Welfare minimalism or social investment?

Paul Smythe assesses the longer-term messages in the Costello budget and the Latham reply FOR long-term social policy watchers the Budget and Reply speeches by the treasurer, Peter Costello, and the leader of the opposition were remarkable for their overwhelming concentration on social rather than economic policy issues. It looks like we may be up for our first social policy federal election campaign in decades. From this point of view the significance of the budget debate lies in what it might tell us about the likely terms of engagement in that campaign Immediate public reaction has understandably been concerned with policy specifics. How many Australians will miss out on the Costello tax cuts? How will Latham fund extra social initiatives like the Youth Guarantee ? The assumption so far appears to be that there is an underlying bipartisan consensus about the overall policy goals. The fact that Latham failed to repudiate the regressive tax cuts to the high-earning elite certainly reinforces that impression. So where does an apparent bipartisan commitment to a low-tax, low-quality social service society come from? It is clearly rooted in the monetarist assumption of the 1980s that social spending is by definition wasteful - that minimal government was not only good for the economy but good for society too. Indeed, some assumed that there was ‘no such thing as society’. Rewarding aspirational voters has emerged as a code for the current consensus. But have the parties got the aspiration right? Pre-budget polling of the Australian people over their preference for tax cuts or social spending suggests the parties should think again. These polls were unanimous that the majority aspire to quality social services for all Australians not a low tax society per se. Today we might well be seeing more a ‘social service revolt’ than a ‘tax revolt’. Both parties, however, seem reluctant to run with these winds of change. But the Budget suggests how they might; and while there are substantial similarities in regard to economic policy, there are also some clear differences in social policy approaches The big ticket items of the Costello budget reflect a truly conservative social aspiration. To give tax cuts to the top end at a time of growing inequality and increasing poverty is to say that cultivating an elite class is essential for the good society. Likewise with the emphasis on the family as the basic unit of society. Strong families in a strong market economy will be able to manage their own social needs with minimal need for tax-based state provision. In this two--tier social policy scenario, socially provided services are kept to a safety net minimum while the vast majority of individuals and families insure themselves privately. One would not anticipate the Howard government moving far from this social aspiration in the election campaign. But what of Labor? Latham expressed a preference for ‘small government’ but also an aspiration to an equality of opportunity for all Australians. His budget speech certainly leaves great scope for the market economy but also endorses an active role for government in social services such as health and education in order to build the ‘ladders of opportunity’. Here we could see emerging the lineaments of a new socio-economic policy paradigm. Still favouring the market economy but with a ‘social investment state’ ensuring that all Australians have an equal chance. Instead of the welfare minimalism of the Costello budget we could anticipate less emphasis on tax cuts and more talk of laying down a fiscal platform for a new era of prudent and sustainable social investment. We could also expect the major parties to moderate their aspirations to reflect the likely influence of the Greens and Democrats. These seem committed to something more like a traditional social democratic version of social policy, and some pundits are tipping the Greens’ preferences may play a key role in determining the result in marginal seats. It is possible that their influence will be on environmental rather than social policy. The federal budget 2004 suggests that a two-decade neglect of social policy in Australia may have ended. While early reaction to the budget suggests a more or less bipartisan understanding of the goals of social policy, a closer examination suggests differences of emphasis which may well widen in the coming election campaign. Welfare minimalism or social investment may well be the defining choice in this social policy election. Paul Smyth is professor of social policy at the University of Melbourne and general manager of Social Action and Research at the Brotherhood of St Laurence Photo: iStockphoto.co