Much of the post-budget discussion has turned on whether what is fashionably termed “middle-class welfare” should be curtailed or continued. The debate has centred on the Gillard government’s decision to cease indexing certain payments to families earning more than $150,000 a year. But a more appropriate question, in terms of the budget debate, is whether such a phenomenon as middle-class welfare exists.
Take a husband and wife with two children who live on the north shore or in the eastern suburbs of Sydney and earn a family income of $150,000. If they send their children to a government school, use a bulk-billing doctor and attend the local public hospital when necessary, no one would then depict them as welfare recipients.
However, if a government decides to pay benefits for bringing up children whose parents earn $150,000, this is now classified as middle-class welfare. Is it? Not really. Successive Coalition and Labor governments have decided to assist families with children. Such payments increased during the latter period of the Howard government and have been wound back somewhat under Labor.
John Howard tackled the issue directly during his address to the Menzies Research Centre in April 2006, declaring: “Those who seek to denigrate what we’ve done constantly refer to family tax benefits as ‘middle-class welfare’. They are nothing of the kind. They are tax relief for a universal reality – that it costs money to raise children.”
It may be intellectually unfashionable to say so, but there are good policy reasons to encourage families – including men and women with a total income of about $150,000 – to have children. This is for two reasons. The best way to constrain the ageing of the population is for Australians to have children. Ageing societies have their limitations – as a glance at Japan, Italy and Russia demonstrates.
Then there is the matter of what used to be called the middle class – once positioned between the upper class and the working class. Such terminology is now out of date for numerous reasons, including the fact that most Western nations also possess a group of welfare recipients, many of them young, who cannot be depicted as members of the working class. There is also the fact that what was once the working class has merged into the middle class and many of the former group, commonly known as “tradies”, now run their own businesses.
Australia does not want a situation to develop where it is primarily the rich and the less well-off who have children. This was the rationale for Howard’s family tax benefits scheme, along with the baby bonus (which was a form of parental leave). Such schemes are best regarded as payments – not unlike contributions made by governments covering the education and health of children.
Tony Abbott’s after-budget appeal to what he terms “forgotten families” appears to be working because many now identify with this message. It’s not the slogan that is causing the Gillard government problems. Robert Menzies, when out of political favour in 1942, coined the term “the forgotten people”. He had in mind those Australians who were neither members of the business-based gentlemen’s clubs nor trade unionists.
Menzies’ “forgotten people” line had no impact in the 1943 or 1946 elections. But when Labor’s Ben Chifley decided to nationalise the private banks in 1947, suddenly the line made sense. The Coalition victory in December 1949 was built on the back of bank clerks, returned servicemen and small business operators who came to believe they had been forgotten by Labor.
There is a significant difference between wealth and income. Some families on an annual income of $150,000 have existing assets or potential inheritance; others do not. Then there are those who aspire to attain a family income of $150,000 or more. Wayne Swan’s budget is risky for Labor if it is depicted as an attack on middle-class welfare in a society where many people regard themselves as middle-income earners.
It is noticeable that most middle-income earners in the private sector do not sneer about middle-class welfare. This is very much the preserve of the well-educated middle-income earners in relatively secure employment in the tertiary sector. Journalists, academics, public servants and the like. Occasionally this can lead to a lack of self-awareness.
Take the Grattan Institute economist Saul Eslake. On May Day, The Sunday Age quoted him saying “there is little good done by giving people who are perfectly capable of looking after themselves and their dependents money raised by higher taxes on other people”. But where should the line be drawn? Eslake is perfectly capable of working in the private sector. But he is on the payroll of the Grattan Institute, which received $30 million in grants from the federal and Victorian governments.
Last week on ABC2’s The Drum program, the lawyer Kara Greiner interrupted a statement by fellow panellist Julian Morrow on people becoming dependent on public funding with the telling question: “Isn’t your entire income from public funding?”
There is good reason to be strict on welfare in particular and government spending in general.
It’s just that payments to assist in offsetting the cost of bringing up children should not be ridiculed as welfare, for whatever class.