Australian welfare portrait

Zhaoen Pan, Dr. Tejaswini Patil Vishwanath

Publication date 2021-05-12

Content

1 Introduction

The construction of the welfare system in a country is determined by its political system and economic circumstances. In the case of Australia, the welfare system devised since Federation has evolved from 1901. The debates that have underpinned the development of the Australian welfare state has been balancing values of social justice and equality, economic development and progress, and state mandated welfare protections. Australian governments have swayed between a residual welfare model that favours the minimum cost on welfare delivery or a universal welfare model that aims at developing welfare as the right of every citizen. This balance has increasingly been impacted by globalisation, neo-liberalism and technological transformations. Given these structural trends, Australian welfare system is compared with comparable Organization for Economic Co-operation and Development (OECD) countries in relation to its social expenditure and welfare delivery. Before addressing the contemporary changes to Australian welfare system, scoping the historical trends and mapping the ever-changing character of the welfare system will provide a framework to current welfare policies.

In the first section, we demonstrate the historical development of Australian welfare system from 1901 until now and indicate the economic, political and ideological conditions that drove welfare changes. Important welfare policies established in different historical periods are highlighted. An analysis of the delivery and impact of varied welfare policies targeted at different groups provides clues to the changing nature of the Australian welfare system. In the second section, we introduce the current welfare policies for different groups in detail (refer to table 1) and highlight the spending of governments on each of them. The ideological framework underpinning welfare policies in analysed through illustration of key welfare policies chosen from different historical periods. Furthermore, the value that underpin the policies is demonstrated by analyzing the eligibility of various groups of applicants for receiving welfare benefits and the criteria of determining how much they can receive. In the last section, we describe the participation of government institutions, non-profit organizations and private companies in welfare service delivery and introduce social workers as employees in those sectors.

Keywords: Australian welfare state; historical trends of welfare system; income supports; welfare spending; welfare service delivery

General Data

Number of inhabitants	25,745,103 (as at 27 January 2021)
Gross Domestic Product	$476,043 million (Sep 2020)
Gross Domestic Product per capita	$ 52,158 (June 2020)
Poverty rate	13.6 % of the population below the poverty line (50 % of median income, $457 per week for a single adult)
Unemployment rate	6.6 % Dec 2020
Social Expenditure (total)	$468,788 million (2018-19), $578,549 million (2019-20), $670,330 million (2020-21)
Social Expenditure per capita	Around $26.036
Share of Social Expenditure on care	Social expenditure on social security and welfare $175,971 million (2018-19), $196,119 million (2019-20), $227,529 million (2020-21)
Share of Social Expenditure on old age, senior citizens	Assistance to the aged $66,771 million (2018-19), $71,855 million (2019-20), $77,986 million (2020-21)
Share of Social Expenditure on social assistance	Other welfare programs $1741 million (2018-19) $1869 million (2019-20) $2044 million (2020-21)
Share of Social Expenditure on youth welfare	Assistance to families with children $36,855 million (2018-19), $38,604 million (2019-20), $42,221 million (2020-21)
Expenditure on Unemployment	Income support for job seekers $10,165 million (2018-19), $20,218 million (2019-20), $34,095 million (2020-21)
Health Expenditure	$78,825 million (2018-19), $87,023 million (2019-20) $93,771 million (2020-21)

2 Historical trends of the Australian welfare system

2.1 From 1901 to the 1930s

The Commonwealth of Australia was founded in 1901. One of the benefit of the establishment of the Commonwealth of Australia was the setting of wages ‘at a level sufficient for a man to look after a dependent wife and three children’ (Wiseman, 2000, p.231) across the Federation as demonstrated by the Harvester Judgement in 1907. Australia inherited the English Poor Laws which benefited who were ‘white’, male and capable of work. For example, the 1908 Old Age Pension Act disqualified Asiatic, African people, Aboriginal and Torres Strait Islanders, the islanders of the Pacific or New Zealand, and the women married to them from receiving a pension (Williams & McMahon, 2000, p.172). That explains why the Australian welfare state is generally regarded as the wage earner’s welfare state (Mendes, 2017, p.19).

In the first half of the twentieth century, because of the influence of the First World War and Second World War, women got the opportunity to engage in works in the food, clothing, printing and even military industries, and to launch or join voluntary organizations such as the Australian Red Cross, the Country Women’s Association and the Australian Women’s National League (Australian Government, 2017). Led by women, the welfare services in Australian became more varied.

2.2 The 1940s

Influenced by the great economic depression from the 1920s to 1930s and two World Wars, Australia started constructing a social security system or social safety net for its citizens from the 1940s, which has been regarded as a significant stage for the form of Australian national welfare (Yeend, 2000; Herscovith and Stanton, 2008; Mendes, 2017, p.18). Many of the welfare initiatives in the 1940s were recommended and promoted by the Joint Parliamentary Committee on Social Security that was formed in 1941 and with the members from different parties in both houses of Parliament (Yeend, 2000; Herscovith and Stanton, 2008).

In 1941, the Child Endowment Act (the Child Endowment) was issued and children under the age of sixteen years in families with more than one child entitled to an endowment. The Child Endowment was based on the general revenue and financed from a payroll tax of employers, which offered a fixed-rate cash payment and had no means texting (Australian Bureau of Statistics, 1988; Herscovith and Stanton, 2008).

In 1942, the Widow’s Pension was established. It complied with the structure of other Commonwealth Pensions and was based on general revenue. Women who had for ‘no fault’ of their own and lost the support of their partners’ were entitled to the Widow’s pension (Herscovith and Stanton, 2008). Other women eligible for getting the Widow’s Pension included ‘deserted wives, divorced women and women whose husbands were in prison or a mental hospital’ (Australian Bureau of Statistics, 1988). Similar with the 1942 Widow’s Pension, a Wife’s Allowance was issued in 1943 and offered to the women who were a dependent spouse of an incapacitated pensioner (Australian Bureau of Statistics, 1988; Herscovith and Stanton, 2008).

The year 1945 witnessed the introduction of the Commonwealth unemployment and sickness benefits, which provided a fix-rate payment for those who were unemployed or unable to work because of sickness (Australian Bureau of Statistics, 1988; Herscovith and Stanton, 2008). The payment was withdrawn from the general revenue of the Commonwealth government and based on very tight means tests. For example, the recipients were required to have availability and willingness to work and not have the history in joining strike actions (Herscovith and Stanton, 2008).

It can be argued that the welfare initiatives in the 1940s were mainly the expansions of the ‘white worker welfares’ model which was introduced in the early 1900s. In order to support workers and their families, the Commonwealth government progressively offered payments to workers’ children and wives. In addition, to the focus on guaranteeing full employment, the Commonwealth Government utilized the means test tool to require the recipients of the unemployment benefits to actively look for jobs. The Commonwealth Employment Services was established to assist job seekers to hunt jobs. In the 1940s, there were strict restrictions on women who needed to have no ‘fault’ of their own to ‘deserve’ the welfare benefits. Although the racial barriers were erased, Aboriginal and Torres Strait Islanders were still restricted by many conditions to receive welfare supports (Murphy, 2013). For example, to receive welfare supports, Aboriginal and Torres Strait Islanders were asked to work and behave like a ‘civilized white citizen’ (Murphy, 2013).

Overall the 1940s witnessed the Australian national welfare system that was financed from general revenue, with benefits based on means testing and achieving full. Along with the construction of the national welfare system, Australian Commonwealth government progressively gained income tax power from the states from 1942 and ensured its legislation power towards social security from a referendum in 1946 (Regan, 2014). The 1940s’ national welfare initiatives have laid the foundation for Australia to build a comprehensive social security system later.

2.3 The 1950s and 1960s

In the 1950s and 1960s, Commonwealth Australia mainly focused on consolidating the welfare initiatives enacted in the 1940s (Yeend, 2000). There were incremental changes including the extension of child endowment to the first child in the family; the introduction of free medical and hospital treatment for pensioners; the provision of rent assistance for single pensioners and for married pensioners whose spouse was not a pensioner; the offering of a higher pension rate for single pensioners; the extension of wife’s allowance to all pensioner’s wives who were not entitled a pension; and the abolition of the five-year residence qualification for widow’s pension and; the removal of the means tests on age and invalid pension eligibility for permanently blind people (Australian Bureau of Statistics, 1988; Yeend, 2000; Herscovith and Stanton, 2008). According to Regan (2014): ‘the 1950s and 1960s were essentially a period of full employment and this probably explains much of the stability of welfare policy during this period’.

2.4 The 1970s

The start of the 1970s witnessed an increasing concern about the causes and situation of poverty and whether the social security system dealt with the poverty efficiently and adequately (Regan, 2014; Mendes, 2017, p.23-5). Also, there were many interests and explorations about the social security system’s impacts on work and saving incentives and its exclusion on some groups who experienced significant hardships (Herscovith and Stanton, 2008, Regan, 2014). Because the economy at that time was relatively healthy and strong, many welfare initiatives were made in the early 1970s (Yeend, 2000; Herscovith and Stanton, 2008, Regan, 2014).

In 1972, the Labor Party led by Gough Whitlam won government adopted the social democracy principle to redistribute the revenue through welfare payments and services to help vulnerable groups (Mendes, 2017, p.25). The Whitlam years introduced a universal welfare model rather than a residual model emphasizing the minimum spending on ensuring social security or social safety net (Bryson and Verity, 2009). As Mendes (2017, p.27) noted: ‘Whitlam government introduced a number of universalist programs which sought to benefit the community in general, as well as alleviating particular inequalities’.

The 1970s’ welfare initiatives were also the outcomes of vigorous human rights movements that largely emerged in Global North countries at that time. For example, through being a part of the worldwide feminist movement challenging gender inequality, Australian women finally won the rights of getting equal pay with men in 1969 (Australian Heritage Council, 2016). The Aboriginal and Torres Strait Islanders also set up many campaigns to advocate for land, welfare and health rights in the 1970s, through which some of them won back land rights and achieved equal opportunity under the law for the first time (Australian Heritage Council, 2016). Notably, relying on the much fairer, more equal and inclusive welfare programs at that time, women, migrants, people with disabilities and elders over 70 gained significant benefits.

Some of the important welfare initiatives during the 1970s are listed as the follows (Australian Bureau of Statistics, 1988; Yeend, 2000; Herscovith and Stanton, 2008; Bryson and Verity, 2009; Australian Heritage Council, 2016; Mendes, 2017, pp.25-32):

1972 Wife’s Pension provided to wives whose husband was aged, invalid or repatriated, which replaced the wife’s allowance and more generous than that;
1973 Supporting Mother’s Benefit introduced for single mothers who were not entitled to a widow’s pension (1977 included the single fathers);
1974 Handicapped Child’s Allowance created for parents of children with disabilities to gain a fixed-term payment without income-test;
1975 the abolition of means-testing for people over 70 to receive pension;
1975 Medibank proposed for constructing a national scheme of universal health insurance;
1976 Family Allowance replaced the old child endowment and child tax rebates, which was financed from the general revenue to provide a non-means-test payment to the principal carer and thus benefited the low-income parents;
1977 the rates of pensions automatically increased in accordance with the Consumer Price Index changes.

2.5 The 1980s

When economic stagnation occurred in many Global North countries in the late 1970s, governments reduced its intervention in the economic and welfare fields and started relying on the market to solve social problems. Keynesianism lost popularity and neoliberalism proposed by Milton Friedman was widely accepted (Alston et al., 2018). Neoliberal economists argued that the welfare state restrains the development of market economy and the freedom of individuals. Individuals were considered as rational beings and capable of controlling most of their life circumstances (Mendes, 2017, p.29; Bryson and Verity, 2009). Therefore, a comprehensive welfare system is not efficient or even harmful for individuals to achieve their own values. This thinking became the cornerstone of Australian government welfare policy in the late 1970s.

The Fraser Coalition government (1975-1983) started transferring the universal welfare system built in Whitlam years to a residual welfare system. Individuals’ independence or self-reliance was utilized by the government as rhetoric to shrink governments’ interventions into welfare and to set up campaigns against dole fraud (Bryson and Verity, 2009; Mendes, 2017, p.31; Alston et al., 2018). For example, the level of welfare spending fell from 15.7 per cent of GDP in 1975-76 to 13.6 per cent in 1981-82 even with the increase of unemployment benefits recipients from 160.7 thousand to 390.7 thousand because of the economic recession (Mendes, 2017, p.31). From the Hawke/Keating government (1983 to 1996) to the Howard Coalition government (1996 to 2006), the principle of prioritizing the free market became more and more popular.

In the 1980s, there were welfare increments such as, a new income supplement for low-income working families with children (1983); a mobility allowance for people with disabilities to cover their commute costs of going to work and vocational training (1983) and a pension for carers of a spouse with disabilities (1984) (Herscovith and Stanton, 2008). However, the 1980s also saw several actions taken by the government to reduce the welfare interventions and tighten the means test or assessment for welfare recipients. For example, the income test and assets test were successively introduced for family allowances (1986 and 1988); the widow’s pension for those without children in their care was abolished (1987), a new assessment was introduced to evaluate the non-resident parents’ liabilities of supporting their children (1988); and the Jobs, Education and Training scheme was created to make the lone parents actively look for jobs (Herscovith and Stanton, 2008).

2.6 The 1990s and the 2000s

Because the economic recession in the early 1990s resulted in a peak unemployment rate of 11 per cent in Australia, governments adopted more restrictive measures to control the number of welfare recipients to save welfare spending. Although the Hawke/Keating government (1983 to 1996) preferred the free market strategy, it still tried to ensure the social security net based on the principle of social justice (Mendes, 2017, p.32). However, the Howard Coalition government in Australia, elected in 1996 and re-elected in 1998, 2001 and 2004, believed in the power of the market to bring social prosperity and therefore rejected the universal welfare provision (Pease, 2017; Alston et al., 2018).

Though increasing standards and requirements of welfare receiving, the Howard government strictly controlled the number of the working-age recipients including unemployment people, single parents and people with disabilities (Eardley and Matheson, 1999; Bryson and Verity, 2009; Mendes, 2017, p.34). The ideology of ‘mutual obligation’ was widely used by the Howard government in designing welfare policies by making it mandatory for working-age welfare recipients to participate in certain work programs in return for government payments (Eardley and Matheson, 1999; Herscovith and Stanton, 2008; Bryson and Verity, 2009; Mendes, 2017, p.34). This can be clearly shown in the Work for the Dole Act passed in 1998, which emphasized the responsibilities of unemployment receivers to improve skills by finishing certain hours of approved activities and ‘challenge individual flaws’ to find a job (Mendes, 2017, p.34). Also, according to Eardley and Matheson (1999, p.1), ‘penalties for non-compliance with activity testing were increased and a number of measures were put in place to ensure that unemployed people draw on their own resources before receiving public assistance’. Given this backdrop, the working-age welfare recipients were stigmatized of being idle and called as the ‘dole bludger’.

In addition, the 1990s also witnessed a trend to contract out governments’ welfare services (Ife, 1997; Alston et al., 2018). Non-profit and for-profit organizations both became bidders and competed for shrunken welfare grants from governments (Markiewicz, 1996; Ife 1997; Chenoweth et al., 2005). New managerialism was promoted to improve service efficiency with complex cost-benefit calculations (Markiewicz, 1996; Ife 1997; Chenoweth et al., 2005). Bigger organizations thus got more chance to win funding bids, while small organizations experienced significant difficulties to squeeze costs and provide services as many as possible. In addition, along with the marketization and managerialism of welfare services, receiving welfare benefits was promoted as a type of consumption. Welfare recipients transformed from citizens requiring social security benefits to consumers of service-providing organizations (Bryson and Verity, 2009).

Themes of developing welfare in the 21st century are the continuation of those in the 1990s. Along with the development of the economy, welfare provision based on mutual obligation has become the norm in the twenty first century. It raises the question about whether the provision of welfare is based on the principle of social justice and reducing social and economic inequalities. In the 21st century, the Australian welfare provision presents a more complex picture with a combination of services, cash payments and tax deductions or rebates, and also the integration between the general welfare payments based on national finance and the social insurance system, such as superannuation and Medicare. There are diverse welfare providers including governmental institutions such as the Department of Human Services (DHS) and Department of Social Services (DSS), market-based services, non-profit organizations and community groups.

Recently, Australian governments have developed a strong focus on social tax expenditures, such as increasing payment rate for the Family Tax Benefit scheme, improving tax concessions or rebate for superannuation and private health insurance (Herscovith and Stanton, 2008; Stebbing and Spies-Butcer, 2010). Some scholars concluded that the rise of the social tax expenditure has especially benefited the middle-class workers with higher income in Australia and may broaden the gap between the rich and the poor (Stebbing and Spies-Butcher, 2010; Whiteford et al., 2011). Interestingly, on one hand, the current Australian welfare system is regarded as being ‘egalitarian because its “historical focus on wage-earner rights and full employment has ensured a relatively low level of ‘working poor’ ”(Mendes, 2017, p.37). On the other hand, the neoliberal ideology underpins the implementation of welfare policies and thus, creates a residual welfare regime focusing on cost-benefit efficiency and minimum welfare spending.

3 Overview of welfare assistance: reviewing government expenditure

Welfare is often regarded as a type of supply from governments, through taxation redistribution in the form of cash and service support, to guarantee the basic survival of citizens and eligible residents. In most circumstances, analysis of welfare is done in relation to public or formal welfare delivered from governments (Cheers, 1998, pp.15-8; Grave, 2008). As the Australia Institute of Health and Welfare (2019a, p.162) pointed out, ‘Australian social security payment policy is administered by the Department of Social Services, and income support payments are delivered by the Department of Human Services (now called the Services Australia), through its network of Centrelink offices’. 35 % of Australian Governments’ expenses are on social security and welfare (Klapdor and Arthur, 2020), which include ‘expenses for pensions and services to the aged; assistance to the unemployed; people with disabilities and families with children; and income support and compensation for veterans and their dependents, and other assistances provided to Indigenous Australians that have not been included under those functions’ (Commonwealth of Australia, 2018). The table 1 shows the expense proportion on different subjects in social security and welfare.

Table 1: Summary of expenses – social security and welfare
	Estimates			Projections
	2017-18 $m	2018-19 $m	2019-20 $m	2020-21 $m	2021-22 $m
Assistance to the aged	63,865	66,771	70,385	73,837	77,422
Assistance to veterans and dependants	6,504	6,213	6,011	5,914	5,857
Assistance to people with disabilities	36,958	47,966	49,667	51,110	53,389
Assistance to families with children	36,119	36,845	38,007	38,183	38,845
Assistance to the unemployed and the sick	11,143	10,165	11,035	11,391	11,915
Other welfare programs	1,838	1,741	1,656	1,639	1,406
Assistance for Indigenous Australians etc	2,184	2,130	2,153	2,186	2,196
General administration	4,010	4,141	3,654	3,276	3,304
Total social security and welfare	162,621	175,971	182,568	187,535	194,335

Source: Commonwealth of Australia, Budget strategy and outlook: budget paper no.6. 2018-19, pp.6-23.

3.1 The assistance for the aged

The assistance for the aged accounts for the largest amount of Australian government expenses on social security and welfare, which was about $66,771 million between the year 2018 to 2019 (Commonwealth of Australia, 2018). The Aged Pension is the main income support for the elder Australians who meet its age and residency requirements and the means test of income and assets, which accounted for more than 70 per cent of the assistance for the aged in 2018-19(Commonwealth of Australia, 2018). As at 29 June 2018, nearly 67 % of the population aged 65 and over (around 2.5 million people) received age pension (Australia Institute of Health and Welfare, 2019a). Given the rising aging population from 13 per cent of the total population in 2004 to 16 per cent in 2019 (Australian Bureau of Statistics, 2019), the spending on the age pension is expected to increase 7.9 per cent from 2018-19 to $77,422 million in 2021-22 (Commonwealth of Australia, 2018). The expenses on aged care services took 26 per cent of the assistance for the aged in 2018-19 but have been criticized as not being adequate and well-assigned to meet the service needs of the aged. Many issues have been raised in the aged care services in Australia, such as the shortage of the skilled and unskilled workforce, the lack of professional services for the aged with dementia and disabilities, the low pay and high labor outflow rate in the industry, and the unequal resource distribution between urban and rural areas.

3.2 The assistance for people with disabilities

The assistance for people with disabilities is the second-largest spending of the Australian government on social security, which was $47,966 million and took 27.26 per cent of the total social security spending in 2018-19 (Commonwealth of Australia, 2018). In 2017-18, the income support for people with disabilities was around 44 per cent and the National Disability Insurance Scheme (NDIS, services for people with disabilities) was 21 per cent of the total assistance for people with disabilities. From 2018-19, the proportion of the income support for people with disabilities dropped 9 per cent from the year before and is predicted to reduce 11 per cent in 2021-22, while the expense on NDIS was almost the same with the income support in 2018-19 and is expected to increase 20 per cent in 2021-22 (Commonwealth of Australia, 2018).

As at 29 June 2018, there were 680,300 recipients of the Disability Support Pension, which accounted for 4.4 % of the population aged 18 to 64 (Australian Institute of Health and Welfare, 2019b). The eligibility criteria for gaining the Disability Pension has been much higher and tighter in recent years. Along with the introduction of the assessments of work-related impairments and job activities in 2012, the number of the recipients of the Disability Support Pension had dropped 14 % from 793,900 in 2012 to 680,300 in 2018 (Australian Institute of Health and Welfare, 2019b). The underpining ideology of the changes in the Disability Support Pension is to encourage or let all recipients who are able to work to find one and keep it. Along with this trend, the NDIS embraces the marketization idea into its framework and regards service users as rational consumers to decide which organization they want to receive services from. This has been argued to have both benefits and risks (Dowse et al., 2016). For example, individuals may have more choices to choose the service they want and organizations may improve their service structures. However, it may emphasize that individuals with different disabilities, particularly those with intellectual disabilities to be economic rational beings and may let small organizations with a local focus face difficulties of making investments to broaden their services and competing with bigger organizations.

3.3 The assistance to families with children

The fourth highest social security expense is the assistance to families with children, 20 per cent of the total in 2018-19 (Commonwealth of Australia, 2018). Currently, there are different kinds of family payments including the Family Tax Benefit, Parental Leave Pay, Dad and Partner Pay, Child Care Subsidy, Additional Child Care Subsidy and Parenting Payment. In general, the income test and assets test are applied by the Australian government to determine whether a family is eligible to get some kinds of family payments. In the year 2018-19, the Australian government’s spending on assistance for families with children was $36,845 million (Commonwealth of Australia, 2018). But with the ‘impact of changes to the income tests, freezes on indexation of payment rates and of income test thresholds, the Family Tax Benefit is expected to decrease by 5.1 % in real terms from 2019-20 to 2022-23’ (Klapdor et al. 2020). It presents a policy trend of tightening the eligibility for gaining family support payments and limiting the amount of income support families can get. Nowadays, the way of providing family support payment is quite different from the universal provision issued in 1941. Instead of ensuring all families have access to income supports, today’s family income supports mainly target the families with lower incomes. The ideology is to provide sufficient income supports for families who are most in need. No matter that the provision methods become more and more complex, the family income support always targets the main carer of the child. As women are still the primary carers for families, family payment encourages women to choose to have more children and provides more flexibilities for women to decide to which extent they want to participate in the workforce (Hodgson, 2005). Nevertheless, a dilemma exists for a woman as the primary carer for her children. If she decides to work, most her salary would be spent on child care because the governments use income test to determine how much child care subsidy the family can get. If she decides to stay at home and look after the child, she would experience the lost about her career development and superannuation accumulation.

3.4 The assistance to the unemployed and the sick

Australian governments’ spending on the assistance to the unemployed and the sick was the fifth on the list, but less than one-third of the expense on the assistance to families with children. Unemployment Benefit was introduced in 1945, provided payment for people who were out of work and had made efforts to obtain work again. At that time, to be eligible to gain the Unemployment Benefit, applicants had not to have participated in any kind of strike, but to meet the income test, residence requirements and be willing to undertake relevant training and suitable assigned work (Parliament of Australia, 2020). By the beginning of the 1970s, the Unemployment Benefit significantly improved. For example, in 1973, the Unemployment Benefit was paid with the same rate as pensions and had set standard payment rates for married and unmarried recipients respectively. The Fraser government in Australia elected in November 1975, reduced the government spending and resources on public welfare, recognized individuals as economic rational beings ((Bryson and Verity, 2009; Mendes, 2017, p.31; Alston et al., 2018). Along with the campaigns set up by the Fraser Government against dole fraud, more restrictive requirements were introduced for job seekers to get the Unemployment Benefit (Parliament of Australia, 2020).

From the 1980s, with the adoption of neoliberal ideology by Australian governments, more detailed payment rates, income tests, work and activity tests have been introduced for different groups of recipients of the Unemployment Benefit. In 1991, the Newstart Allowance replaced the Unemployment Benefit. As the Australian government continued to believe on economic rationalist and the omnipotent market, the recipients of the Newstart Allowance were required to properly participate in the Employment Pathway Plan or the Work for the Dole program to complete a maximum 25 hours of work-related tasks (usually in a community or government setting) each week (Social Security Rights Victoria, 2017). The payment rate of the Newstart Allowance is determined by the government to provide a minimum standard of living to job seekers, which increases in accordance with the Consumer Price Index (CPI). Thus, comparing pensions such as aged pension and disability pension that refer to the national minimum wage, the Newstart Allowance’s payment is quite low. For example, by 2016, the income support payment for job seekers was only around 65 % of the age pension (Henriques-Gomes, 2019). It is argued that with the technology development that the Internet and mobile have become the necessary living goods and with the increased renting and travelling fees, low payments cannot meet the basic living needs of job seekers.

Keeping the income support for job seekers in a low rate is because the government aims to set up an incentive for people to gain paid work and support themselves as much as possible. The ideology of the implementation of job seeker payment program is that individuals should try their best to improve knowledge and skills for working and avoid any personal deficit or shortage that can cause unemployment. However, there are complex contextual and macro structural reasons that result in the unemployment of individuals. For example, class, globalisation, gender, race, community locations (urban, rural and remote) all play a role in determining whether an individual has enough capital or resources to find a job. Therefore, many people have argued that the job seeker payment program is punitive for making individuals take responsibilities of structural inequalities and preventing them from enjoying their deserved citizen rights.

3.5 Other government expenses

The table 2 presents Australian governments’ expenses on different functions. The spending on social security and welfare is the highest among all, near 36 per cent of the total (Commonwealth of Australia, 2018). Health spending took the second position, with $78825, more than 16 per cent of the total. Third was the education spending, but which was less than half of the health spending. Other expenses include defense, housing and community amenities, recreation and culture, transport and communication.

Table 2: Estimate of expenses by function
	Estimates		Projections
	2017-18 $m	2018-19 $m	2019-20 $m	2020-21 $m	2021-22 $m
General public services	24,975	23,065	23,621	22,253	22,923
Defence	30,982	31,215	30,866	33,061	35,164
Public order and safety	5,251	5,324	5,263	4,851	4,829
Education	33,746	34,736	36,185	37,730	39,336
Health	77,603	78,825	80,416	82,049	85,041
Social security and welfare	162,621	175,971	182,568	187,535	194,335
Housing and community amenities	5,435	5,382	5,119	4,454	4,225
Recreation and culture	3,793	3,638	3,517	3,470	3,539
Fuel and energy	7,515	7,541	7,814	8,138	8,492
Agriculture, forestry and fishing	3,019	3,070	2,628	2,549	2,678
Mining, manufacturing and construction	2,979	3,260	3,552	3,681	3,484
Transport and communication	9,252	9,062	8,187	7,523	6,976
Other economic affairs	10,212	9,471	8,640	8,400	8,347
Other purposes	91,407	98,023	105,797	112,552	121,460
Total expenses	468,788	488,584	504,171	518,247	540,830

Source: Commonwealth of Australia, Budget strategy and outlook: budget paper no.6. 2018-19, pp.6-7.

4 Organizations providing welfare services and the social work profession

Government institutions, non-profit organizations, private companies, and community groups are all engaged in welfare delivery in Australia. Australia has a long tradition that governments outsource services for non-profit organizations and community groups. The end of the 1960s and the mid-1970s witnessed a vast expansion of the non-profit organizations along with vigorous social movements. Consequently, Australian governments relatively retreated from direct service delivery and outsourced more social services for non-profit organizations at that time (Australian Charities and Non-for-Profits Commission, 2018). With increasing influence of neoliberalism and managerialism, contracts were largely adopted by Australian governments to purchase services. This has raised the competition between non-profit sectors and driven the growth of private sectors participating in social service delivery.

While the Commonwealth government mainly takes charge of providing income support, state governments make rules and offer funds for contracting welfare services. According to the ACNC (2018), there were 57,675 registered charities in 2020. Table 3 suggests that the large, very large and extra-large charities have 47.2 %, 46.2 % and 49.8 % revenue from government funding, while the medium, small and extra-small charities have 28.7 %, 12.8 % and 8.1 % revenue from government funding. Besides, the larger the charity is, the more capability it has to get funding from multiple sources. Clearly, under the current welfare delivery market, large non-profit organizations have more possibilities to win contracts from governments and attract more donations. With increases in private institutions in the welfare service delivery market, small and local-focused non-profit organizations experience many difficulties to develop and even survive.

Table 3: Revenue sources as a percentage (%) of total revenue by charity size
Size	Government (including grants)	Donations and bequests	Goods or services	Investments	Other revenue
Extra small	8,1	38,1	20,7	16,2	16,8
Small	12,8	37,5	23,4	11,8	14,5
Medium	28,7	26,3	26,8	8,4	9,9
Large	47,2	12,9	28,1	4,5	7,3
Very large	46,2	8,4	36,0	2,8	6,6
Extra large	49,8	2,4	35,3	1,7	10,8
Average across all Charities	47,4	6,8	34,2	2,7	8,9

Source: Australien Charities Report 2018, Breakdown of charity revenue sources, p.16.

The Services Australia (the previous Department of Human Services) offers a range of health, social, welfare payments and services through programs of Medicare, Centrelink, and Child Support. It develops service delivery policies and works with other government, private, and non-profit agencies to provide services. As an important part of Services Australia, Centrelink is responsible for delivering social security payments and services. It is the biggest employer of social workers in Australia (750 persons in 2017) (DHS, 2017). But more recently it has been criticized as focusing more and more on economic efficiency and require users to be economically rational beings (Chenoweth et al, 2005; McDonald and Chenoweth, 2007).

This is associated with the Australian government’s adoption of neoliberal ideology since the 1980s. Working in the Services Australia, social workers are assigned to primarily serve the people who are at high risk of suicide or self-harm, youth and children who need out-of-home care, and people affected by family and domestic violence (the previous DHS, 2017). In the current neoliberal environment, social workers in Services Australia are criticized as being mainly gatekeepers who assess users’ eligibility for receiving services, rather than empowering users through challenging structural inequalities and advocating for policy change (McDonald & Chenoweth, 2007; Gray et al., 2015). The programs of Services Australia purport to have gender-netual policies and it is hard to identify whether social workers can do enough to influence policy to take female users’ subordinate gender position into account in daily practices.

As well as government organizations, profit organizations and non-profit organizations all participate in welfare service provision. Non-profit organizations are where most social workers work. The main funder of non-profit organizations are federal and state governments. The non-profit organizations comply with governments’ goal of delivering services, but also interpret policies according to their serving principles and construct serving practices in terms of local or micro contexts. Some non-profit organisations are based on religion and developed in the Australian tradition of Christian charity (Hughes, 2010) whereas; some flourished in the prosperous social movements of the 1960s and the 1970s (McDonald & Marston, 2002).

In order to compete for government funding, many non-profit organizations are losing their critical or radical spirit against structural inequalities (McDonald & Marson, 2002; Micheli & Kennerley, 2005). They become compliant in order to gain resources in the current political environment of economic rationalism. Governments pay more attention to economic efficiency, economic benefits, and rational management, while ignoring the negative effects of assessing everything (even human rights) by having an economic standard (Payne, 2012). Non-profit organizations make improvements in management and try to achieve more visible or quantitative service outcomes to survive in the marketized welfare system, while struggling with how to engage in sustainable empowerment practice for service users and how to challenge unequal structures (McDonald & Marson, 2002; Micheli & Kennerley, 2007; Payne, 2012; Gray et al., 2015; Moore, 2017). Non-profit organizations are deemed to be more flexible and caring than governments, but their serving methods rely on what kinds of ideology, aim, leadership, personnel structure, and resources (include funding and external connections) they have. Therefore, embedded in diverse non-profit organizations, social workers’ practices present various differences.

To summarise, Australian governments think social workers can help individuals improve their living capacities, deal with social issues, and thus contribute to social stability. In the 1960s to the 1970s, based on the robust economy and Keynesian ideologies, Australian governments promoted social work by valuing its critical lens of challenging unequal social orders (such as patriarchy, discrimination, racism) that set up many barriers for societal vulnerable people (Moore, 2017; Noble, 2017; Pease, 2017). However, because of the economic stagnation in the late 1970s, Australian governments adopted neoliberal ideology which meant moving away from universal welfare provision. By encouraging the market competition and managerialism in the welfare provision market, Australian governments are critiqued to utilise social workers to constrain resources and supports to control the ‘poor-behaved’ societal members (Chenoweth et al., 2005; McDonald & Chenoweth, 2007; Alston et al., 2018). The overview of welfare provision suggests that care and control are the main themes of social work practice in Australia.

5 Discussion

The evolvement of Australian national welfare system closely relates to the ever-changing economic situation, class hierarchy and governing ideologies. Since the establishment of the Commonwealth of Australia in 1901, the formation of the Australian national welfare system has centered on ensuring the full employment and providing essential assistance for workers and their families to make a living. The early-stage welfare provision (1901 to the 1940s) contains clear gender bias and race discrimination, which benefited the ‘deserved white man’ and excluded many of the ‘undeserving’ such as women, Aboriginal and Torres Islanders, Asiatic and the islanders of the Pacific or New Zealand. As the two World Wars caused significant economic depression and suffering for people, many nation states particularly those in Global North started promoting government to play a stronger role in social redistribution to help the vulnerable groups in the society. From the 1940s to 1960s, Australia’s welfare provision extended to workers’ wives, widow, families with children, people with disabilities and unemployment. By the 1970s, a universal welfare model based on social justice was developed in Australia. However, the global economic depression in the late of the 1970s made many welfare nation states reconsider the restrictions of universal welfare model on the development of market economy and thus reduce the welfare spending. Thereafter, governments have been adopting the neoliberal ideology and believing the omnipotent power of the market to deal with social issues.

As Jamrozik (2009, p.8) pointed out, ‘the welfare state, as a form of social, economic and political organization in modern industrial societies, was a product of a synthesis of the Keynesian economic theory and program for social policy formulated by William Beveridge in Britain during World War II.’ Ideologies such as social justice, democracy and citizenship are deemed as the bases of the form of the welfare state. Scandinavian countries such as Sweden and Norway are generally recognized as the best taking those ideologies to provide universal welfares in health, education, various cares and supports for their citizens (Jamrozik, 2009). Therefore, they are reckoned as the ‘social democratic’ welfare states, which treat welfare as the entitlement or right of their citizens. Nevertheless, countries like the United States, Canada, and Australia consider welfare as the way to assist the low-income working-class groups to deal with difficulties and contribute labours to the market. According to the identification of Esping-Andersen (1990, 26-7; cited in Jamrozik, 2009, p.8), they all belong to the ‘liberal’ welfare state that adopt the means-tests to provide supports for the most vulnerable people with the minimum spending. Another type of the welfare state is the ‘corporatist’ state including Austria, France, Germany, and Italy, which favour social insurance and family solidarity but take little redistribution to transform social inequalities (Jamrozik ,2009).

As demonstrated above, Australia can be categorized as a liberal welfare state. But the category of welfare states is not fixed to measure a country’s welfare system because that keeps changing in accordance with economic and political structures. In general, the Australian welfare system focuses on achieving full employment and ensuring working groups to have enough payments for living and raising families. This guarantees social justice at a certain level, but tends to require welfare recipients to undertake strict obligations or individual responsibilities to find works and make a living. In particular, critiques about Australian’ retreat from universal welfare provision have been raised when Australian governments adopted neoliberal ideology and attempted to reduce welfare spending since the 1980s (Mendes, 2009; Alston, 2018). Australia is regarded as having a residual welfare model and doesn’t have clear welfare state ideologies like Scandinavian countries. Nevertheless, to judge a whether a country has a residual welfare model depends on which country it compares with. If comparing Australia with some developing countries, its provides quite comprehensive and generous income supports and welfare services.

It can be seen that the construction of the welfare system is determined by the political system and economic circumstance. Welfare policy is one part of the political governing, with contradictory natures of care and control. Almost all countries in the world join the globalized market economy that is based on industrialization and consumption. Therefore, moving towards civilization to have sufficient resources and equal respect for every person is always limited by the current capitalist economic system with class hierarchies and race and gender discrimination. It is of great significance to note this contradiction by service practitioners because they are the one who keeps challenging the system inequalities and empower each service user in everyday practice.

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7 Recommend readings

Smyth, P, 2014, ‘Australian social policy in an international context’ in McClelland, A & Smyth, P Social Policy in Australia: Understanding for Action, Melbourne: Oxford University Press.

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Carson, E & Kerr, L, 2014, Australian Social Policy and the Human Services, Melbourne: Cambridge University Press.

Written by
Zhaoen Pan
Lecturer in Community and Human Services and Social Work| School of Arts
Federation University Australia
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Dr. Tejaswini Patil Vishwanath
Program Coordinator, Master of Social Work (Qualifying)
Senior Lecturer in Community and Human
Services and Social Work| School of Arts
Federation University Australia
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Cite this publication
Pan, Zhaoen and Tejaswini Patil Vishwanath, 2021. Australian welfare portrait In: socialnet International [online]. 2021-05-12. Retrieved 2025-01-23 from https://www.socialnet.de/en/international/Australia

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