o m t o d a y ' s d i s c u s s i o n i s
t h a t we a r e nowhere n e a r knowing what p a r t i c u l a r o p t i o n w e ' r e o n
a b o u t when we t a l k a b o u t a g u a r a n t e e d m i n i m u m income. We have t o
address ourselves n o t o n l y t o t h e t h e o r e t i c a l p o s s i b i l i t i e s o f
w h a t we t h i n k we a r e wanting t o do, but a l s o t o t h e a d m i n i s t r a t i v e
d e t a i l s i n any one o f t h e s e o p t i o n s .
T l j e r e have b e e n a l o t o f things r a i s e d t o d a y which w i l l be u s e f u l
when we come down t o t h e t a s k o f l o o k i n g at t h e recommendations
%hat P r o f e s s o r Henderson w i l l make a n d advising t h e government o n
t h e o p t i o n s open t o it a r i s i n g f r o m t h e s e recommendations.
I cannot but r e i t e r a t e what I s a i d a t t h e b e g i n n i n g , t h a t I t h i n k
i t h i g h l y d e s i r a b l e that an i n f o r m e d p u b l i c d e b a t e should c o n t i n u e
a b o u t t h e problems o f t h e corn-unity s o far as income s e c u r i t y
schemes a r e concerned. There s h o u l d be as much i n f o r m e d debate as
p o s s i b l e about t h e p o s s i b l e o p t i o n s .
I t h i n k t h a t t h e more we discuss ideas then t h e r e i s much more
p r o b a b i l i t y t h a t t h e p r o p o s a l s t h a t t h e government w i l l e v e n t u a l l y
b r i n g f o r w a r d w i l l not be f a l l i n g o n d e a f e a r s , i n a c l i m a t e where
p e o p l e are t i r e d o f h e a r i n g about w e l f a r e s p e n d i n g , but w i l l
r e c o g n i s e t h a t t h e r e a r e community n e e d s which must b e m e t as
e f f i c i e n t l y and e c o n o m i c a l l y as p o s s i b l e .
APPENDIX A:
qAPPROACHES TO WELFARE REFORM'
by P r o f e s s o r J . C u t t
Professor of Administrative Studies
F a c u l t y o f Economics,
A G s t r a l i a n Natrional U n i v e r s i t y
This b r i e f p a p e r r e v i e w s t h e r a n g e o f a l t e r n a t i v e a p p r o a c h e s t o
w e l f a r e reform, and s u g g e s t s a b r o a d framework f o r t h e e v a l u a t i o n
o f such a l t e r n a t i v e s .
I
The Spectrum o f W e l f a r e Reform A l t e r n a t i v e s
The b r o a d r a n g e o f r e l e v a n t p o l i c y o p t i o n s may be c o n s i d e r e d t o
f o r m a continuum o f s p e c t r u m , The p a r t i c u l a r c a t e g o r i e s d e f i n e d
may be r e g a r d e d s i m p l y as i l l u s t r a t i v e o f m a j o r s e c t i o n s o f t h e
spectrum, i m p l i c i t i n which i s a v i r t u a l l y i n f i n i t e r a n g e o f
p e r m u t a t i o n s and c o m b i n a t i o n s .
The f o l l o w i n g b r o a d c a t e g o r i e s o n t h e spectrum may be d i s t i n g u i s h e d :
I.
Pure c a s h t r a n s f e r programs d e l i v e r e d i n a s e l e c t i v e , i . e . ,
income t e s t e d , mode, g e n e r a l l y i n t h e f o r m o f a n e g a t i v e
income t a x , c h a r a c t e r i z e d by a b a s i c income g u a r a n t e e i n
t h e a b s e n c e o f income f r o m o t h e r s o u r c e s ( G ) , a n e g a t i v e
income t a x r a t e or income s u b s i d y r e d u c t i o n r a t e (r) by
which t h e b a s i c payment i s reduced as income f r o m o t h e r
s o u r c e s i n c r e a s e s , a n d a t h i r d component, d e t e r m i n e d
when t h e f i r s t t w o components a r e s p e c i f i e d , which i n d i c a t e s
t h e l e v e l o f income f r o m o t h e r s o u r c e s (break- even income,B)
at which income t r a n s f e r payments a r e r e d u c e d t o z e r o .
By d e f i n i t i o n ,
B = -Gr
In i t a p u r e form s u c h a c a s e t r a n s f e r program may dk s e e n
as unsupplemented by any o t h e r form o f t r a n s f e r - e i t h e r
i n cash o r k i n d o f some s o r t - and uncond-itioned by any
form o f work t e s t or measure o f t h e r e c i p i e n t q s r e l a t i o n s h i p t o r e m u n e r a t i v e employment.* The p u r e s e l e c t i v e
income t r a n s f e r a p p r o a c h t o t h e n e g a t i v e income t a x mode
may a l s o be s e e n i n a e e n e r a l and z c a t e o r i c a l form,
t h e f o r m e r defining e l i g i b i l i t y simply i n erms of an
+
The n o t i o n of a work t e s t i s i i e f l n e d below
73
income t e s t , t h e l a t t e r a d d i n g t o t h e income t e s t a
c a t e g o r i c a l e l i g i b i l i t y t e s t , l i m i t i n g payments, s a y
t o t h e e l d e r l y or t o f a m i l i e s w i t h c h i l d r e n .
2.
P u r e c a s h t r a n s f e r program d e l i v e r e d i n a u n i v e r s a l mode,
l e . not s u b j e c t ; t o a n y f o r m o f income e l i g i b i l i t y t e s t
( r = 0 , B = CO). Again i n t L e p u r e f o r m X U C ?t ~r a n s f e r
programs may be s e e n as unsupplernented b y any o t h e r form
o f t r a n s f e r a n d u n c o n d i t i o n e d by any f o r m o f work t e s t ,
a n d may b e d i s a g g r e g a t e d , as i n t h e c a s e o f tine s e l e c t i v e
a p p r o a c h , i n t o a g e n e r a l f o r m i n wi._ich t h e e l i g i b l e group
i s t h e e n t i r e p o p u l a t i o n and a c a t e g o r i c a l form i n which
payments a r e l i m i t e d t o a s p e c i f i e d p o p u l a t i o n c a t e g o r y .
The e x i s t i n g examples c f such an approach, a n d most
a l t e r n a t i v e f o r m s o f t h e a p p r o a c h proposed, a r e l i m i t e d
t o a s p e c i f i e d category o f r e c i p i e n t s - generally the
e l d e r l y and/or c h i l d r e n . Where a g e n e r a l u n i v e r s a l
a p p r o a c h i s c o n s i d e r e d , it i s u s u a l l y a s s o c i a t e d w i t h a
p o s i t i v e income t a x recoupment s c h e n e d e s i g n e d t o l i m i t
t h e b e n e f i t s u n d e r t h e scheme t o income groups below a
s p e c i f i e d income l e v e l . It i s worth r e c o r d i n g t h a t t h e
a l t e r n a t i v e e x i s t s between t h e t w o o p t i o n s o f u n i v e r s a l i t y
a n d s e l e c t i v i t y o f combining t h e t w o i n v a r i o u s f o r m s o f
mixed- s t r a t e g y , s u p p l e m e n t i n g a n2ga"cve income t a x of
v a r y i n g d-egrees o f g e n e r a l i t y b y a u n i v e r s a l program o r
s e t o f s u c h programs d-esigned f o r s p e c i f i e d r e c i p i e n t
group s.
30 A b a s i c or c o r e cask t r a n s f e r program, d e l i v e r e d e i t h e r
i n t h e s e l e c t i v e o r u n i v e r s a l mode, s u p p i e n e f i t e d b y one
o r more o f a s e t o f earmarked c a s h t r a n s f e r s , s u c h as a
H o u s i n g Allowance o r a Day Care -!iowance, and/or i n - k i n d
t r a n s f e r s t o which. a cazh v a l u e c a n b e imputed, s u c h as
4.
A b a s i c sash t r a n s f e r program, d e l i v e r e d e i t h e r i n t h e
s e l e c t i v e o r u n i v e r s a l modo, sirpplement ed b y a v o l u n t a r y
We msy b r o a d l y d i s human c a - p i t a 1 i-r;vestnsnt program.
t i n g u i s h t w o t y p e s o f work t e s t s - t h e v o l u n t a r y o r
" o p p o r t u n i t y f f form o f work t s s t i n which an o p t i o n a l
human c a p i t a l o r q l p e n a l t y t '3ori-a o f work t e s t i n which
some form o f p a r t i c i g a t i o n i n a hwman c a p i t a l i n v e s t m e n t
program, or i n t h e m o s t extreme f o r m t h e a c t u a l h o l d i n g
o f a j o b , i s a c o n d i t i o n o f r e c e i v i n g imcome m a i n t e n a n c e
paymefits u n d e r t h e b a s i c c a s h t r a n s f e r scheme, T h e form
o f work t s s t e n v i s a g e d u n d e r t h i s coaponent o f t h e
spectrwn i s t h e voluntary o r o p p o r t u n i t y kind.
'7 4
5.
A b a s i c cash t;ransfer program d e l i v e r e d e i t h e r i n t h e
s e l e c t i v e o r u n i v e r s a l - m o d e , supplemented by a mandatory
human c a p i t a l i n v e s t m e n t program. I n t h i s c a s e , t h e
work t e s t may be s e e n as f a l l i n g s h o r t o f h o l d i n g a j o b
as a c o n d i t i o n o f e l i g i b i l i t y for t h e b a s i c c a s h transf e r program b u t as rec$-iiring as a c o n d i t i o n o f r e c e i v i n g
cash t r a n s f e r papie'nTs some e x p r e s s i o n o f "comnlitment
t o work" i n t h e f o r m o f p a r t i c i p a t i o n i n a human c a p i t a l
investment program, The work t e s t thus t a k e s a mandatory
o r p e n a l t y forrrl.
hloving along t h e s p e c t r m i , c a t e g o r y 4 has i n t r o d u c e d a
v o l u n t a r y humn c a p i t a l i n v e s t m e n t program, a n d c a t e g o r y
5 has a c t u a l l y r e q u i r e d t h e p a r t i c i p a t i o n o f a r e c i p i e n t
o f cash t r a n s f e r payments i n a human c a p i t a i n v e s t m e n t
program as a c o n d i t i o n o f r e c e i v i n g c a s h t r a n s f e r payments. The l o g i c a l seqiLence i s t o w a r d a program which
r e q u i r e s r e n u m e r a t i v e eniployrnent as a c o n d i t i o n o f e l i g i b i l i t y for payments o f any k i n d , and f i n a l l y i n t h e
a c t u a l p r o v i s i o n o f p a i d p u b l i c s e c t o r employment as
t h e basic form of a s s i s t a n c e .
C a t e g o r i e s 6 and 7 p u r s u e t h e s e o p t i o n s .
6.
Any employment-conditioned payment program d e l i v e r e d i n
t h e f o r m o f a wage s u b s i d y . There a r e many forms o f
wage subsidy program, but t h e g e n e r a l form i s conceptually similar t o , though n o t i d e n t i e d w i t h , a g e n e r d
n e g a t i v e income tax progran1 u n d e r which r e c e i p t o f
b e n e f i t s i s c o n d i t i o n e d b y employment, and t h e l e v e l o f
benefits i s condisioned by t h e r a t e o f remuneration i n
t h a t employment. The n a t u r e o f c u r r e n t p r o p o s a l s i s
that of a vanishing supplement r e l a t e d t o income, t h e
supplement b e i n g g e a r e d e i t h e r t o a g g r e g a t e e a r n i n g s
( t h e wage r a t e m u l t i p l i e d by hours worked) or t o t h e
h o u r l y wage r a t e . In b o t h c a z e s t h e form t a k e n by t h e
wage subsidy i s similar; i n t h e c a s e c f t h e e a r n i n g s
subsidy, t h e s u b s i d y ( S ) may b e e x z r e s s e d as some f r a c t i o n
( t ) of t h e d i f f e r e n c e between a s p e c i f i e d income minimum(M)
and earned income ( W ) , i . e . ,
S
=
t(M
-
W)
In t h e case of t h e wage r a t e s u b s i d y , t h e same e q u a t i o n
a p p l i e s , bGt S i n t h i s c a s e m e a s u r e s t h e h o u r l y r a t e
subsidy, M measures a, s p e c i f i e d wage r a t e minimmi, a n d
W measures t h e a c t u a l h o u r l y wage r a t e .
75
7.
I1
A p u b l i c emploplent program i n which t h e p u b l i c s e c t o r be-
comes, i n e f f e c t , t h e employer o f t h e l a s t r e s o r t . Antedel u v i a n though s u c h a p r o p o s a l may sound, i t i s a l o g i c a l
consequence o f p r e o c c u p a t i o n w i t h t h e r e l a t i o n o f t r a n s f e r
pa$ments t o t h e s u p p l y o f l a b o u r , a n d o f e x c e s s s u p p l y o f
l a b o u r i n r e l a t i o n t o p r i v a t e s e c t o r jobs.
S u g g e s t e d Framework o f E v a l u a t i o n
W e l f a r e programs have a v a r i e t y o f v e r y d i f f e r e n t e f f e c t s .
We
b e g i n t h e developnient o f an e v a l u a t i o n fran,ework f o r w e l f a r e
p r o g r a m s w i t h a s u g g e s t e d b r o a d i n v e n t o r y o f progran1 o u t p u t
measur e s.
Macro o r C o n t e x t u a l Measures
(i)
The e f f e c t o f t h e progran, on t h e growth o f GNP.
( i i )The e f f e c t o f t h e program on econoiilic s t a b i l i t y , i . e . ,
on t h e r a t e o f unemployment a n d t h e r a t e o f i n f l a t i o n .
M i c r o o r S p e c i f i c Outcomes
( i ) A b s o l u t e outconies, d e f i n e d i n t e r m s o f a s p e c i f i e d
p o v e r t y l i n e and c o r r e s p o n d i n g p o v e r t y gap or
a g g r e g a t e income d e f i c i e n c y ( t h e gap b e t w e e n t h e
sm o f t h e incomes o f f a m i l i e s below t h e p o v e r t y
l i n e and t h e sum o f t h e incomes o f t h o s e same
families calculated at the appropriate poverty
lines).
(a)
Aggregate adequacy, or t h e p e r c e n t a g e o f
t h e p o v e r t y gap c l o s e d by t h e program i n
que st i o n .
(b)
Weighted adequacy, or a g g r e g a t e adequacy
r e c a l c u l a t e d i n terms i n terms o f a
w e i g h t e d p o v e r t y gap i n which d i f f e r e n t i a l
w e i g h t i n g o f f a m i l y incomes below t h e
poverty l i n e i s used.
(c)
V e r t i c a l o r t a r g e t e f f i c i e n c y , d e f i n e d as
t h e r a t i o . o f b e n e f i t s r e c e i v e d by i n t e n d e d
b e n e f i c i a r i e s ( t h o s e whose incomes a r e
below t h e p o v e r t y l i n e ) t o t o t a l b e n e f i t s
d i s t r i b u t e d - i n e f f e c t , as t h e p e r c e n t a g e
o f t h e t o t a l c o s t o f each scheme t h a t g o e s
t o c l o s e t h e p o v e r t y gap.
(d)
P o v e r t y l i n e c r o s s i q p , d e f i n e d simply as
t h e n m b e r o f fanil-ies crossing t h e poverty
l i n e as a r z s u l t o f t h e program i n q u e s t i o n ,
( i i ) R e l a t i v e outcomes, a e f i n e d in t e r m s o f a v a r i e t y o f
m e a s u r e s o f income d i s t r i b u t i o n .
( a ) The p e r c e n t a g e change i n t h e c o n c e n t r a t i o n
r a t i o o r g i n i c o e f f i c i e n t , This c o e f f i c i e n t
i s c a l c u l a t e d b e f o r e and a f t e r e a c h program,
a n d i s d e r i v e d by dividilzg t h e d i f f e r e n c e
between t h e a r e a sub-tended by a Lorenz curve
o f a c t u a l income d i s t r i b u t i o n , by t h e t o t a l
a r e a und-er t h e Lorenz azurve o f p e r f e c t
I t s v a l u e r a n g e s between z e r o
equality.
( p e r f e c t e q u a J . i t y ) and one ( p e r f e z t i n e q u a l i t y ) .
(b)
This
P e r c e n t a g e change i n t h e h i g h : l o w r a t i o .
r a t i o i s c a l c u l a t e d b e f o r e at’-d a f t e r each
program, m-d i s d e f i n e d as t h e r a t i o o f t h e
highest quintkle o r decile,
( i i i )M i s c e l l a n e o u s o u t cornea,
(a)
Program c o s t , defined. as t h e d i r e c t t r a n s f e r
c o s t i n d - o l l a r s a t t r i b u t a b l e t o t h e program
i n q u e s t i o n , and d e f i n e d Go r e f l e c t t h e
d e f i n i t i o n o f d i s p o s a b l e i.ncome u n d e r which
t r a n s f e r payments a r e made, t h i s l a t t e r
d e f i n i t i o n , i n t u r n , r e f l e c t i n g whether o r
n o t t h e program i n q u e s t i o n i s i n t e n d e d t o
supplement o r r e p l a c e e x i s t i n g programs.
The e f f e c t o n work i n c e n t i v e s , d e f i n e d as
t h e p r e d i c t e d o r o b s e r v e d change i n l a b o u r
s u p p l y (and t h u s income o t h e r than frail
t r a n s f e r p a y m a t s ) on t h e p a r t o f t r a n s f e r
r e c i p i e n t s u n d e r t h e program i n q u e s t i o n .
Even i n i t s o b s e r v e d v a r i e t y t h i s i n d i c a t o r
i s a d i f f i c u l t concept, s i n c e i t i s d i f f i c u l t
t o e s t a b l i s h t h e net; e f f e c t of a t r a n s f e r
program; b u t it i s even more i n t r a c t a b l e i n
i t s p r e d i c t i v e variety, since it implies t h e
establislvnent OS a theory o f l a b o u r supply,
and in o u r r e s e a r c h at ANU we have d e v e l o p e d
an u n i n h i b i - b e d measure whish r e f l e c t s t h e
f o l l o w i n g v a r i a b l e s : f i r s t , t h e magnitude of
t h e b a s i c income s a r a n t e e u n d e r e a c h scheme;
second, t h e l e v e l o f e a r n e d income up t o which
n o d e d u c t i o n i s made i n t h e b a s i c g u a r a n t e e ;
third, t h e ~ I D - C by
L ~ ~which diap::,sable j-ncome
r i s e s when income rises by one dol.I.+ar( r e f L e c t i n g
t h e n e g a t i v e income t a x rate); and f o u r t h , t h e
par-kicular c i r c u m s t a n c e e 0 % t r a n s f e r payment;
r e c i p i e n t f a m i l . i e s , & f i n e d i n terms o f t h e nuniber
of dependan+; c h i l d r e n , an2 the s e x G € %he f a m i l y
head.
(e)
The e f f e c t o f %Se p r c g r a m i n q u e s t i o n 3n t h e cons m p t i o n : s a v i n g s r a S j o of r e c i F i . e n t fm.il.ies, and
on t h e d i s t r i l m t i o n o f eonslm~ption e x p e n d i t u r e
by t h e s e families.
(d)
The effect o f t h e pri.>grmi o n fanlily s t a b i l i t y ,
d e f i n e d i n terms c f the e x t e n t t o which an income
su-pport program 3 r o v i d e s an i m p i i z i t mcnetary
i n c e n t i v e for o m spouse I n R two-pa.rent f a m i l y
t o e s % a b l i s i x 8 separa’Ge I z c u . s ~ ~ ~ ~ ~The
~ C Zproblem
~
may, o f co‘L:,rss, be widened- “I;G incliide the c a s e
o f t h e e l d e r 1 . y F e r s r n am3 teenage c h i l d - who may
b e encourage6 t o I-e%ve the h o u s e h a l a aad e s t a b l i s h
s e p a r a t e s t a t u . s 3:4rAr3.er t h e prcgrarir in q u e s t i o n .
Program c h a r a z t e r i s % i c s re3.evan.t to t h e c o n s t r u c t i o r A
o f sxch a variak1.E: wo?:.lct i n c l v d e t h e e x i s t e n c e o f
a u p p e r l i m l t c n transfer payments, a d i m i n i s h i n g
s c a l e o f such payrnelzta a c r o s s the m m b e r s of a
f a m i l y , and t h e g e n e r o s i r y of program payments.
,
(e)
I
The s t i g m a t i z i n g e f f e c t ; o f t h e p r o g r m i i n q u e s t i o n ,
such an effect being r e l e v a l i t for i t s own sake i n
as much. a s i t is g e i i e r a l l y h e l d t h e s e days t h a t
i n c o n e s u p p o r t p r o g r a m s s h o u l d n o t be p r o v i d e d i n
a manner t h a t somehow s t i g m a t i z e s t h e r e c i p i e n t s ,
and i n t e r m s of program ,?ffect;iveneas and c o s t ,
i n as rnu~chas t h e e m e n t t o which e l i g i b l e benef i c i a r i e s Ernrcl Ln t h e prcgram, w h i c h WE d e f i n e
as t h e -t;aks--cip r a t e , w i . l L b e direct1.y r e l a t e d t o
t h e exkent t o wh-ich “,k.,e prcgran i s F a r c e i v e d t o
be s t i g m a t i s i n g , Beievan-t; v a r i a b l e s i n t h e d e s i g n
o f s u c h a c r i t e r i o n m L & t inc:lud?9 f i r s t , t h e
degree o f s e l e c t i v i % y d e f i n s r l i n program e l i g i b i l i t y
c r i t e r i a , second, t h e degree o f g e n e r o s i t y i n p r o gram transfer payment r a . t e s , t h i r d , t h e a v a i l a b i l i t y
o f f r i n g e b e n e f i t s r e l 2 t e d -Go t h e program, f o u r t h ,
t h e p a r t i c u L a r c i r c u m s t m 3 e s ai? t r a n s f e r payment
r e c i p i e n t s , d e f i n e d a.s in the case o f the work
i n c e n t i v e c r i t e r i o n , a n d f ~ . f t h ,t h e a v a i l a b i l i t y
o f i n f o r m a r t i o n on t1;e program,
78
The p o l i t i c a l a c c e p t a b i l i t y o f t h e program,
d e f i n e d c r u d e l y i n t e r m s o f program c o s t , or
more i n t e r e s t i n g l y , i n t e r m s o f t h e e f f e c t s
o f t h e program o n i n t e r e s t e d g r o u p s i n t h e
p o l i t i c a l arena,
The administrative e f f i c i e n c y o f t h e program,
d e f i n e d i n terms o f t h e p e r c e n t a g e o f t o t a l
program c o s t s r e q u i r e d t o a d m i n i s t e r t h e program.
Evduation Strategy
Suppose t h a t we had i n f o r m a t i o n on t h e s e t o f outcomes l i s t e d
above f o r a l t e r n a t i v e w e l f a r e r e f o r m measures. How do we u s e
t h e s e i n an e v a l u a t i o n s t r a t e g y ? Even i n a p a r t i a l , s t a t i c s e n s e ,
i t i s d i f f i c u l t t o make s e n s e o f a multi- dimensional s e t o f incommensurables.
The standard approach would be t o s e p a r a t e o u t
t h e c o s t outcome, and t o use a, standard c o s t - e f f e c t i v e n e s s approach
i n which we a t t e m p t e d t o f i n d o u t how b e s t we could do f o r a speci f i e d c o s t c o n s t r a i n t o r h o w c o s t c o u l d be minimized for t h e a t t a i n ment o f a s p e c i f i e d performance t a r g e t . The d i f f i c u l t y l i e s i n
s p e c i f y i n g t h e t a r g e t . We have a s e t o f incomn,ensurable o u t p u t
measures, and we can o n l y o p t i m i z e one such measure at a t i m e ,
even assuming l a c k o f c o n f l i c t between t h e s e o u t p u t measures. A
s i m p l e approach would b e t o s e l e c t t h e performanee measure we cons i d e r e d most i m p o r t a n t a n d choose t h e p r o g r a n which a c h i e v e d t h e
h i g h e s t s c o r e on t h a t o u t p u t measure f o r a g i v e n c o s t , or which
a c h i e v e d a s p e c i f i e d t a r g e t performance l e v e l i n t h a t o u t p u t
measure a t minimunl c o s t . But t h i s procedure would do s c a n t j u s t i c e
t o t h e r i c h n e s s o f t h e s e t o f o u t p u % measures we have s p e c i f i e d
and, i d e a l l y , we would l i k e t o b e a b l e t o d e f i n e e a c h outcome o n
a common s c a l e , a p p l y a p p r o p r i a t e w e i g h t s t o each outcome, and
c o l l a p s e t h e v a r i o u s outcome measures i n t o a s t a n d a r d i z e d o v e r a l l
performance s c o r e f o r e a c h a l t e r n a t i v e w e l f a r e program. Now i n
t h e f i n a l a n a l y s i s we w i l l have t o conduct s u c h an e x e r c i s e t o
d e c i d e on t h e b e s t program, but I would now l i k e t o argue that
t o conduct such an e x e r c i s e meaningfully we m u s t d e f i n e a framework i n which t h e i n t e r - r e l a t i o n s h i p s (complementary and c o n f l i c t ing) between t h e s e t o f outcome n e a s u r e s o v e r t i m e f o r e a c h p r o gram u n d e r c o n s i d e r a t i o n a r e e s t a b l i s h e d ,
Such a3n approach I would d e s c r i b e as a dynamic, g e n e r a l c o s t e f f e c t i v e n e s s approach. L e t me now t r y t o j u s t i f y t h i s somewhat
pompous p h r a s e . The a p p r o a c h must be g e n e r a l i n t h r e e d i s t i n c t
s e n s e s . F i r s t , any w e l f a r e program which i s n o t f i n a n c e d s i m p l y
by t h e c r e a t i o n of new money must have a s e t o f n e t c o n t r i b u t o r s
and a s e t o f n e t b e n e f i c i a r i e s .
Although a w e l f a r e program might
b e f i n a n c e d by borrowing, it i s v i r t u a l l y c e r t a i n t h a t a m a j o r
79
p r o p o r t i o n o f f i n a n c i n g would be t h r o u g h t a x a t i o n , a a d e v e n i n
a single t i m e p e r i o d , i t i s t h e r e f o r e n e c e s s a r y t o i n c l u d e t h e
i m p l i c a t i o n s o f f i n a n c i n g f o r a f u l l measure o f t h e e f f e c t of
a program on t h e r e l a t i v e d i s t r i b u t i o n o f income.
When one Cons i d e r s b e h a v i o u r a l changes o v e r t i m e , t h e q u e s t i o n becomes e v e n
nlore i n t e r e s t i n g , Second, a w e l f a r e program i s s i m p l y one cornponent f o a s e t o f government programs which we might d e f i n e as
human r e s o u r c e programs. Such programs a r e i n t e r - r e l a t e d , and
a f u l l a n a l y s i s would have t o a s c e r t a i n t h e s p i l l o v e r e f f e c t s
( n e g a t i v e o r p o s i t i v e ) o f t h e w e l f a r e programs i n q u e s t i o n o n
r e l a t e d programs and v i c e v e r s a , The problem i s e v e n more a c u t e
i f one c o n s i d e r s that s e v e r a l l e v e l s o f government may be i n v o l v e d
i n a d m i n i s t e r i n g t h e w e l f a r e program. Problems o f d u p l i c a t i o n
and o v e r l a p are endemic i n such a s i t u a t i o n .
T h i r d , t h e program
nlust be p l a c e d i n i t s macro c o n t e x t . Under t h i s h e a d we c a n n o t
excape t h e t h o r n y q u e s t i o n o f program dynmAcs. A program which
w a s considered t o increase t h e r a t e of inflation would c l e a r l y
diminish t h e r e a l v a l u e of t h e performance measures o v e r t i m e ;
and a program which w a s c o n s i d e r e d t o c o n t r i b u t e t o unemployment
would i n c r e a s e t h e p o t e n t i a l c l i e n t e l e , and a f f e c t t h e c o s t and
performance measures o f t h e program.
Conversely, f a v o u r a b l e
e f f e c t s on i n f l a t i o n and unemployment would have c o r r e s p o n d i n g l y
f a v o u r a b l e e f f e c t s on program outcomes over t i m e .
The u l t i m a t e
macro c o n t e x t , o f c o u r s e , i s t h a t o f t h e growth o f a g g r e g a t e or
n a t i o n a l income o v e r t i m e .
If t h e program were c o n s i d e r e d t o
a f f e c t t h e r a t e o f growth o f n a t i o n a l income, t h i s w o u l d h a v e
r a d i c a l . i m p l i c a t i o n s f o r t h e c o s t and p e r f o r m a n c e o f t h e program
o v e r t i m e , i n c l u d i n g t h e n a t i o n a l c a p a c i t y t o f i n a n c e such programs. On t h i s n o t e we t u r n i n more d e t a i l t o t h e q u e s t i o n o f
program dynanli c s .
C o n s i d e r f i r s t t h e r e l a t i o n s h i p o v e r t i m e between t h e outcome
nleasures r e l a t i n g t o t h e g i n i c o e f f i c i e n t and t h e g r o w t h o f
a g g r e g a t e income. The r e l a t i o n s h i p i s s u b j e c t t o s o m e d e b a t e ,
but t h e r e would p r o b a b l y b e b r o a d agreement t h a t i t t o o k t h e form
i n d i c a t e d on t h e p r o d u c t i o n p o s s i b i l i t y o r t r a d e - o f f c u r v e AE
shown i n diagram 1. We have p l o t t e d t h e s i z e o f GNP against t h e
g i n i c o e f f i c i e n t and e n v i s a g e t h a t o v e r t h e s e c t i o n AB t h e two
measures a r e p o s i t i v e l y r e l a t e d , i. e . d i m i n i s h e d i n e q u a l i t y l e a d s
t o an i n c r e a s e i n t h e growth o f GNP. Over t h e r a n g e BC we env i s a g e t h e c o n f l i c t i n c r e a s i n g at a n i n c r e a s i n g r a t e , and o v e r
t h e r a n g e C D a t a d e c r e a s i n g r a t e . Over t h e s e c t i o n DE, we
h y p o t h e s i z e t h a t f u r t h e r i n c r e a s i n g i n e q u a l i t y h a v e no f u r t h e r
e f f e c t s on t h e s i z e of a g g r e g a t e income. R e a d i n g s o n t h e v e r t i c a l a x i s a r e , of c o u r s e , s e e n as t i m e - l a g g e d i n r e l a t i o n t o
r e a d i n g s o n t h e h o r i z o n t a l a x i s . I t is c l e a r l y i m p o r t a n t t o
a s c e r t a i n t h e segment o f t h e t r a d e - o f f curve o n which s o c i e t y i s
o p e r a t i n g . If i t i s c o n s i d e r e d t h a t we a r e o p e r a t i n g over t h e
segment BC, t h e n t h e n a t u r e o f this t r a d e - o f f s h o u l d b e s p e c i f i e d
t o decision-makers.
Such a t r a d e - o f f might o c c u r i f t h e p o l i c i e s
80
u s e d t o f i n a n c e t h e w e l f a r e program d i m i n i s h e d t h e r a t e of i n vestment and t h u s t h e r a t e o f economic growth.
DIAGRAM
1
S i z e of GNE)
(time t+l)
\
qs 50
-3%
Gini C o e f f i c i e n t ( t i m e t )
i f t h i s were s o , t h e n i t i s n o t d i f f i c u l t t o d e m o n s t r a t e t h a t
over t i m e t h e a b s o l u t e income o f t h o s e who a r e b e n e f i c i a r i e s
under t h e program would b e l o w e r t h a n would have been t h e c a s e
i n t h e absence o f t h e program, d e s p i t e t h e i r improved r e l a t i v e
p o s i t i o n . My p o i n t r e a l l y i s n o t t o p r e s u p p o s e t h e n a t u r e of
t h i s r e l a t i o n s h i p , but t o a r g u e i t s i m p o r t a n c e f o r t h e s u c c e s s
o f w e l f a r e programs o v e r t i m e , and t o u r g e i t s i n c o r p o r a t i o n i n
t h e a n a l y t i c a l i n f o r m a t i o n provided t o decision- makers. A
c o r r e s p o n d i n g dynamic argument c l e a r l y r e l a t e s t h e c o s t and
a b s o l u t e and r e l a t i v e outcome m e a s u r e s o f w e l f a r e programs -bo
t h e i r e f f e c t o n unemployment and p r i c e s t a b i l i t y .
81
P e r h a p s t h e m o s t c o n v e n t i o n a l dynamic argument i s t h a t ; r e l a t i n g
program c o s t and a b s o l u t e outcome n l e a s u r e s t o t h e e f f e s t s o f t h e
program o n work i n c e n t i v e s , A s i n + h e case o f t h e sconomic
g r o w t h argument, t h e q u e s $ i o n i s complex, a l t h a u g h we h a v e t h e
a s s i s t a n c e i n t h i s c a s e o f t h e e v i d e n c e f r o m t h e New J e r s e y
g u a r a n t e e d income e x p e r i m e n t , a n d a c o n s i d -e r a b l e body o f t h e o r e t i c a l and e m p i r i c a l e v i d e n c e . The dynamic dilemma h e r e i s t h a t
i f t h e w e l f a r e program r e s u l t s in a r e d u c t i c n i n 1abou.r supply,
program c o s t s w i l l be h i g h e r over time, p o v e r t y a l . 1 e v i a t i o n w i l l
b e l e s s s u c c e s s f c i , and t h e r e w i l l be d e f i n i t i o n a l i m p l i c a t i o n s
for econDrnic growth thrrjugh t h e r e d z c t i o n i n l a b o g r s u p p l y . The
work i n s e n t i v e i m p l i c a t i o m o f t h e program woGld c l e a r l y a l s o
seem t o be r e l e v a n t t;o i t s p o l i t i c a l a c c e p t a b i l i t y . A g a i n my
a r g m e n t i s s i m p l y t h a t f o r t41e s e t of a l t e r n a t i v e prog.rams u n d e r
C o n s i d e r a t i o n t h e wzrk i n c e n t i v z i m p l i c a t i o n s o f e a c h p r o g r a m
O v e r time be e x p l o r e d and p r e s e n t e d t o t h e d e c i s i o n - m a k e r .
T h e dynamic i n t e r - r e l a t i o n s h i p s o f ou.tcame a e a s v - r e s a r e , alas,
v e r y uziierous. May Is u g g e s t o n l y t w c more o f t h e s e r e l a t i o n s h i p s .
F i r s t , c o n s i d e r t h e e f f e c t o f stigmatization, If a program is
c o n s i d e r e d t a be s t i g m a t i z i n g by i t s b e n e f i c i a r i e s , t h e n t h e ext e n t t o which % h e s e e l i g i b l e k e n e f i c i a r i e s e n r o l i n t h e program
w i l l be d i m i n i s h e d ; a e c o r d i x g l y , not; o n l y w i l l program c o s t o v e r
t i m e be l e s s , 3u-t s o ELLSOw i l l t h e p r o g r a m v s s u c c e s s i n p o v e r t y
a l l e v i a t i o n . Second, c m s i d e r th.e i m p l l c a t i o n s o f f a m i l y s t a b i l i t y , I f t h e n a t u r e o f a program i s such as t o e n c o u r a g e t h e
s p l i t t i n g o f f a m i l i e s , t h e n progrwn c c s t w i l l b e h i g h e r o v e r t i m e
and t h e progran's m c c e s s i n p m e r t y a l l e v i a t i o n w i l l . be d i m i n i s h e d ,
I n SWI,
s e r i o u s a n a l y t i c a ' l a d v i c e on t h e perforniance o f a l t e r n a t i v e
w e l f a r e r e f o r m nleasixres m u s t concern i t s e l f with c 3 n f l i c t and com-I e m e n t a r i t i e s between p r o g r r m outsomes o v e r t i m e , a n d must s p e c t h e t r a d e - a f f s w h i c h e x i s t between d e s i r e d but c o n f l i c t i n g
o u t p u t measures,
pf,
I would l i k e t o make t w o f i n a l p o i n t s , e a c h r a t h e r b r i e f l y , a n d
each r e f l e c t i n g an a s p e c t o f t k e cel?-tral argument c f t h i s s e c t i o n
o f t h e paper,
S e 1e c t ; i v i t y
Versus U n i v e r s a l i t y
i f clne a p p r o a c h e s t h e fiesign o f w e l f a r e p o l i c y through t h e a p p a r atus o f economics, i t i s v e r y d i f f i c u l t t o 7.indersterid t h e o l d
Fabian argument f o r u n i v e r s a l i t y a s against s e l e c t i v i t y . It seems
p r e t t y o b v i o u s , i n d e e d i s s t a t i s t i c a l l y d e m o n s t r a b l e , t h a t i f one
a p p r o a c h e s o b j e c t i v e s s u c h 6 s a g g r e g a t e adequacy, o r t a r g e t
e f f i c i e n c y , fclr a g i v e n cccst, t h e n t h e s e l e c t i v e , o r i n c o r n e - t e s t e d ,
a p -p r o a c h i s f a r more c o s t - e f f e c t i v e f o r a g i v e n w e l f a r e b u d g e t ;
$he nrgunient f o r u n i v e r s 5 l i t y seems t o f o u n d e r on t h e r o c k o f
i n a d e q u a t e payments t o t h o s e inoat i n need. And. y e t t h e F a b i a n s
h a d come a l o n g way from t h e 1.830s, and one wonders at t h e i r
i n s i s t e n c e om t h e i m p o r t a n c e o f u n i v e r s a l . i t y . There a r e t w o
a r g u m e n t s which seem t o s u g g e s t t h a t ‘ u n i v e r s a l p r o g r a n s foml
a$ l e a s t a component, o f our o v e r a l l w e l f a r e s t r a t e g y .
The f i r s t argument r e l a t e s t o t h e s o c i a l a n d p o l i t i c a l e f f e c t s
o f w e l f a r e programs. A. s e l e c t i v e program i s aimed by d e f i n i t i o n
at a s t a t i s t i c a l l y d e f i n e d e l i g i b l e p o p u l a t i o n , Suppose, for
t h e s a k e o f argument, we d e f i n e t h i s g r o u p as t h e l o w e s t onef i f t h o f t h e p o p u l a t i o n c l a s s i f i e d by income, Then we might
a r g u e that t h e p r i n c i p l e s o u r c e o f o p p o s i t i o n t o s u c h programs
which b e n e f i t s o l e l y a n d s p e c i f i c a l l y t h e poor might come not
from high- income g r o u p s b u t froni t h e g r e a t r a n g e o f f a m i l i e s
i n p e r h a p s t h e n e x t t w o - f i f t h s i n terms o f income, who f i n d
t h e n i s e l v e s i n a p o s i t i o n of f i n a n c i a l s t r i n g e n c y , who f e e l caught
by a v a r i e t y o f f o r c e s o v e r which. t h e y h a v e no c o n t r o l , s u c h as
i n f l a t i o n a n d r i s i n g taxes, and who have come t o r e s e n t program
p r o p o s a l s i n which t h e y a r e r e p r e s e n t e d as donors and not as
recipients.
It m i g h t t h u s b e argued. t h a t a s e l e c t i v e scheme
would c r e a t e s o c i a l disharmony by c r e a t i n g an a r b i t r a r y and
e r r o n e o u s l y s h a r p l i n e between t h e s t a t i s t i c a l l y d e f i n e d p o o r
a n d non- poor, a n d b y f a i l i n g t o s t r e s s t h e n e e d s and d i s c G n t e n t s
s h a r e d by t h e s e groups. It i s p e r h a p s t r u e t h a t t h i s argument
i s n o t as s t r o n g i n Australia o r Canada as i t i s i n t h e U n i t e d
S t a t e s , where t h e r e a r e i m p o r t a n t dimensions o f r a c e a n d r e g i o n
i n v o l v e d , b u t t h e g e n e r a l argument i s s u r e l y r e l e v a n t t o t h e
p o l i t i c a l a c c e p t a b i l i t y of programs; t h e r e can c e r t a i n l y be
l i t t l e d e b a t e on t h e b r o a d p o p u l a r i t y o f U - n i v e r s a l programs i n
Australia. a n d o v e r s e a s .
The s e c o n d a r g u n e n t i s p e r h a p s a l i t t l e more s u b t l e . It f o l l o w s
t h e p r e v i o u s argument i n s t r e s s i n g t h a t s e l e c t i v e w e l f a r e p r o grams r e q u i r e a l e g a l l y e l i g i b l e b e n e f i c i a r y t o concede income
inadequ.acy and a r e thus, by d e f i i i i t ion, more s t i g m a t i z i n g than
u n i v e r s a l programs which r e q u i r e no such c o n c e s s i o n , To t h i s
p o i n t t h e argunient i s i n k e r e s - L i n g b u t p e r h a p s n o t overwhelming.
What i s d i s t u r b i n g i s t h a t s u c h stigma niay be a s s o c i a t e d w i t h
t h e take- up r a t e a s s o c i a t e d w i t h s e l e c t i v e programs, Recent
e v i d e n c e f r o m t h e U.K. s u g g e s t s r e m a r k a b l y l o w take-xp r a t e s f o r
s e l e c t i v e programs, i n c l u d i n g an a s t o n i s h i n g 50% take- up r a t e o n
t h e w i d e l y a d v e r t i s e d Family Income Supplement. The argument
f u r t h e r s u g g e s t s t h a t l o w t a k e - u p r a t e s a r e c o n c e n t r a t e d among
It f o l l o w s t h a t a s e l e c t i v e scheme which i s
t h o s e most i n need.
s t a t i s t i c a l l y more s u c c e s s f u l than a u n i v e r s a l scheme on t h e
a s s u m p t i o n o f 100% take- up, may n o t b e more s u c c e s s f u l i f t a k e u p rates a r e s i g n i f k c a n t l y l o w e r t h a n loo%, a n d i f , p a r t i c u l a r l y ,
l o w take- up i s c o n c e n t r a t e d anlong t h e l o w e s t income g r o u p s .
Redistribution o r Poverty Alleviation
R e d i s t r i b u t i o n a d p o v e r t y a l l e v i a t i o n were l i s t e d above as
r e l a t e d outcome m e a s u r e s , a n d seem o b v i o u s l y complementary.
But
a r e t h e y ? The a l l e v i a t i o n o f a b s o l u t e p o v e r t y i s an o b j e c t i v e
which I b e l i e v e we c a n r e a s o n a b l y a r g u e i s a c c e p t a b l e a c r o s s t h e
p o l i t i c a l spectrum. C l e a r l y t h e r e a r e g a i n e r s a n d l o s e r s , b u t
t h e c o s t s may b e w i d e l y s p r e a d , a n d t h e goal a c h i e v e d w i t h
m i n i m a l e f f e c t on iEcome d i s t r i b u t i o n .
If you l i k e , i t i s
analogous t o t h e e c o n o m i s t s ' i d e a o f a move towards a P a r e t o
o@timurn, where some a r e h e l p e d , a n d n o n e l o s e r s ( o r a t l e a s t not
enough t o become p o l i t i c a l l y opposed, o r t o behave e c o n o m i c a l l y
i n such a w a y as t o o f f s e t t h e e f f e c t s o f t h e p r o g r a m ) .
R e d i s t r i b u t i o n i s q u i t e a n o t h e r m a t t e r . By d e f i n i t i o n , it inv o l v e s , a n d i s i n t e n d e d t o i n v o l v e , g a i n e r s and l o s e r s ( t o cont i n u e t h e P a r e t i a n a n a l o g y above, we a r e i n t h e z e r o siun gane
c a s e where what i s g a i n e d by t h e b e n e f i c i a r i e s m u s t b e l o s t by
t h e c o n t r i b u t o r s ) a a d a program couched e x p l i c i t l y i n t h i s way
i s l i k e l y t o create p o l i t i c a l opposition.
Further, t h e question
or" t r a d e - o f f s o v e r t i m e i n r e l a t i o n t o economic g r o w t h and t h e
whole dilemma, o u t l i n e d above, o f a b s o l u t e income l e v e l s a n d
r e l a t i v e income s h a r e s o v e r t i m e , become c e n t r a l t o %he d e b a t e .
Now i t i s a l s o true -chat h i s t o r i c a l l y income s h a r e s have p r o v e d
remarkably r e s i l i e n t t o a t t e m p t s t o make s u c h s h a r e s mDre e q u a l .
It i s g e n e r a l l y a r g u e d t h a t t h i s r e s i l i e n c e i s a t t r i b u t a b l e t o
t h e c a p a c i t y o f p o w e r f u l g r o u p s i n t h e economy - i n c l u d i n g t r a d e
unions - t o s h i f t t a x e s o v e r t i m e a n d f i x t h e p r i c e o f t h e i r
s e r v i c e s a c c o r d i n g t o some n o t i o n o f a p p r o p r i a t e a f t e r tax r e l a t i v i t i e s ; t h u s p r e - r e d i s t r i b u t i v e shares a r e r e s i ; o r e d o v e r t i m e .
T h i s argument may b e h e l d t o d i r e c t l y o f f s e t t h e importance of
t h e argurrlent o f t h e p r e v i o u s p a r a g r a p h , a l t h o u g h t h e t w o arguments a r e n o t n e c e s s a r i l y m u t u d l y e x c l u s i v e ; u n d e s i r a b l e beh a v i o u r a l r e s p o n s e s o f t h e sort p o s t u l a t e d a r e s t i l l p o s s i b l e ,
even if, i n t h e aggregate, t h e r e d i s t r i b u t i v e attempt i s o f f s e t .
B u t whatever i n t e r p r e t a t i o n we p l a c e o n t h e t w o arguments - t h a t
r e d i s t r i b u t i o n may l e a d t o l o w e r a b s o l u t e income o v e r t i m e f o r
b e n e f i c i a r i e s d e s p i t e t h e i r r s l a t i v e improvement, o r t h a t r e d i s t r i b u t i o n w i l l n o t b e s u c c e s s f u l anyway, t h e f a c t r e m a i n s t h a t
i t i s a much more s w e e p i n g o b j e c t i v e than t h e a l l e v i a t i o n o f
poverty.
It i s my c o n t e n t i o n t h a t t h e q u e s t i o n o f r e d i s t r i b u t i v e
s h a r e s i s a complex s o c i a l i s s u e o n which r e a s o n a b l e p e o p l e may
d i s a g r e e . A b s o l u t e d e p r i v a t i o n , o n t h e o t h e r hand, i s s o c i a l l y
imrrioral i n an a d v a n c e d s o c i e t y . I would l i k e t r J l e a v e you w i t h
t h e s u g g e s t i o n t h a t i t would be a p i t y t o f a i l i n our a t t e m p t
t o a l l e v i a t e a b s o l u t e p o v e r t y by c o n f u s i n g t h i s o b j e c t i v e w i t h
t h e desire t o transform society.
84
APPENDIX B:
PASSING THE BUCK - AN AUSTRALIN GUARANTEED
M I N I m INCOME SCHEm
By Jan Salmon, B.A., Dip. S o c i a l S t u d i e s ,
R e s e a r c h Worker, F m i i l y C e n t r e P r o j e c t ,
B r o t h e r h o o d o f S t . Laurence
I n r e c e n t y e a r s t h e r e has b e e n a growing i n t e r e s t i n G u a r a n t e e d
Minimnunl Income ( G M I ) schemes as a means o f a l l e v i a t i n g p o v e r t y .
T h i s p a p e r looks at an A u s t r a l i a n p r o j e c t where an Income
Supplement Scheme w a s p r o v i d e d f o r a group o f l o w income f a m i l i e s
o v e r a p e r i o d o f t h r e e y e a r s . The r e s u l t s of' t h i s scheme a r e examined, a n d some i m p l i c a t i o n s a r e drawn about t h e problems o f i m p l e m e n t i n g a G M I scheme.
THE FAMILY CENTRE PROJECT
T h i s p r o j e c t , known as t h e Family C e n t r e P r o j e c t , was s e t u p t o w a r d s t h e e n d o f 1972 as a r a d i c a l a n d innova-tive c h a l l e n g e t o
much o f t h e c o n v e n t i o n a l t h i n k i n g and p r a c t i c e o f s o c i a l work
w i t h t n i u l t i - p r o b l e m ' f a m i l i e s . The B r o t h e r h o o d o f S t . Laurence
h a d f o r m a y y e a r s been o p e r a t i n g a respected and p r o f e s s i o n a l
S o c i a l Work S e r v i c e i n t h e i n n e r Melbourne s u b u r b o f F i t z r o y .
W i t h a y e a r l y c a s e l o a d o f 600, most o f whom were low-income f a m i l i e s ,
i t h a d become an ' e n d - o f - t h e - l i n e '
agency for many p e o p l e .
It
o f f e r e d some m a t e r i a l r e l i e f a n d casework t o p e o p l e i n t i m e s o f
c r i s i s o r , i n many c a s e s , c h r o n i c d i f f i c u l t y . P a r a l l e l w i t h t h i s
-programn,e w a s a Y o u t h Work S e r v i c e which h a d - f o r many y e a r s worked w i t h numerous young p e o p l e i n t h e l o c a l i t y - o f t e n i n f a c t
t h e c h i l d r e n o f f a n l i l i e s who were c l i e n t s o f t h e S o c i a l Work
S e r v i c e.
A c o m b i n a t i o n o f a number o f f a c t o r s l e d t o t h e d e c i s i o n t o t e r m i n a t e t h e s e s e r v i c e s a n d s e t u p t h e Family C e n t r e P r o j e c t . The exp e r i e n c e o f t h e s o c i a l work s t a f f c o n t i n u a l l y c o n f r o n t e d them with
t h e i r i n a b i l i t y t o s u b s t a n t i a l l y a f f e c t t h e circumstances o f
p o v e r t y i n which t h e i r c l i e n t s were s o h o p e l e s s l y t r a p p e d . A
B r o t h e r h o o d o f S t . L z n e n c e r e s e a r c h s t u d y confirmed t h e i r f e e l i n g . *
R e c e n t developments i n w e l f a r e t h i n k i n g o v e r s e a s were a l s o s u g g e s t i n g t h e n e e d f o r q u i t e new a p p r o a c h e s t o p o v e r t y .
*
O l N e i l J . a n d Nairn R . ,
The Have N o t s - A S t u d y o f 1 5 0 Low
P'amilies, B r o t h e r h o o d o f S t L a u r e n c e ,
Melbourne, J m u a r y 1972.
.
85
The b a s i c theme u n d e r l y i n g t h e new P r o j e c t w a s .that t h e m o s t
c r i t i c a l p r o b l e m f a c e d by t h e p o o r w a s t h e i r c h r o n i c l a c k o f
f i n a n c i a l and m a t e r i a l r e s n u r c e s ancl., t h e r e f o r e , of o p p o r t u n i t i e s
t o p a r t i c i p a t e on e q u a l t e r m s w i t h o t h e r groups i n t h e l a r g e r
s o c i e t y . I n t h i s s i t u a t i o n , p e r s o n a l p r o b l e m s - where t n e y e x i s t e d were s e c o n d a r y and o f t e n d i r e c t l y a t t r i b u t a b l e t o t h e l a c k o f r e s o u r c e s . A c e n t r a l f u n c t i o n o f t h e Family C e n t r e P r o j e c t , t h e r e f o r e ,
h a d t o b e t h e p r o v i s i o n of r e s o u r c e s and o p p o r t u n i t i e s for p o o r
families.
A n o t h e r c e n t r a l t e n e t of t h e P r o j e c t w a s t h e a b i l i t y and t h e r i g h t
o f poor p e o p l e t o m a k e t h e i r own d e c i s i o n s on. t h e b a s i s o f t h e i r
own v a l u e s about t h e i r own l i v e s .
It w a s f e l t t h a t t h e conventl o n a l p r a c t i c e o f s o c i a l work, and t h a s t r u c t u r e o f s o c i a 2 work
a g e n c i e s , d e n i e d t h i s , e s p e c i a l l y where t h e c l i e n t s were l o w income, w o r k i n g- c l a s s p e o p l e .
The Family C e n t r e Proj e c t , t h e r e f o r e ,
a t t e m p t e d t o b r e a k down t h e formal., f a l s e m d o f t e n a u t h o r i t a r i a n
It enr e l a t i o n s h i p between p r o f e s s i o n a l staff and p o o r f a m i l i e s .
c o u r a g e d t h e f u l l e s t p a r t i c i p a t i o n o f members i n e v e r y a s p e c t of
t h e P r o j e c t , b o t h i n s p e c i f i c r e l a t i o n s h i p s between i n d i v i d u a l s ,
a n d i n t h e o v e r a l l management and desision-making within t h e
Project,
-
-
A r i s i n g l o g i c a l l y from t h e emphases o n a d e q u a t e r e s o u r c e s f o r
t h e poor, and t h e r i g h t o f p o a r p e o p l e t o p a r t i z i p a t e o n e q u a l
terms i n a c c o r d a n c e w i t h t h e i r own w i s h e s , w a s a c o n c e r n w i t h
s o c i a l j u s t i c e and s o c i a l a c t i o n . P o v e r t y w a s s e e n as r e f l e c t i n g
s o c i a l s t r u c t u r e s and i n e q u a l i t i e s , and one o f t h e g o a l s o f t h e
P r o j e c t w a s t o be:
' t o h e l p t h e f a n i i l i e s t o v i e w t h e m s e l v e s , n o t as
p a s s i v e v i c t i m s o f s o c i e t y , but as a c t i v e p a r t i c i p a n t s who a r e p o t e n t i a l l y c a p a b l e o f change.
This i n c l u d e s b o t h change i n t h e m s e l v e s and t h e
c a p a c i t y t o change t h e environment i n which t h e y
l i v e . 1%
A s an i m p o r t a n t c o r o l l a r y o f t h i s n o t i o n , i t f o l l o w e d tkat t h e
' P r o b l e m - o r i e n t a t i o n 9 o f much s o c i a l w o r k was seeii as i n a p p r o p r i a t e , and t h a t ' t h e r e d problem o f t h e p o o r w a s t h a t t h e y l a c k e d
money.'
The o v e r a l l a p p r o a c h o f t h e P r o j e c t was e x p r e s s e d i n t h e
u s e f u l s h o r t h a n d f o r n u l a t i o n that i t s a i m w a s t o a c h i e v e , f o r
h i t h e r t o d i s a d v a n t a g e d p e o p l e , four t y p e s o f power:
*
Bern, C o n c e t t a , The Family C e n t r e P r o j e c t - F i r s t P r o j e c t
R e p o r t B r o t h e r h o o d o f St L a u r e n c e ,
Melbourne, Novenber 1972.
power
pDwer
power
power
over
over
Gver
over
resources;
de c i s i on-making ;
relationships;
i n f o r m a t ion.
A t t h e o u t s e t , t h e P r o j e c t was s e e n as an experimental. 'demons t r a t i o n p r o j e c t P and a m a j o r r e s e a r c h component s t a f f e d by two
t r a i n e d r e s e a r c h w o r k e r s w a s b u i l t in-bo i t .
S i x t y f a m i l i e s were i n v i t e d f r o m t h e Brotherhood c a s e l o a d t o be
They were
s e l e c t e d l a r g e l y on t h e b a s i s o f being t h e most v u l n e r a b l e and
n e e d y f a m i l i e s known t o t h e B r o t h e r h o o d and i n c l u d e d a l a r g e
nmlber o f single- parent f a n i l i e s ,
members o f t h e new P r o j e c t i n t h e f i r s t t h r e e y e a r s .
In November 1-972 t h e new P r o j e c t cormrsnced i n a l a r g e multip u r p o s e b u i l d i n g i n F i t z r o y , Within a y e a r t h e f o l l o w i n g o b j e c t i$es* were c o n c e p t u a l i z e d a n d a c c e p t e d by s t a f f and f a m i l i e s .
1,
To p r o v i d e c o n s i d , e r a b l e r e P o u r c e s t o a g r o u p o f p o o r
f a m i l i e s , s o t h a t t h e y can a t t a i n power o v e r t h e
s o c i a l a n d economic c o n d i t i o n s which a f f e c t t h e i r l i v e s .
2"
To p r o v i d e t h e f a c i l i t i e s and t h e o p p o r t u n i t i e s for
t h e s e f a m i l i e s t o become a c q u a i n t e d w i t h t h e p r o c e s s e s
a n d t e c h n i q u e s c f decision- making,
3.
Through p a r t i c i p a t i o n i n t h e decision- making p r o c e s s
i n t h e C e n t r e t o p r o v i d e f a m i l i e s with t h e s k i l l s t o
change the s o c i a l s t r u c t u r e o f t h e C e n t r e .
4*
To p r o v i d e o p p o r t u n i t i e s f o r t h e f a m i l i e s t o d e t e r m i n e
t h e i r O W needs arid t o c o m u n i z a t e t h o s e n e e d s t o t h e
l a r g e r comLunity,
5.
To p r o v i d e s o c i a l a c t i o n . r e s o u r c e s a n d s k i l l s t o t h e
f a m i l i e s s o t h e y can g e n e r a l i z e t h e i r C e n t r e e x p e r i e n c e
t o t h e l a r g e r community i n o r d e r t o demand changes i n
t h e s o c i a l p o l i c i e s a n d i n s t i t u t i o n s which a f f e c t t h e i r
lives,
6,
To e v a l u a t e t h e methods u s e d t o a t t a i n t h e above o b j e c t i v e s , and t o c o l l . e c t b a s i c i n - d e p t h data. about t h e n e e d s ,
s o c i a l c o n d i t i o n s and v a l u e s y s t e m s o f t h e f a m i l i e s t o
p r o v i d e them a n d t h e l a r g e r community w i t h t h e power
o v e r i n f o r m a t i o n which i s e s s e n t i a l f o r change.
*
Bern, C . ,
The Family C e n t r e P r o j e c t - T h i r d P r o g r e s s R e p o r t
B r o t h e r h o o d o f St Laurence, Melbourne, F e b r u a r y ,
197 4.
THE INCOME SUPPLEMENT SCHEME.
I n o r d e r t o meet t h e s e o b j e c t i v e s , i t w a s first n e c e s s a r y t o meet
a more b a s i c n e e d amongst t h e f a m i l i e s - f i n a n c i a l s e c u r i t y . The
Income Supplement Scheme w a s b u i l t i n t o t h e Family C e n t r e P r o j e c t
f o r t w o main r e a s o n s . F i r s t l y , i t w a s f e l t that t o i g n o r e t h e b a s i c
element o f p o v e r t y , namely i n a d e q u a t e income, would p r e v e n t t h e
o v e r a l l s u c c e s s o f t h e program.
The Canadian Committee o n P o v e r t y
expressed the view
' F r e e d from p r e - o c c u p a t i o n w i t h m e e t i n g t h e b a s i c n e e d s
o f survival, many will b e a b l e t o t a k e a d v a n t a g e o f
o p p o r t u n i t y programs which w i l l e n a b l e them t o a c h i e v e
independence. )*
-
I n o t h e r words, t h e Income Supplement w a s p r o v i d e d t o f r e e t h e
f a m i l i e s o f some o f t h e i r e x t r a o r d i n a r y f i n a n c i a l strains i n o r d e r
t h a t t h e y c o u l d p a r t i c i p a t e i n a l l a s p e c t s o f t h e Family C e n t r e
Project
.
Secondly and p r a g m a t i c a l l y , it w a s r e a l i z e d t h a t t h e f a m i l i e s h a d
a t t e n d e d t h e f o r m e r S o c i a l Work S e r v i c e a n d had f r e q u e n t l y r e c e i v e d
f i n a n c i a l a s s i s t a n c e , It would have b e e n f a c i l e t o assume that
t h e s e f a m i l i e s would n o l o n g e r n e e d f i n a n c i a l a i d , The c o n c e p t o f
a Guaranteed M i n i m u m Income w a s s e l e c t e d as t h e form o f m e e t i n g
t h e i r f i n a n c i a l . n e e d s , r a t h e r than a d i s c r e t i o n a r y ' c h a r i t y - t y p e '
system, which would c o n t r a d i c t t h e p h i l o s o p h y o f t h e Family
C e n t r e P r o j e c t , i . e . p r o v i s i o n o f power o v e r r e s o u r c e s , r e l a t i o n s h i p s , information and decision- making. For t h i s r e a s o n , t h e
Income Supplement a t t e m p t e d t o meet two c r i t e r i a :
That it w a s a r i g h t r a t h e r t h a n a d i s c r e t i o n a r y handout.
1.
2.
S i m p l i c i t y - t h e r a t i o n a l e o f t h e scheme needed t o be
c l e a r l y u n d e r s t o o d by t h e f a m i l i e s .
The Income Supplement Formula
Because o f t h e absence o f a n y comprehensive A u s t r a l i a d a t a r e g a r d i n g family e x p e n d i t u r e p a t t e r n s , t h e r e was no e x i s t i l z g s t a n d a r d
t h a t would e n s u r e an a d e q u a t e a n d e q u i t a b l e income t o t h e f a m i l i e s .
It was d e c i d e d n o t t o u s e P r o f e s s o r H e n d e r s o n ' s ' P o v e r t y L i n e '
because t h e r e w a s v e r y l i t t l e e v i d e n c e t o suggest that it w a s an
a d e q u a t e l e v e l and it f a i l e d t o meet t h e second c r i t e r i o n - its
r a t i o n a l e was t o o d i f f i c u l t f o r t h e f a m i l i e s t o u n d e r s t a n d .
F u r t h e r , it d i d n o t seem a p p r o p r i a t e f o r t h e P r o j e c t t o e n d o r s e
t h e a s s u m p t i o n i m p l i c i t i n t h e p o v e r t y l i n e that f a m i l i e s with an
income o v e r t h e l i n e were, t h e r e f o r e , n o t i n p o v e r t y .
*
Report o f t h e S p e c i a l S e n a t e Committee on P o v e r t y ,
P o v e r t y i n Canada, p.175, O t t a w a 1971.
The Income Sixppl emenb rias 1;wo f e a t u r e s :
and a r e n t a l wbsidly.
a rninimunl n e e d s u b s i d y
This wag ' b a s e d . 013. t h e min.j.ini!xn wage a n d c h i l d endowment, and i s
adjixated f o r .the n3:~fi~'loer
o f p a r e n t s and c h i l d r e n , t h e t y p e o f
a c c o m i o d a t i o n , and ,the work x - b a t u s o f t h e p a r e n t s , The minimm1
wage was b r o k m ci,c~wain-to c o s t components which were d e r i v e d f r o m
a simpl.ificakinu of H m d . ~ m o nsOs-tan6w-d c o s t s ,
Simplification
w a s necessa.@y for % W O r e a a c n s , F i r s k l y , a.t t h e t i m e o f c c n s t r u c -t;i,on o f t h e .1.:.a.bl.r:., k n o w l e d g s o f t h e group w a s i n c o m p l e t e . T h i s
made es'tima.l:ion o f -Lhe c o s t o f t h e Income Supplement i m p o s s i b l e
with.ou.G rnalchg 'cer.tain aaaump"tionw, S e c o n d l y , i t was d e s i r e d t o
c o n s t r u c t a s::al,a whi.ch c o u l d 'be readily u n d e r s t o o d by t h e f a m i l i e s
and easy to a d m i n i s t ; e r ,
The s i r n p l . i , f i a d s-Land.arc3, c o s t s were c a L x L a t e d by r e p l i c a t i n g t h e
Henderson s?;anrj.a.rd c o s t s s c a l e o v e r a. r a n g e o f income u n i t s .
R e p 1 i c a t i . m was ach,irz?ved by m.aking t h e EoEl-owing a s s u m p t i o n s :
I,
. A l l males were xn.der 40 y e a r s o f a g e ,
2.
The s t a n d a r - d cout;x o f a, malle and. f e m a l e a t home and a t work
were e q m : L ,
The standard c o s t o f t h e first child w a s eqv-a1 t o a male
c h i l d argon. be,.tween s i x and f i f t e e n years.
With -these axai;l.mpt;ions, a r b i t r a r y v a l u e s o f t h e s t a n d a r d c o s t of
an a d d i t i o n a l c h i l d . and s t m . d a r d c o s t o f accomnIodation were ass i g n e d by tri.e,lL and e r r o r .until. t h e y z c h i e v e d a c l o s e approxima t i o n t o Hend.ersonus fomnmla,
*
This r e f e r s to t k e l e v e l o f p e n s i o n s s e t i n 1972.
These s i m p l i f i e d s t a n d a r d c o s t s were then e q u a t e d t o t h e m i n i m u m
wage by a s c a l i n g f a c t o r .
In o t h e r words, t h e s i m p l i f i e d s t a n d a r d c o s t s were s c a l e d down by a p e r c e n t a g e , s o that t h e sum o f
t h e standard c o s t s o f the so-ca3led a v e r a g e f a l i l y ( t w o p a r e n t s ,
t w o c h i l d r e n l i v i n g i n a h o u s e , with one p a r e n t working) w a s e q u a l
t o t h e m i n i m m wage, e.g. when t h e m i n i m u m wage w a s $51.00 t h e
T a b l e 1 summarizes this transformation.
s c a l i n g f a c t o r was 75. 25%.
The Income Supplement Assessment T a b l e w a s c o n s t r u c t e d by a d d i n g
t h e a p p r o p r i a t e s t a n d a r d c o s t s o f a range of family s i t u a t i o n s .
T a b l e 11 shows t h e M i n i m u Need L e v e l s .
The M i n i m m i Reed Subsidy i s t h e amount by which t h e f a m i l y ' s
income i s l e s s than t h e m i n i m u m n e e d l e v e l . When t h e f a m i l y ' s
m c m e exceeds t h e m i n i m m 1 n e e d l e v e l , t h e r e i s n o m i n i m u m n e e d
subsidy p a i d . In o t h e r words, t h e Income Supplement i n c o r p o r a t e s
a 1005 t a x a t i o n r a t e . The 100% t a x a t i o n r a t e w a s s e l e c t e d for t w o
p r a g m a t i c reasons.
It w a s s i m p l e r t o u n d e r s t a n d , a n d i t was
cheaper. Budgetary c o n s i d e r a t i o n s a r e n a t u r a l l y o f m a j o r i m p o r tance i n a v o l u n t a r y agency.
Rent; Subsidy
It w a s asswiled t h a t no f a m i l y s h o u l d p a y more than a q u a r t e r of
i t s t o t a l s u b s i d i z e d income on r e n t .
If they did, t h e d e f i c i t
w a s p a i d as a r e n t subsidy. The scheme w a s a d m i n i s t e r e d o n a
weekly b a s i s . The supplement w a s p a i d i n t h e f o r m o f a cheque
whizh w a s cashed w i t h i n t h e C e n t r e ,
Il@LICATIONS OF THE INCOME SUPPLEMENT :
I. D e f i n i t i o n s
Any income main5enance scheme r e q u i r e s a s e t o f o p e r a t i o n a l d e fi n i t i o n s o f c e r t a i n terms, e . g . t h e income u n i t , income. I m p l i c i t
i n e a c h o f t h e s e d i f i n i t i o n s a r e v a l u e judgments.
(a)
The Income U n i t :
U n t i l t h e Income Supplement Programs b e g a n , i t was n a i v e l y
assumed t h a t t h e r e would be few d i f f i c u l t i e s i n d e f i n i n g
what would be t h e income u n i t .
S i x t y f a m i l i e s had been t o
j o i n t h e P r o j e c t , a n d i t w a s thought t h a t t h e y would be p a i d
on t h e basis o f t h e family unit.
The s i t u a t i o n o f b o a r d e r s
l i v i n g w i t h a f a m i l y h a d been a n t i c i p a t e d : i t was assumed
t h a t $6.00 w a s a d e q u a t e t o c o v e r t h e c o s t s o f a b o a r d e r
Any a d d i t i o n a l b o a r d w a s assumed t o g o
(food, f u e l e t c . ) .
towards paying t h e f m i l y P s r e n t .
For i n s t a n c e , i f a
b o a r d e r p a i d $10,00, $6,00 w a s asawned t o meet h i s e x p e n s e s ,
and t h e r e m a i n i n g $4.00 r e d u c e d t h e f a m i l y ' s r e n t ( f o r exmp1.e from $20.00 te @-6.00). The r e n t s u b s i d y was t h e n
c a l , c u . l a t e d o n t h e a d j u s t e d - r e n t o f $16,00. Problems arose
b e c a u s e o f t h e complex r e l a t i o n s h i p s within t h e f a m i l i e s .
s01ne f a m j . l i e s had d i s t a n t r e l a t i v e s l i v i n g w i t h them who
may o r may no-t pay b o a r d ,
The d i s t i n c t i o n b e t w e e n f a m i l i e s as one- or two- parent
f a m i l i e s c o v e r e d most s i t u a t i o n s ; however, t h e r e were some
Some f a m i l y r e l a t i o n s h i p s were n o t v e r y s t a b l e ;
anomalies.
e . g . some de f a c t o r e l a t i o n s h i p s l a s t e d o n l y weeks o r months.
In t h e s e c a s e s , t h e problem l i e s w i t h d e c i d i n g wh.ether t h e
c o u p l e p o o l t h e i r r e s o u r c e s o r n o t , and w h e t h e r t o i n c l u d e
t h e m a n i n t h e payment u n i t , ,
U n d e r l y i n g t h e s e d e c i s i o n s i s a v a l u e judgment, namely t h a t
t h e man s h o u l d . p r o v i d e f o r t h e woman. We know t h a t t h i s i s
n o t n e c e s s a . r i l y t h e c a s e , e v e n w i t h s t a b l e de f a c t o r e l a t i o n s h i p s , For i n s t a n c e , can a woman r e c e i v i n g a p e n s i o n exp e c t her de f a c t o husband t o s u p p o r t h e r a n d h e r c h i l d r e n ?
The r e a l i t y o f t h e s i t u a t i o n i s f r e q u e n t l y t h a t t h e man i s
an irregular w o r k e r a.nd, t h e r e f o r e , u n a b l e to s u p p o r 5 t h e
family.
F o r - t h i s r e a s o n , t h e woman may c o n t i n u e t o r e c e i v e
t h e pension a n d i n d o i n g s o w i l l be b r e a k i n g t h e l a w .
Womeii a r e n o t e n t i t l e d t o t h e W i d o w o x P e n s i o n or S u p p o r t i n g
M o t h e r s P B e n e f i t if t h e y a r e i i v i n g i n a de f a c t o r e l a t i o n s h i p ; -the e x i s t i n g s o c i a l s e c u r i t y system makes a d i s t i n c t i o n b e t we e n s e mal r e l a t i o n s h i p s a n d d o m e s t i c r e l a t i o n s h i p s ,
y e t i n d e c i d i n g t h e n a t u r e o f a r e l a t i o n s h i p , it i s f r e q u e n t l y s u f f i c i e n t e v i d e n c e for a p e n s i o n / b e n e f i t t o b e c u t o f f
i f t h e r e i s a man o n t h e s c e n e { , O b o o t s u n d e r t h e b e d ' syndrome). J u s t r e c e n t l y a group i n Queensland l a u n c h e d a
campaign against t h e S o c i a l S e c u r i t y Department o n t h i s v e r y
issue.
This illus-brates how t h e S o c i a l S e c u r i t y system can
c o n t r o l p e o p l e u s l i v e s , and a f f e c t t h e s o r t s o f r e l a t i o n s h i p s which p e o p l e c a n form.
Problems a l s o o c c u r w i t h c l a s s i f i c a t i o n c f d e p e n d e n t s .
A l l o w a n c e s had t o b e made for c h i l d r e n i n i n s t i t u t i o n s
where p a r e n t s were p a r t i a l 1 . y r e s p o n s i b l e for t h e c h i l d r e n ' s
upkeep. B u t vvha'c about t h e few o c c a s i o n s when p a r e n t s
d i d n o t have t o pay institutions? Frequently t h e s e p a r e n t s
s t i l l had -to i n c u r t h e c o s t s o f t r a v e l l i n g t o i n s t i t u t i o n s ,
b u y i n g c l o t h e s , e t c . These axe t h e c o s t s o f b e i n g an i n t e r e s t e d p a r e n t maintaining c o n t a c t w i t h a c h i l d .
91
(b)
Income
In one way t h e d e f i n i t b n o f income w a s a f a i r l y s i m p l e
p r o c e d u r e s i n c e t h e f a m i l i e s h a d few o r no a s s e t s . Net
income w a s u s e d r a t h e r than g r o s s income, b e c a u s e i t w a s
found t h a t few f a m i l i e s e v e r go t h r o u g h t h e p r o c e s s o f
making a t a x claim. One o f t h e f e a t u r e s o f l o w income
l i v i n g i s housing m o b i l i t y . The families change h o u s i n g
s o f r e q u e n t l y t h a t group c e r t i f i c a t e s would p r o b a b l y
never reach families,
In u s i n g t L e t o t a l income o f t h e income u n i t as t h e b a s i s
o f t h e c a l c u l a t i o n o f t h e s u b s i d y , one i s assuming that
t h e income i s p o o l e d by t h e f a m i l y . It has a l r e a d y b e e n
p o i n t e d o u t t h a t t h i s i s n o t t h e c a s e In de f a c t o r e l a t i o n s h i p s . Even with m a r i t a l r e l a t i o n s h i p s , it i s n o t nece s s a r i l y t h e c a s e . It depends o n who r e c e i v e s t h e income
and who i s r e s p o n s i b l e f o r t h e h o u s e h o l d f i n a n c e s .
For
i m t a n c e , t h e husband may not g i v e h i s wife s u f f i c i e n t
money o u t o f t h e pay- packet t o manage t h e h o u s e h o l d .
However, d i f f i c u l t i e s also a r i s e where f a m i l i e s r e c e i v e
invalid pensions.
In t h e s e c a s e s , t h e p e n s i o n i s d i v i d e d
i n t o a husbandvs aad w i f e ' s allowance. Frequently t h e s e
f a m i l i e s e x p e r i e n c e c h r o n i c f i n a n c i a l problems b e c a u s e
t h e husbalzd a s s m i e s t h a t t h e w i f e c a n manage t h e h o u s e h o l d
o n h e r allowance.
The S o c i a l S e c u r i t y system d o e s n o t have t h e r i g h t t o d i c t a t e how a f a m i l y h a n d l e s i t s r e s o u r c e s , y e t b y s e l e c t i n g
a method o f payment it can i n f l u e n c e f a m i l i e s ' a b i l i t i e s
t o cope. P e r h a p s t h e o n l y nlethod i s t o l e a v e it t o t h e
i n d i v i d u a l incoFe u n i t t o d e c i d e who should r e c e i v e t h e
subsidy,
2.
Administration
A s e c o n d m a j o r problem a r e a i s t h a t o f administration o f an income
a a i n t e n a n c e scheme. It cannot b e assumed t h a t t h e family s i t u a t i o n
w i l l remain c o n s t a n t . De f a c t o r e l a t i o n s h i p s form a n d b r e a k up,
c h i l d r e n oome m d g o froni i n s t i t u t i o n s , and f a m i l i e s change housing
at a r a p i d r a t e and, m o s t i m p o r t a n t l y , t h e income p a t t e r n s v a r y
enormously. This has i m p l i c a t i o n s f o r :
(a)
The f l e x i b i l i t y of t h e scheme,
The p e r i o d o f a c c o u n t i n g .
92
c------>
Flc?x~*bi,2.i-Lo f th9 Scheme
-___1_
The p r e s e n t S o c i a l S e c i n - i t y system i s i n . s u f f i c i e n t 1 y f l e x i b l e t o nccou.nt for f a m i l y changes. We h a v e found that
g e n e r a l . l y f a m i l i e s s u . f f e r a d e l a y o f two weeks if t h e y change
t h e i r s d - d r e s s , It i s e v e n more c o m p l i c a t e d when c h i l d r e n
move i n a.nd out o f i n s t i t u t i o n s . I t i s a s t r a n g e thing
tha% -t?Jne s y s t e m seems v e r y a d e p t at d e d u c t i n g a c h i l d ' s
tLLl,owaul!:e frcrri a p e n s i o n e r , y e t it can t a k e weeks o r months
f o r t h i s a.l,iowance t o b e r e i n s t a t e d when t h e c h i l d r e t u r n s
home.
It i s for t h i s r e a s o n t h a t some f a m i l i e s o p t f o r
p e r a o n a l . l y p a y i n g i n s t i t u t i o n s r a t h e r than having t h e ded u c k i o n s aint;omat,icd-ly -t&en from t h e i r pen.sions t o pay
the institutions,
Under t h e presen-ti scheme, i t was p o s s i b l e t o account for
t h e s e changes because t h e f a n l i l i e s p e r s o n a l l y a t t e n d e d t h e
C e n t r e e a c h week, It i s clou.btfu3, whether a n a t i o n a l scheme
cou1.d r e v i e w i n f o r m a t i o n weekly.
The p r e s e n t d i f f i c u l t i e s
f a c e d by t h e S o c i a l- S e c u r i t y Department i n t h e i r payment
of ian.ew1ploplent b e n e f i t s b e a r o u t t h i s p o i n t .
(b)
P e r i o d o f Aoccoimting
The Income Supplerncnt has used a weekly p e r i o d o f a c c o u n t i n g .
It WRE d i s c o v e r e d i n t h e e a r l y stages o f t h e scheme t h a t
re-I;rospec-l;ive payments ( e v e n on a weekly b a s i s ) s e v e r e l y
a f f e c t e d . t h e f a m i l i e s P a b i l i t y t o manage f i n a n c i a l l y o The
s u b s i R y WBA i n i t i i a l . l y a s s e s s e d o n t h e p r e v i o u s week's income.
This meant- tha% if f a m i l i e s had a v e r y low income, t h e i r
i.nc,me wou.1.d n o t 'ne r a i s e d t o t h e m i n i m u m n e e d l e v e l u n t i l
n e a r l y a week l a t e r .
k . r i n g t h a t week t h e family would g e t
b e h i n d i n t h e i r rental an3 hire p u r c h a s e payments b e c a u s e
t h e y h a d no savings, Thess f a m i l i e s c o u l d n e v e r c a t c h UP
u n l e s s t h e s u b s i d y was p r o v i d e d on a p r o s p e c t i v e basis, i . e .
o n t h e basis o f t h e inc3me -that a f a m i l y would have t o manage o n f o r t h e coming week.
1% is i n c o r r e c t t o assuine t h a t f a m i l i e s w i l l have f i n a n c i a l
res9rvEts t o t i d e them o v e r during l e a n times. The W i s c o n s i n
Income M a i n t e n a n c e Zxperiment made t h i s a s s u m p t i o n and u s e d
a quart-er1.y a c c o u n t i n g p e r i o d . , It was p o s s i b l y due t o t h i s
f a c - t a r that s0m.e 1..cw income f a n , i l i e s dropped out o f t h e
experiment , The e x p e r i m e n t a l . g r o u p had t o choose between
r e c e i v i n g e x p e r i m e n t a l payments o r n o r m a l s o c i a l . s e c u r i t y
paymen-l-s, Tkc e x p e r i m e n t a l payments were made p r o s p e c t i v e l y
w h i l e t h e s o c i a l . s e c u r i t y payments were made r e t r o s p e c t i v e l y .
For t h i s r e a s o n , some o f t h e e x p e r i e m e n t d g r o u p found it
p r e f e r a b l e t o r e t u r n t o t h e n o r m a l s o c i a l s e c u r i t y payments.*
The S e a t t l e - D e n v e r e x p e r i m e n t , on t h e o t h e r hand, was more
aware o f t h i s problem, a n d made s p e c i a l p r o v i s i o n s f o r
p e o p l e whose a n t i c i p a t e d income w a s e x p e c t e d t o be low.
ThBse f a m i l i e s could subn,it a f o r t n i g h t l y income s t a t e m e n t
The S e a t t l e - D e n v e r scheme
a n d r e c e i v e an a d v a n c e payment
a l s o u t i l i z e d a f i e l d o f f i c e where p e o p l e i n v o l v e d i n t h e
experiment c o u l d r e p o r t .
e
It i s okviou-s from t h e r e s u l t s o f t h e Income Supplement
scheme t h a t t h e r e t r o s p e c t i v e payment s y s t e m o f o u r unemployment and s i c k n e s s b e n e f i t scheme i s one o f t h e greate s t s o u r c e s o f inconLe i n s e c u r i t y amongst t h e f a m i l i e s . Unt i l t h i s y e a r it t o o k at l e a s t t h r e e weeks f o r t h e family
t o r e c e i v e i t s f i r s t unemploynent b e n e f i t cheque.
In o t h e r
words, i f t h e r e h a d b e e c n o Income Supplement, f a m i l i e s
would h a v e been d e s t i t u t e f o r t h r e e weeks.
T a b l e I 1 1 shows % h e Inccme d i s t r i b u t i o n o f h u s b a n d ' s m a j o r
s o u r c e o f income between F e S r u a r y 1973 and O c t o b e r 1974.
To u n d e r s t a n d t h i s t a b l e i t i s n e c e s s a r y t o f i r s t e x p l a i n
how t h e t a b l e w a s compiled.
In any week i t i s p o s s i b l e t o p r e s e n t a snap- shot d e s c r i p t ion of t h e s m , p l e ; for example, t h e number o f f a m i l i e s
l i v i n g i n pu-blic housing. However, o v e r t h e p e r i o d from
February 1973 t o O c t o b e r 1974 (87 weeks) many changes i n
t h e f a m i l i e s * s i t u a , t i o n s Lave b e e n recorded., A f a m i l y may
move from p u b l i c k m s i n g t o p r i v a t e housing. Furthermore,
t h e group h a s graclually i n c r e a s e d from 56 f a m i l i e s t o 64.
1%w a s f e l t t h a t a surmation crf t h e d a t a would r e v e a l a
more a c c u r a t e d e s c r i p t i o n than taking one w e e k t s d a t a bec a u s e it minimized m y random f l u c t u a t i o n s .
In summing
t h e d a t a , c o n f u s i o n In c a t e g o r i z a t i o n r e s u l t s f r o m t h e
f a m i l i e s changing s i t u a t i o n s ; f o r example, f a m i l i e s may
move from one c a t e g o r y t o a n o t h e r o v e r t i m e .
It was, t h e r e f o r e , d e c i d e d n o t t o d e s c r i b e t h e f r e q u e n c y o f a phenomenon
o c c u r r i n g in terms o f t h e n u n h e r o f f a m i l i e s . A n a l t e r n a t i v e measure w a s s e l e c t e d , namely t h e i n s t a n c e o f a
phenomenon o c c u r r i n g i n a week.
*
This i n f o r m a t i o n w a s p r o v i d e d p e r s o n a l l y t o t h e author
by I r v . G a r f i u k e l .
94
TABLE
I11
I l I S T R I R U T I O N OF HUSBAND'S MAJOR SOURCE OF INCOlV3*
I
Income
( $ p s r week)
Zero Income
1 - 10
11 - 20
21 - 30
32- - 40
41 - 50
51
61
- 60
- 70
71
and o v e r
No a n s w e r s
I
Total :
$ Instances N
=
2613
29.0
.3@6
7.6
13.3
8.7
8.0
ll*9
4. 2
4.9
8.8
100.0
Mean Income w a s $27.1 p e r week
Table 1 1 1 c l e a r l y d e m o n s t r a t e s t h e r e l a t i v e l y high number o f
i n s t a n c e s where t n men
~
r e c e i v e d n o income a t a l l . This
o c c u r r e d p r i m a r i l y when t h e y were unemployed o r s i c k , a n d
e i t h e r not e n t i t l e d t o b e n e f i t s ( t h e i n d i v i d u a l s a r e n o t ent i t l e d t o b e n e f i t s during t h e f i r s t s e v e n days of unemployment
o r s i c k n e s s ) o r were waiting f o r t h e i r b e n e f i t s t o a r r i v e . This
waiting t i m 2 d e t e r s p e o p l e f r o m a p p l y i n g for b e n e f i t s .
*
A few men r e c e i v e d mQre than one s o u r c e o f income.
Bezause t h ? amoulnt r e c e i v e d from t h e s e c o n d s o u r c e
w a s g e n e r a l l y v e r y s m a l l , i t has b e e n i g n o r e d f o r
t h e purposes o f t h i s paper. Exanplea o f t h i s second
s o u r c e o f income were c h i l d e n d o m a n t o r a p a r t i a l
r e p a t r i a t i o n pension.
95
The i m p 1 , i c a t i o n s o f t h e s e r e s u l t s s h o u l d be apparent. If
an income maintenance scheme i s t o provide income s e c u r i t y ,
i t cannot be b a s e d on a r e t r o s p e c t i v e method o f payment,
f u r t h e r m o r e , an i n f l e x i b l e scheme with i n b u i l t d e l a y s d i s c o u r a g e s t h o s e most i n need from u s i n g i t .
3.
Work I n c e n t i v e .
The m a j o r bone of c o n t e n t i o n with t h e concept of a GMI i s whether
p e o p l e w i l l s t o p working when g u a r a n t e e d a minimuni income, From
t h e Income Supplement da,ta c o l l e c t e d o v e r 87 weeks, one f a c t
c l e a r l y emerged. P e o p l e work f o r o t h e r r e a s o n s a p a r t f r o m money.
A p e r s o n ' s work p a t t e r n i s a complex m a t t e r . It i s a f u n c t i o n o f
e d u c a t i o n , j o b s k i l l s , a t t i t u d e s t o work, j o b h i s t o r y , s e l f - e s t e e l
and, m o s t i m p o r t a n t l y , o p p o r t u n i t i e s i n t h e l a b o u r market.
The men* on t h e whol,e a r e u n s k i l l e d workers who change j o b s f r e q u e n t l y . With t h e e x c e p t i o n o f two men, no men have completed
t h e n i n t h g r a d e o r i n t e r m e d i a t e s t a n d a r d o f education. In t h e
two y e a r p e r i o d between February 1973 and February 1975, o n l y
t h r e e men h e l d t h e same j o b . I t i s more usual f o r t h e men t o h o l d
j o b s for it few months. They l e a v e j o b s because o f a combination
of f a c t o r s ; t h e most f r e q u e n t l y c i t e d r e a s o n b e i n g p o o r working
condi-ti0n.s. Theywork b e c a u s e t h e y . f e e l t h a t t h e y ought t o work
t o p r o v i d e f o r t h e i r f a m i . l i e s , y e t few men s e e work as a means o f
gaining fulfilmen-l;. O f 17 men i n t e r v i e w e d , only t h r e e said that
i f t h e y h a d t h e o p t i o n o f b e i n g p r o v i d e d with an income, t h e y
would p r e f e r n o t t o work, This i s b o r n e out by t h e f a c t t h a t t h e
nieri k e e p re-Lurning *bo -the work f o r c e o r at l e a s t changing jobs.
On t h e o t h e r hand, Tab1,e 1 V i s comparing ,the i n s t a n c e s of men
working and unemployed o v e r t w o p e r i o d s o f time, and it shows a
s i g n . i f i c a n - t drop in t h e number working.
A l t h o u g h t h e r e s u l t t e n d s t o confirnl t h e a s s e r t i o n t h a t a G M I
would r e d u c e work i n c e n t i v e , i t i s not p o s s i b l e t o deduce from t h e
- t a b l e whether t h e drop i s due t o t h e Income Supplement scheme, o r
t h e g e n e r a l d e c l i n e i n t h e l a b o u r market. F u r t h e r data anaLysis
i s n e e d e d t o a s c e r t a i n which e f f s c t i s predominant.
*
Women were exclu,ded from d i s c u s s i o n i n t h i s paper because
t y p i c a l l y t h e y d i d not work.
96
WORK STATUS OF I E N
Work S t a t u s
Feb. 1973 Oct. 1973
$ Instances
N = 104-5
Home Du-bles
NOV. 1973 Oct. 1974
Instances
N = 1568
Total $
Instances
N = 2613
8.4
Unemploys d
20.2
Working
40.1
Other
27.1
N.A.
Total :
4.2
100
X2 = 15.88, 4 . d f (~40.01)
c o N c L ~ J s I o: ~
This p a p e r has briefly I i s c u s s e d some o f t h e p r o b l e m s that have
a r i s e n i n a d m i n i s t e r i n g a G M I scheme aniongat low- income f a n d i e s .
T h i s p a p e r has dwelt on t h e d i f f i c u l t i e s e n c o u n t e r e d r a t h e r t h a n
%he o b v i o u s a d v a n t a g e s o f t h e schemes as e v i d e n c e d i n t h e P r o j e c t .
U n l e s s t h e s e d i f f i c u l t i e s a r e r e c o g n i z e d , a GMI scheme will n o t
s u b s t a n t i a l l y improve t h e p l i g h t o f low- income families.
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99
APPENDIX C:
- THE LEVEL OF A
G'JARANTEED MINIMUM INCOME
-
by R , J . A , H a r p e r , S e n i o r L x t u r e r i n Economics
U n i v e r a i . t y sf I i k l k 4 o ~ z L ~ ~
SYNOPSIS
The l e v e l a t which a guara.nteed m i n i m u m income i s s e t depends on
t h e answers t o a n m b e r o f complex and i n t e r - r e l a t e d questions.
The main q u e s t i o n s which I t h i n k n e e d t o be c o n s i d e r e d can be
grouped u n d e r t h e f o l l o w i n g h e a d i n g s :
1.
The e l e m e n t s of a g u a r a n t e e d income scheme
* t h e l e v e l of t h e guarantee?
* t h e r a t e o f taper?
* t h e break- even p o i n t ?
2.
The purpose o f t h e scheme
* anti- poverty?
* r a t i o n a l i z a t i o n o f t a x and s o c i a l s e c u r i t y p o l i c i e s ?
* i n c r e a s e e q u i t y i n t h e t a x system?
3.
The r e c i p i e n t s of t h e g u a r a n t e e d income
* universal o r selective?
* t r e a t m e n t o f dependants?
* work t e s t ?
4.
What t h e g u a r a n t e e d income p r o v i s i o n s w o u l d r e p l a c e
* t a x concessions?
* existing social security benefits?
* c h i l d endowment?
5.
The r e l a t i o n s h i p of t h e g x a r a n t e e d income t o e x i s t i n g and
o t h e r p r o p o s e 2 schemes o f income maintenance.
6.
The r e l a t i o n s h i p o f t h e scheme t o t a x r a t e s and work
i n c e n t Fves.
7.
The c o s t o f t h e scherne.
100
APPE;rNDIX D:
PMTICIPANTS OF THE SEMINAR
P U T ICIEANTS
M s . I?. Apps
L e c t u r e r , DEPARTMENT OF TOWN & COUNTRY
PLANNING, SYDNEY UNIVERSITY
M s . G. A t h e r d o n
V i c e P r e s i d e n t , ASSOCIATION OF CIVILIAN
WIDOWS
M r . W. Bach
DEPT. OF CEI1sSUS & STATISTICS, and
member o f ACOXS t a s k g r o u p on GMI*
M r , B. B c l c h e r
P r e s i d e n t , AUSTRALIAll ASSOCIATION OF
SOCIAL WORKEXS
Mr. C . Benjaiiiin
D i r e c t o r , VCOSS, r e p r e s e n t i n g AUSTRALIAB
ASSOCIATION OF SOCIAL WORKERS a
M s . NI, B e s t
C o u n c i l for t h e S i n g l e Mother & Her
C h i l d r e p r e s e n t i n g VICTORIAN COUNCIL
OF SOCIAL SERVICE.
M s . M. Coleman
Chairman, SOCIAL WELFARE COMMISSION.
Prof, J . Cu-tt
Professor, A d m i n i s t r a t i v e S t u d i e s ,
.
ECONOMICS DEPARTMENT) AUSTRALIAN
NAT IONAL UN IVERS I T Y
Mr. P. Cu-t.tance
R e s e a r c h S c h o l a r , INSTITUTE OF APPLIED
ECONOMIC RESEARCH, and member of t h e
ACOSS t a s k group on G M I .
(.IO)
~ r W.
. Curran
Australian Meat I n d u s t r i e s Employees
Union re p r e s e n t i n g VICTORIAN COUNCIL
OF SOCIAL SERVICE.
(11)
M s . I, E l l i s
National S e c r e t a r y , AUSTRALIAN COMMONWEALTH PENSIONERS FEDESIATION.
(12)
Major G o F i s c h e r
S e c r e t a r y , S e n i o r C i t i z e n s & Rehabili t a t i o n r e p r e s e n t i n g SALVATION ARMY.
(13)
Ms. C . F l e c h e r
LIBERAL PARTY SECRETARIAT
*
Guarant e ed M i n i m u m Income
.
101
COMMITTEE OF INQUIRY,
I
PARTICIPANTS
ORGANISATION
G
(14)
Mr.
POVERTY INQUIRY.
(15)
M s . E. G o o n e r a t n e
R e s e a r c h O f f i c e r , RESERVE BANK OF
AUSTRALIA, and c o r r e s p o n d i n g m e m b e r
o f t h e ACOSS t a s k group o n GMI.
(16)
Mr. D. G r i f f i t h s
S o c i a l P o l i c y O f f i c e r , BROTHEXHOOD OF
S T . LAURENCE.
J, Gibson
(17) Hr. J . H a r p e r
S e n i o r L e c t u r e r , FACULTY OF ECONOMICS
MELBOURNE UNIVERSITY, and m e m b e r o f
t k e ACOSS t a s k group o n G M I , and o f
t h e ACOSS Standing C o m m i t t e e o n
E c o n o n l i c s & S o c i a l Welfare.
(18)
NATIONAL COUNCIL FOR THE SINGLE
MOTHER AND HER CHILD.
M s . P. H a r p e r
(19) M r . J. C o a t e s
(20)
Mr.
A. H a y e s
(21)
M r . P. H o l l i n g w o r t h
f o r D e n i s t o n e , and s e c r e t a r y
f o r t h e WELFARE CAUCUS COMMITTEE.
M,P,
Welfare Manager, C i v i l i a n M a i m e d &
L i m b l e s s A s s o c i a t i o n N. S.W., r e p r e s e n t i n g AUSTRALIAN COUNCIL FOR THE
RE-KX3ILITATION OF THE DISABLED.
Secretary, Social R e s p o n s i b i l i t i e s
Committee, CHURCH OF ENGLAND I N
AUSTRALIA.
(22)
Mr.
M. H o r s b u r g
D e p a r t m e n t o f S o c i a l Work, Sydney
U n i v e r s i t y r e p r e s e n t i n g NEW SOUTH
WALES COUNCIL OF SOCIAL SERVICE.
(23)
Ms.
S. Horne
L e c t u r e r , SOCIAL STUDIES, MELBOURNE
UNIVERSITY, and m e m b e r o f t h e ACOSS
t a s k g r o u p on GMI, and c h a i r m a n o f
t h e ACOSS Standing C o m m i t t e e o n
E c o n o m i c s & S o c i a l Welfare.
(24) M r , A.L. H o w a r d
R e s e a r c h O f f i c e r , CENTFLAL INDUSTRIAL
SECRETARIAT - EMPLOYERS FEDERATION.
I
-PARTICIPANTS
UYI
(25)
M r . M. J o h n s t o n
(26)
M s . M. K e l l e y
T , Law-ton
(27)
MY.
(28)
Mse M. L e w k o n o w i c z
(29)
MI-. M. Z i f f m a n
L)irec+i;or, S o c i % l Work S c ~ v i c e ,V i c t o r i a i l D i v i s i o n AUSTRALIAN RED CRGSS
(I
Iliri!c-Lor, E d u c a t ; i o n &- Welfa,re,
L e g i s l a t i v e R e s e a r c h , PARLIAMEITTARY
LIBRARY ,,
R e s e a r c h Worker, BROTFEXHOOD 3F SY.
LAURENCE, and chairman of :he ACOSS
t a s k grou-p o f G E
a
(30)
Mr. J . MacMahon
S e c r e t a r y , I\JA.TSON.tlL S-iTPERA"UATICN
CCMI!!ITTEE 07 IINQTJIKY
a
(31)
M r * T. H u r l e y
(32)
Mr. P. Mathews
(33)
MI-,
(34)
Mr. D. N e e l y
C. McCalister
D i r e c t o r , AUSTBbLPAN FRONTIER I N C
A s s i s t a n t D i s e c t o r G e n e r a l (Planning
SC Ressarch), BENEI"1'I'S POLICY & REVIEW
Ill?, ISION, T)EPA€EY/LENT OF S O C I A L SECURITY.
Manager, W e l f a r e S e r - b 7 i c e s , SMITE:
FAMILY.
( 3 5 ) Rev. A.C. N i c h o l s
Di r e c t o r o f Informat i o n , AY GLIC-4N
( 3 6 ) Mr, E . J . Pennington
S e crsta r y - G m e r a l ,
(37)
DIOCESE 9F S-fD$!E'._.
B.USTHALIRN COUT-C I L
OF SOCXAL SEXNICE,
M r . A. P o d g e r
.
( 3 8 ) Dr. M O P o r t e r
PRIORYCIES REV:ZEW STAF'I'
(39)
S o c i a l Welfare D i v i s i o n , DEPARTMENT OF
SOCIAL SECURITY
Ms. F . R o b e r t s
(40)
PARTICIPANTS
ORGANISATION, COMMITTEE OF INQUIRY,
GOVERNMEPT DEPARTlVENT
Mr, V. R o g e r s
A c t i n g D i r e c t o r (Research) Benefits &
Po1ie.v R e v i e w D i v i s i o n , DEFARTMENT OF
S O C Z k SECIJRITY.
( 4 1 ) M r . G. R u s s e l
NELBOTJ’RNE ITNIVERSITY, and m e m b e r of
t h e ACOSS task g r o u p o n GMI.
R e s e a r c h O f f i c e r , BROTHERHOOD OF ST.
LAURENCE, and m e m b e r o f t h e ACOSS
task group on GMI.
(42)
M s . J . Salmon
(43)
Mr.
(44)
Ms. H. S h e l t o n
P r o j e c t o f f i c e r , PEPARTMENT OF SOCIAL
SECURITY (and m e m b e r o f T a s m a n i a n
C O V J L C S . ~ c f S5ciaZ S e r v i c e ) .
(45)
M s . P. S m i t h
S o c i a l p o l i c y O f f i c e r (Econoaics &
S o a i d W e l f a r e ) , AUSTRAL1A.B COUNCIL
OF SOCIAL SERVICE.
(46)
M r . T. S t a l e y , M.P.
S o c i a l Security 8c W e l f a r e C o m m i t t e e ,
LIBERAL PARTY.
(47)
D r . L. T i e r n y
L e c t i n r e r , SOCIAL S T U D I E S , MELBOURNE
UNIVERSTTY
(46)
M r . P. T r a v e r s
R e p r e s e n z i n g SOUTH ATJSTRAZLAN COUNCIL
OF SOCIAL SERVICE.
(49)
M s . P. Windler
M a n a g e m e n t Z x m , i t t e e , F-AMILY CENTRE
PROJECT, and member o f t h e ACOSS t a s k
group o n G M I .
D. S c o t t
BROTHERHOOD OF S T . LAURENCE, and
p r e s i d e n t o f ACOSS.
(50) M r . S. Wolf
Management CcmnAttee,
PROJECT‘.
(51)
DEPARTMENT OF REPATRIATION AND
COWENSAT LON
M s . R.
Woods
FAMILY CENTRE