So in the past week I have seen and heard a number of stories in both print and radio media exclaiming with some shock about the amount of money spent on social welfare. Comparing Treasury data on the cost of government welfare with employment data, it is possible to make unsophisticated assertions about how many hours a week the average Australian worker is working to pay for it. And from this we get the deliberately evocative headlines and sound bites that the average Australian worker works three hours to pay for social welfare programs.
Now admittedly some of the assumptions of this process are highly open to interpretation, but I'm going to be generous and treat the claim as largely accurate; as even if this is the case there are several points that need to bee considered in this context.
Firstly, of all the things our government spends money on, social welfare is not one of the areas I find particularly objectionable. Based on my wage being fairly close to the national average, I’m probably working around 10 hours a week for the government by this way of thinking. What am I getting for the other seven hours of work? We got the Marriage Equality plebiscite, which confirmed what research had consistently demonstrated; so that was money well spent, I suppose. The millions of dollars rorted by our elected MPs in entitlements also bother me a whole lot more than money spent on social welfare, as do the millions of dollars wasted on corporate spin doctors to help Peter Dutton lie to us about the billions of dollars he spends torturing refugees.
There is any number of other examples of financial mismanagement by this government (such as wasting millions on consultancy fees, bungling the NBN and Barnaby Joyce’s pork barrelling) that anger me a whole lot more even if individually each of them costs less than our entire social welfare budget.
The fact is social welfare is an important aspect of a developed nation, so it should cost us money. I would actually be quite okay with working 2-3 hours a week to know that the elderly, the disabled and the poorest in our society receive some form of support. If the alternative was working a few less hours a week and knowing thousands of Australians were going hungry, who would take it? Not many of us I suspect. Moreover, a vast majority of money spent on welfare in recycled within the economy, not siphoned out of the country in international investments or just sitting in offshore tax havens, so bemoaning the cost of welfare misses a fairly elementary point of basic economics.
Let’s also take note of what is not being spoken about in this narrative. According to treasury estimates, the expected welfare budget for the year will be around 150 billion dollars. Admittedly no trifling amount. On the other hand, there is little said about the fact that as much as twice as much money is lost to our budget due to large corporations (such as the media companies carrying these stories) paying next to nothing in taxes. That is before you add other favourable conditions and incentives, but that still isn’t enough. Just last year the Turnbull government passed 34 billion dollars of corporate tax cuts (I still haven’t forgiven craven hypocrites such as Xenophon and Hanson) for very dubious benefit to the economy; which was only half of what they were negotiating for- with ongoing attempts to increase these cuts further expected in the coming year. And unlike social welfare spending, most of the money lost to corporate welfare is truly lost to the Australian economy as it disappears overseas.
While all welfare recipients are unfairly tainted by this narrative, no doubt the unemployed will bear the biggest brunt of government clawback policies, ‘incentives’ and angry rhetoric through the media. This is hardly fair. According to the same data, unemployment benefits account for about one thirteenth of spending on welfare. So if working for 2-3 hours pays for social welfare in its entirety, we are only working for 10-15 minutes to pay for unemployment benefits (is that so bad?) In fact, unemployment benefits account for less than interest repayments on skyrocketing government debt, which has tripled under the Liberal government (thank God they weren’t in power during the Global Financial Crisis). That’s right, using this formula, we are working for around 20 minutes a week to pay for debt because the Liberal government is incompetent. How do you feel about that?
And don’t for a moment assume we could all work a few less hours in a heartless world without social welfare. Because you can guarantee your tax rate would stay the same and the government would just use the money in some of the other ways I outlined above.