To Rebuild a Universal Welfare State, We Need to Scrap Means-Testing (2022)

In January of this year, a severe shortage of free rapid antigen tests (RATs) was exacerbating Australia’s largest wave of COVID infections. To the majority, it seemed obvious that the federal government should distribute RATs for free — but not to opposition leader Anthony Albanese. Although Labor shifted its position later, Albanese initially only called for free antigen tests for low-income Australians. This is to say that Albanese wanted to apply a means test to determine who should and who shouldn’t receive free access to COVID tests. It was a response that revealed Labor’s long-standing obsession with means-testing welfare.

Australia’s welfare system has always been heavily means-tested, especially when compared to universal welfare states built on the Nordic model. As socialists have typically pointed out, this is a major deficiency. Means-testing undermines public services and makes them less accessible, over time eroding the social rights that the welfare state should guarantee. Indeed, as the last fifty years of Australian history show, means tests are at best a built-in vulnerability. At worst, means tests are the thin end of a wedge intended to impose austerity and chip away at the universal provision of welfare.

In the postwar period, the view of welfare as a social right gained popularity. Consequently, Liberal governments relaxed means tests and took steps toward making social benefits universally available. In the campaign that led to his 1972 electoral win, Labor’s Gough Whitlam went further, promising a massive expansion of welfare and the end of all means-testing. In his short, three-year term in office, Whitlam abolished university fees, raised entitlements across the board, and established a universal, publicly funded health care scheme, Medibank.

In 1974, Whitlam went on to abolish the income means test on the age pension for those over seventy-five, as well as reducing the eligibility age to seventy the year after. However, his plan to gradually abolish means-testing over a six-year period was thwarted by a constitutional coup in 1975. Despite this, Whitlam’s universal age-pension policy was so popular that Malcolm Fraser’s Liberal government abolished the age pension asset test. For a while, it seemed as though Australia was maybe heading toward a universal welfare state.

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These hopes were soon quashed, however. Immediately after taking government following Whitlam’s dismissal, Fraser moved to water down Medibank by making it possible to opt out and purchase private health insurance. In 1981, he moved to scrap Medibank altogether, provoking a further backlash from the labor movement, ultimately contributing to Bob Hawke’s win in 1983.

Hawke’s Prices and Incomes Accord offered the union movement a deal: the unions would stop pushing for “excessive” wage raises and, in return, the Labor government would introduce a “social wage” in the form of expanded social services. Building a universal welfare state, however, was never part of this plan.

To be fair to Hawke, he did increase welfare spending from around 7.8 percent of GDP in 1983 to 10 percent in 1991. He also introduced a range of new benefits such as the Family Income Supplement, the Supported Accommodation Assistance Program, and the Home and Community Care Program to fund disability services. Importantly, he restored Medibank, now called Medicare. Yet at the same time, Hawke reintroduced the asset test for the aged pension, scrapped free higher education, and strengthened means-testing across the board. In many ways, it was the Hawke government that accelerated an era of neoliberal austerity that still dominates Australian welfare policy today.

For example, the Hawke governments introduced stringent measures to police people’s welfare. He introduced rules forcing job seekers to prove their willingness to find work and subjecting welfare recipients to mandatory interviews. In 1986, Hawke even floated a “work for the dole” scheme that would make eligibility for unemployment benefits contingent on carrying out unpaid labor. Hawke’s successor, Paul Keating, carried out this vision by giving the Commonwealth Employment Service — the forerunner to Centrelink — unprecedented powers to suspend and cancel payments for unemployed workers if they failed to carry out the requirements now attached to payments.

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Labor politicians defended their newfound love of means-testing on the basis that it was a necessary cost-saving measure. Even to this day, it is common to hear pundits like Brendan Coates of the Grattan Institute claim that tough means-testing keeps welfare fiscally sustainable. The reality is that Labor’s turn toward heavy-handed means-testing under Hawke and Keating eroded social solidarity and undermined the welfare state.

Rights are universal. If welfare is not universal, then it is not a right. By reinforcing means-testing, Labor made Australia’s welfare system more vulnerable to conservative attacks. It’s much harder to roll back a right once it’s been won. However, when welfare is means-tested, it suggests that only some people deserve social benefits. This, in turn, encourages the conservative view that welfare takes money out of the pockets of hardworking people and gives it to the undeserving poor. At the same time, means-testing both makes it far more difficult to access services and necessitates a bureaucracy to assess claims.

After taking power in 1996, Liberal prime minister John Howard furthered the attacks on welfare. He reduced the Medicare rebate, and it became increasingly common for patients to pay out-of-pocket expenses for standard treatments. At the same time, he introduced generous rebates to encourage people to pay for private health insurance and announced billions in federal funding for private schools.

In 1998, Howard made Hawke’s vision of a “work for the dole” scheme a reality while further privatizing employment services and increasing the burden of “mutual obligations” imposed on those receiving unemployment payments. While Hawke and Keating wished to restrict welfare to the poor, Howard went further, designing tests to distinguish the deserving poor from the underserving. He also subjected single parents and the disabled to these demeaning requirements.

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Despite these attacks, Howard rarely pushed for further means tests on welfare, largely because by then it wasn’t necessary. Mutual obligations already gave Centrelink the power to cancel arecipient’s payments at whim, and thanks to funding cuts and increasingly stringent rules, Centrelink’s phone wait times soared, making it harder to reverse a wrongful payment-suspension decision.

Indeed, Howard marginally relaxed means tests on family benefits and the age pension. Big business, conservative pundits, and conservative intellectuals were incensed — but it was widely seen as a successful vote-winning strategy. Labor, now completely invested in the supposed virtues of means-testing, saw an opportunity to attack Howard from the right. In 2006, Labor proposed means-testing as part of the Family Tax Benefit, in opposition to what Tanya Plibersek called “outrageous welfare entitlement.”

Under Kim Beazley, Labor criticized Howard for indulging in so-called middle-class welfare — that is, for making payments available to supposedly average and above-average income earners. Consequently, Labor adopted further means-testing as part of their platform, despite the fact that, according to parliamentary research, Australia had the lowest rate of “middle-class welfare” of any country in the OECD. Howard rightly pointed out that Labor’s proposed means tests would only save a minuscule amount of money.

Labor’s attacks were fundamentally misguided. There is nothing wrong with well-off doctors or highly paid miners being eligible for welfare. Everyone, regardless of their income or financial assets, should have a right to free health care, public education, and welfare payments like the age pension. Welfare should not be understood as a charity service for the poor or the deserving. Welfare should be for everyone. Besides, with a progressive taxation system, the wealthy will pay more than enough tax to offset whatever welfare they may receive.

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When Howard was finally ousted, Labor returned to its means-testing agenda with a vengeance. Kevin Rudd’sgovernment brought in new means tests for family payments like the baby bonus and tightened old ones like the age-pension income test. The worst, however, came from Julia Gillard, who attempted to brand Labor as “the party of work, not welfare.”She argued that extensive reform was needed to combat long-term welfare dependency. This culminated in her decision to cut parenting payments for over 150,000 single parents and their kids, forcing them onto unemployment payments. This cut their income by $205.60 a fortnight and subjected them to obligations like resumé-writing classes, mandatory job searches, and penalties for failing to comply.

Successive Liberal governments have happily followed Rudd and Gillard’s lead on means-testing, implementing increasingly cruel attacks on welfare since 2013. Notably, in 2015, the Liberal prime minister Tony Abbott strengthened means-testing on the age pension with — disgracefully — the support of the Australian Greens. Today, only 62 percent of the eligible population receives an age pension, and of this number, 32 percent have their payments cut thanks to means tests.

Far from preventing a transfer of wealth to the rich — as is implied by rhetoric about middle-class welfare — means-testing hurts poor and middle-income citizens the most. The administrative hurdles involved in accessing entitlements often exclude those who most need them. And for those who just barely fail the means test, being denied a payment can be very consequential.

FAQs

What does welfare state mean? ›

welfare state, concept of government in which the state or a well-established network of social institutions plays a key role in the protection and promotion of the economic and social well-being of citizens.

What are the characteristics of welfare state? ›

Characteristics of welfare state
  • A welfare state ensures social security. ...
  • A welfare state is socialistic in nature. ...
  • 3.It exercises control over all the economic activities. ...
  • 4.It provides even the basic facilities to its citizens. ...
  • 5.It undertakes and runs various enterprises. ...
  • 6.It ensures justice to all.
Jun 10, 2011

Who gave the concept of welfare state? ›

Otto von Bismarck, the powerful Chancellor of Germany (in office 1871–90), developed the first modern welfare state by building on a tradition of welfare programs in Prussia and Saxony that had begun as early as in the 1840s.

What are the benefits of a welfare state? ›

Social welfare systems provide assistance to individuals and families through programs such as health care, food stamps, unemployment compensation, housing assistance, and child care assistance.

What is a welfare state example? ›

Social Security, federally mandated unemployment insurance programs, and welfare payments to people unable to work are all examples of the welfare state.

What are the three types of welfare states? ›

In this book he distinguishes three types of welfare states, namely liberal, social democratic and the conservative welfare states. Each of the welfare state types has its own characteristics (Esping-Andersen 1990).

What is the most important function of a welfare state? ›

The primary functions of a welfare state are : i) To afford equality of opportunity; ii) To afford basic standards of living; in keeping with human dignity to all; Whatever their station in life and the social system, and within a democratic framework and within a world at peace.

Why is welfare important to society? ›

Social welfare policy — which guides the government programs that assist people in need — builds on the idea that a government has a responsibility to protect its citizens from harm. According to the principle, a society can thrive only when it provides safeguards for those who face risks to their well-being.

What is the welfare state model? ›

The "welfare state" often refers to an ideal model of provision, where the state accepts responsibility for the provision of comprehensive and universal welfare for its citizens. State welfare. Some commentators use it to mean nothing more than "welfare provided by the state". This is the main use in the USA.

Which countries are welfare states? ›

Countries that use the welfare state concept include: the United Kingdom, France, Sweden, Italy, Belgium, Denmark, Findland, Germany, Portugal, Spain, Austria, Greece, Japan, Netherlands, Switzerland, Iceland, Kuwait, Israel, Slovenia, Australia, South Korea, Estonia, Latvia, Israel, Canada, New Zealand, and the United ...

When did the welfare state start? ›

Histories of the welfare state usually begin around 1945.

Why India is called welfare state? ›

As we have seen, India is referred to as a welfare state… It is a governance model in which the state plays a significant role in the preservation and promotion of its residents' economic and social well-being. The ideas of equality of opportunity and equitable wealth distribution support a welfare state.

What are examples of social welfare? ›

Social welfare includes healthcare, empowerment, housing and other programs geared towards assisting the poor, unemployed and marginalized in society. Such programs include Medicaid, AFDC (Aid for families with dependent children), WIC (women, infants and children) programs, veteran programs and others.

Do we need a welfare state? ›

The main advantages of a welfare state are that it ensures a greater level of equality among its citizens and prevents unnecessary hardship. The provision of a social support network protects people from disease, starvation and overall misery. It allows everyone to live on a more equal level.

What is the impact of welfare? ›

The welfare impact of an economic loss depends upon total income, the utility function specification being used, and the timing of the loss.

What are the four types of welfare? ›

Housing, food, medical care, and financial assistance for daily life are all provided by different social welfare programs.

What are the types of welfare? ›

Definition and Examples of Welfare Programs
  • Temporary Assistance for Needy Families (TANF)
  • Medicaid.
  • Supplemental Nutrition Assistance Programs (SNAP or "food stamps")
  • Supplemental Security Income (SSI)
  • Earned Income Tax Credit (EITC)
  • Housing assistance.

Where was the first welfare state? ›

The first welfare state was Imperial Germany (1871–1918), where the Bismarck government introduced social security in 1889.

Which of the following is a goal of a welfare system? ›

Which of the following is a goal of a welfare system? To provide an adequate standard of living. higher than the true level.

Which is the best definition of social welfare? ›

Definition of social welfare

: organized public or private social services for the assistance of disadvantaged groups specifically : social work.

Is welfare good for the economy? ›

In times of normalcy, social welfare is vital to society

Unemployment benefits also provide people leeway to find jobs that match their skill sets, rather than snapping up the first available position. In other words, overall economic productivity increases as a result of government assistance.

What welfare issues mean? ›

a. financial and other assistance given to people in need.

What is another name for welfare state? ›

government taking social responsibility (noun)

Social Services, welfare statism, social democracy.

Is USA a welfare state? ›

For the United States has a social welfare system that is not small by comparison with the size of the economy. And when looked at in total, per capita it's the second largest such social welfare state in the world.

Does China have welfare? ›

Social welfare in China has undergone various changes throughout history. The Ministry of Human Resources and Social Security is responsible for the social welfare system. Currently the form of social welfare is in between 40-75% according to their means of production. Welfare in China is linked to the hukou system.

Why welfare state was created? ›

After the Second World War the incoming Labour government introduced the Welfare State. It applied recommendations from the pioneering civil servant Sir William Beveridge and aimed to wipe out poverty and hardship in society.

How did the welfare system start? ›

In 1935, President Franklin D. Roosevelt proposed to Congress economic security legislation embodying the recommendations of a specially created Committee on Economic Security. There followed the passage of the Social Security Act, signed into law August 14, 1935.

What is the welfare state history? ›

The phrase “welfare state” is of recent origin. It was first used to describe Labour Britain after 1945. From Britain the phrase made its way round the world. It was freely employed, usually but not exclusively by politicians and journalists, in relation to diverse societies at diverse stages of development.

Which part of the Indian Constitution is the ideal of welfare state? ›

The correct answer is Directive Principles of State Policy.

Does India have a welfare state? ›

The formal sector welfare system provides for approximately 7 per cent of the total labour force in India; its provision is the Government run social security schemes mentioned above.

What is the importance of rule of law in welfare state? ›

The law provides protection to individuals from unlawful action of Government and its officials by comparing them to exercise their power in accordance to the law.

Why is welfare a problem? ›

Personal Development is missing from the system

Welfare doesn't address life skills. Recipients of welfare are left on their own to improve their lives and leave poverty behind. However, this has not proved successful enough to lower the overall poverty rate of the nation.

What would happen if we didn't have welfare state? ›

Poverty would be eliminated overnight. Work disincentives would be removed. American bureaucracy would be significantly reduced. Families would be free to make financial decisions without government intrusion.

Who does welfare affect? ›

Forty percent of nonteenage single mothers are poor, and nearly 60 percent rely on food stamps or cash welfare payments after the birth of their child. Single mothers generally remain impoverished longer than divorced mothers.

Why is economic welfare important? ›

Importance of Welfare Economics

It signifies the importance of optimal use of scarce resources to fulfill human needs. Favors the market structure nurturing maximum consumer surplus. You can calculate it by, Consumer Surplus = Maximum Price to be paid willingly – Actual Paid Price read more and producer surplus.

How does the economy affect social welfare? ›

Overall, the strong economy has clearly helped reduce caseloads and increase work opportunities. It has also helped reduce poverty and raise income (primarily through increases in earnings) in poor families.

Is USA a welfare state? ›

For the United States has a social welfare system that is not small by comparison with the size of the economy. And when looked at in total, per capita it's the second largest such social welfare state in the world.

What is another name for welfare state? ›

government taking social responsibility (noun)

Social Services, welfare statism, social democracy.

Which countries are welfare states? ›

Countries that use the welfare state concept include: the United Kingdom, France, Sweden, Italy, Belgium, Denmark, Findland, Germany, Portugal, Spain, Austria, Greece, Japan, Netherlands, Switzerland, Iceland, Kuwait, Israel, Slovenia, Australia, South Korea, Estonia, Latvia, Israel, Canada, New Zealand, and the United ...

Is China a welfare state? ›

When compared to economically developed countries, China has a relatively weak social welfare system. This isn't to say it is nonexistent; since 2007, China has run one of the world's largest means-tested forms of basic income, known as dibao (short for “minimum livelihood guarantee”).

Why is welfare important to society? ›

Social welfare policy — which guides the government programs that assist people in need — builds on the idea that a government has a responsibility to protect its citizens from harm. According to the principle, a society can thrive only when it provides safeguards for those who face risks to their well-being.

What states don't have welfare? ›

Since 2011, eight states have raised benefits in nominal terms (Colorado, Connecticut, District of Columbia, Nebraska, New Hampshire, New Jersey, New York, and Utah), while four states have cut them (Delaware, Michigan, South Dakota, and Washington).

What country has the best social welfare system? ›

France remains the country most committed to social benefits, with almost a third of French GDP spent on social services by the government in 2019. Scandinavian countries appear high up on the ranking, with Denmark, Sweden and Norway all spending more than 25%. The OECD average was 20%.

What is the opposite of welfare state? ›

There are no categorical antonyms for welfare state. The noun welfare state is defined as: A social system in which the state takes overall responsibility for the welfare of its citizens, providing health care, education, unemployment compensation and social security.

Which of the following is a goal of a welfare system? ›

Which of the following is a goal of a welfare system? To provide an adequate standard of living. higher than the true level.

What is the nature of the view of citizens of welfare state? ›

Abraham defines it, as 'a community where state power is deliberately used to modify the normal play of economic forces so as to obtain a more equal distribution of income for every citizen, a basic minimum irrespective of the market value of his work and his property'

What is the biggest welfare state? ›

Most Federally Dependent States
RankStateTotal Score
1Alaska93.22
2Mississippi84.94
3Kentucky79.54
4West Virginia78.08
46 more rows
Mar 15, 2022

Where was the first welfare state? ›

The first welfare state was Imperial Germany (1871–1918), where the Bismarck government introduced social security in 1889.

When did the welfare state start? ›

Histories of the welfare state usually begin around 1945.

Does China have a national debt? ›

China's debt increased by $2.5 trillion over the first quarter and the United States added $1.5 trillion, the data showed, while total debt in the euro zone declined for a third consecutive quarter.

Does China have a crime problem? ›

In 2011, the reported murder rate in China was 1.0 per 100,000 people, with 13,410 murders. The murder rate in 2018 was 0.5. The reported murder rates have been criticized for under-reporting unsolved murders due to police salaries being based on the rate of solved cases.

Is education free in China? ›

China offers nine years of free, compulsory education, but fees are levied at state-run senior secondary schools. In poor areas, charges can amount to more than 80% of net income per person, one of the highest such burdens in the world.

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