End race-based welfare

The section 18C debate has been sidetracked because of the claims made by some individuals against Andrew Bolt. The conflation of Aboriginal identity and schemes aimed at helping Aboriginal peoples creates various incentives which lead inexorably to welfare dependency and an over-emphasis on a particular racial identity. These, no doubt well-meaning, policies tend to entrench racial stereotypes and have had the effect of condemning a significant number of people to a welfare-dependent future. It has also caused some people to view themselves as victims. I use the term welfare broadly, including preferment schemes such as Indigenous scholarships.

A wealthy country will rightly want to help those in the community who are less well off or who do not have the means to support themselves. It is unlikely that the welfare state will disappear, notwithstanding that it crowds out private charity.

But Government welfare is just that – charity. Hence it should be designed carefully, with full knowledge of the incentives that it provides individuals. The principal aim of welfare should be to assist those in need in the short-term while encouraging them to be self-supporting in the long-term.

There will always be some people who need welfare throughout their lives, but that does not detract from the general aim of getting people off welfare.

The design of welfare also needs to carefully consider issues such as the effective marginal tax rate – the extent to which it discourages recipients from taking work. A broad welfare system can reduce the extent of EMTRs but be very costly – raising one dollar of tax revenue costs more than one dollar.

These are design issues for a welfare system: efficiency, cost-effectiveness, targeted payments to those in need, and understanding incentives.

There is no case for race-based welfare. Welfare in Australia should, in general, be targeted to those most in need. A small proportion of these people will be of Aboriginal identity. Our welfare system is presently inefficient since some people in need are not receiving welfare, while others who are not in need are receiving welfare.

That is, Aboriginal identity has been used as a proxy for need and a proxy for poverty. We need to measure need and poverty directly, not through proxies.

The removal of race-based welfare is not necessarily easy, however. For example, there are groups of Aboriginal peoples in remote areas living in abject poverty. The delivery of welfare to those groups needs to be culturally sensitive; this is in effect race-based welfare. But these are isolated examples. For those living in the general community, there is no case for race-based welfare which has had the pernicious effect of entrenching welfare dependency.

Like any policy, changing to a new scheme may need a phased approach which allows adjustment by existing beneficiaries. But the Government could undertake a thorough review of the various schemes, with an objective of generally removing race-based welfare with limited exceptions as mentioned above. It would need to give a strong commitment to a new package of welfare measures that are coherent and credible. Does anyone really think our present welfare system is efficient and well designed?

About Samuel J

Samuel J has an economics background and is a part-time consultant
This entry was posted in Budget. Bookmark the permalink.

32 Responses to End race-based welfare

  1. Di

    One of the things that doesn’t get the exposure that it should is the requirement of government (especially the NT Govt) where business must have an indigenous component to be considered for contract work.

    This has been a worry for some time. Especially when you have business that identify as being owned by Aboriginals – be they trusts, etc., who are out their competing with your stock standard business.

    Some of those businesses may not employ an aboriginal person on staff – they fly in workers from the Eastern states, are heavily subsidised & continue to be given preferential treatment by the nodding heads.

    Meanwhile normal businesses are closing left right & centre.

    Whilst I’m all for giving a hand up, the fact of the matter is that it isn’t a level playing field anymore & the tax base is shrinking rapidly.

  2. A Lurker

    Payments to those who suffered damage and deprivation from natural disasters proves that if a pot of Government taxpayer money exists somewhere, the opportunistic, the unprincipled, the immoral, or the criminally inclined will always make a beeline to it.

    We cannot prevent the opportunistic doing what they do – but we can at the very least impose such strictures of eligibility that the opportunists would need to be very creative with their stories (and provide convincing evidence to support those stories) in order to get their mitts on the money.

    So simply ticking a box to say that you identify as a particular racial group and that you’re going to sue anyone into the hereafter if they dare question you will, simply put, no longer cut the mustard.

  3. richard lee

    The major problem is taking away welfare that has already been handed out to people who believe welfare is a right- that starts revolutions. Also it makes it harder to vote for a dispassionate government of the day.

    Sure, welfare could be removed if we had a conversation between adults. Unfortunately, in the electorate, we often deal with electors who act like children.

  4. john constantine

    my family’s politically aware politics/law student is being taught in university that ‘it isn’t their culture to work for money’. you get high marks at university for writing that “it is cultural genocide to expect indigineous australians to work outside their culture. it is cultural genocide to claim that being taught to be an english speaking doctor or lawyer is better than teaching the children in traditional ways in traditional language to sing the old songs and do bush tucker”.

    the university also teaches that,just as communism only failed because america deliberately and meanly refused to provide the communist nations with enough money,aboriginal welfare has only failed because the welfare isn’t generous enough. you get high marks for writing that you are ashamed to be australian,living under a govenment that is so mean that it refuses to give aboriginals enough money to make them happy.

  5. Does anyone really think our present welfare system is efficient and well designed?

    Of course not, it is designed and run by socialists.

  6. richard lee

    just as communism only failed because america deliberately and meanly refused to provide the communist nations with enough money,

    lolwut?! which uni is this?! and what was the quote exactly?

  7. Tel

    The whole concept of “cultural genocide” is a load of bullshit. Culture always changes, that’s a good thing. Stagnation is death.

  8. Culture always changes, that’s a good thing. Stagnation is death.

    Absolutely.
    Explains why conservatism is a slow cancer.

  9. Crossie

    Culture always changes, that’s a good thing. Stagnation is death.

    Absolutely.
    Explains why conservatism is a slow cancer.

    Non sequitur.

  10. In the debate about which group of indigenous people should be entitled to welfare money and extra support, there seems to be no public awareness of the fact that many white people also live in extremely isolated areas. People on cattle stations, and pearl farms and prospecting families etc. None of these groups get extra funding. All are expected to provide their own housing, education and health needs, as well as supplying their own power and water. I certainly agree that indigenous people living in remote communities need some extra help, but it would be nice if we occasionally acknowledged the non indigenous people in similar circumstances who are totally self supporting.

  11. Gilas

    Numbers, you are beyond parody… (widespread chuckling and utter mirth all round!)

  12. richard

    None of these groups get extra funding. All are expected to provide their own housing, education and health needs, as well as supplying their own power and water.

    I don’t think this is true. The bush is quite heavily subsidised- there is a vein in Australian culture that says the farmers and miners are the only people doing “real” work, notwithstanding there are handouts for droughts and the cost of delivering public services is exponentially more while the number of voters per rural seat is less (so it takes less changes in vote to swing a vote). The National party has a protectionist streak as well that has more in common with Labor and the unions than the Coalition, businesses and libertarians. If Labor didn’t get hijacked by Whitlam’s university academics and the lawyers (the latte left), perhaps the “coalition” would be “Labor/National” ticket rather than “Liberal/National”

  13. The difference between welfare and charity is relationship. You simply can’t have welfare that is beneficial to the community, while charity is beneficial to both recipient and giver.

    For an alternate way to look at where we have arrived at:

    Slavery entailed the right to the labour of an individual, and the responsibility to care for there needs even after they were no longer able to work.

    With an income tax and the welfare state, the government has taken on the exact same roles.

  14. Richard, to the best of my knowledge no station owners get subsidised housing, power or water. I know the don’t have health clinics, just fly in visits from doctor occasionally. If they don’t have enough children to qualify for a teacher they have to teach their own children, and if they do have enough children to qualify, they have to provide housing for the teacher. They have to build and maintain their own airstrips. As far as the provision of public services goes they don’t get any, however, residents of every tiny indigenous out station, regardless of how few people live there, demand teachers, nurses and access to commercially produced food. They also want power and water supplied, plus housing. When you consider that some of these outstations are home to less than 20 people it becomes a travesty of misuse of public money. In places like Utopia, apparently the focus of Pilgers movie, millions of dollars are spent sending teachers and nurses around vast areas doing mobile schools and clinics for people who wish to live in their own small family groups spread throughout the bush. These are the groups pictured in horror articles about 3 rd world conditions for indigenous people. They move onto a patch of land, throw a basic shelter together, then demand public services, even if it is for a handful of people. They neglect to mention that the government has already spent Multimillions on housing, health
    and education at a location central to all of them, but they choose not to live together as a tribe. Whilst I don’t deny any of these people the right to choose where they want to live on their own land, I do object to the demand for taxpayer funds to pay for it. Non indigenous people have to reach a certain population level before they are eligible for public funding.

  15. Zulu Kilo Two Alpha

    The bush is quite heavily subsidized

    Could you provide some examples here? I would like to know what I’m missing out on.

    handouts for droughts

    Fairly rigorously means tested- I’ ve steered this place through four out of the six worst droughts in a hundred years, and there hasn’t been a brass razoo in “handouts.”

  16. Tel

    Could you provide some examples here? I would like to know what I’m missing out on.

    SPC got their handout, does that count?

  17. Tel

    Oakeshott and Windsor managed to get NBN installed in their electorates, does that count?

  18. Senile Old Guy

    As far as the provision of public services goes they don’t get any, however, residents of every tiny indigenous out station, regardless of how few people live there, demand teachers, nurses and access to commercially produced food.

    And then, not infrequently, some of the indigenous harass and attack the teachers and nurses.

  19. richard

    Could you provide some examples here? I would like to know what I’m missing out on.

    Calculate it this way. If you build anything that requires laying of material – cables, roads, infrastructure, how many dollars per citizen do you spend in the country, and how many dollars per citizen do you spend in the city?
    If I was running NBN in Hong Kong, I run a 100m cable up the side of the building to get 100 customers. If I run 5km of cable, digging pits and installing material, I get one bush customer. How long until I get my return on investment? So when I think of rural infrastructure, and how there is demand for “public services”, the basics such as roads and sewage, it is inefficient to provide it. That’s part of the price we pay for having fresh fruit and fresh milk. At least the miners can use some of their profits to build out roads and other transport infrastructure.

    Compounding this is that the rural vote is worth more than the city vote (as fewer electors are needed to swing the vote), and we know that governments pour infrastructure into marginal seats while letting safe seats stagnate. Ask Mr Oakshott and Mr Windsor, it’s how politicians play the game.

    They move onto a patch of land, throw a basic shelter together, then demand public services, even if it is for a handful of people.

    Farmers are not rent seekers. But this isn’t black and white- it is a spectrum- your argument that only “indigenous rent seekers seek services” could be applied in lesser measure to other remote communities who are not necessarily indigenous and asking for handouts. Your disdain for “rent seekers” reminds me of Matthew 7: 1-5. I’m not sure whose responsibility it really should be to provide “basic services” to remote communities. It should be government, but laying all that infrastructure to support so few is inefficient.

    Fairly rigorously means tested- I’ ve steered this place through four out of the six worst droughts in a hundred years, and there hasn’t been a brass razoo in “handouts.”

    I’ve never accepted a dollar of welfare in my life either, besides what my parents gave me to set sail (obviously that’s not a govt handout!). Nevertheless, your peers may apply for drought assistance.
    http://www.theland.com.au/news/agriculture/general/news/drought-assistance-expanded-in-nsw/2687656.aspx

  20. Big Jim

    It’s not the allure of welfare boodle paying for Twisties and VB dinners that keeps all those potential Good Will Huntings out back from being doctors and engineers. Get real. Your catallaxy 120+ IQs should allow you to empathise to a degree; to imagine for a moment what it might be like to be what was once known as ‘retarded’ , before retardation was cured by SJ Gould.

    William Faulkner put himself in the mind of Benji in the first chapter of The Sound and the Fury. Poor Benjy, on the other hand, could not reasonably be expected to imitate a gentleman of letters.

  21. That is, Aboriginal identity has been used as a proxy for need and a proxy for poverty. We need to measure need and poverty directly, not through proxies.

    Thank you. A very concise summary of my repeated chant, ‘It’s not about skin colour, it’s about socio-economic status.’

  22. hzhousewife

    I’ve never accepted a dollar of welfare in my life either, besides what my parents gave me to set sail (obviously that’s not a govt handout!).

    remittance man were you then, Richard?

  23. The bush is quite heavily subsidized

    Bullshit has been successfully called on this one plenty of times.
    It seems to keep rearing up though, every time some ingenue who hasn’t done their research pops in, out comes the same old line……

  24. Armadillo

    Oakeshott and Windsor managed to get NBN installed in their electorates, does that count?

    It’s a fallacy Tel. I live in Tamworth and I don’t know of anyone who has the NBN. Perhaps I should get out more? There were some workmen on one of the arterial roads about a year back with NBN t-shirts on. Maybe Armidale has it? I’m not sure. They have a University, so perhaps that’s where it’s at?

  25. Andrew

    Oakeshott and Windsor managed to get NBN installed in their electorates, does that count?

    LOL. As if UNE wouldn’t have got the fibre backbone attached to them anyhow! It was a Howard666 policy – they weren’t going to run the whole Uni on ADSL!

  26. richard lee

    remittance man were you then, Richard?

    Nope, my parents were skilled migrants, both university educated. I wasn’t born here, but came with them. It’s Chinese culture for parents to dote on their children up front, but then live with their children later in life.

    It’s a fallacy Tel. I live in Tamworth and I don’t know of anyone who has the NBN. Perhaps I should get out more? There were some workmen on one of the arterial roads about a year back with NBN t-shirts on. Maybe Armidale has it? I’m not sure. They have a University, so perhaps that’s where it’s at?

    If I was doing NBN installations, I’d start with the big cities first, get the money coming in, then move out to the countryside. Instead, Labor decided to do the countryside first (to “restore service” to “sub-standard service areas”) severely underestimating both the build time and build cost, and having to constantly revise down targets . I wouldn’t be surprised that you didn’t see NBN in New England because they overestimated their run rate by a factor of X. Labor at the time love their big impressive announcements that coincided with the news cycle, and got turned out of office when delivery was lacklustre and didn’t correspond with the promise.

    You may ask what “bush subsidies” are, but there is one in the example above: starting with building out the bush first, where it is more expensive and risky, but politically smarter.

  27. The Pugilist

    If I was doing NBN installations, I’d start with the big cities first, get the money coming in, then move out to the countryside.
    Instead, Labor decided to do the countryside first (to “restore service” to “sub-standard service areas”) severely underestimating both the build time and build cost, and having to constantly revise down targets .

    You are correct Richard, yet the original business plan, which Conroy used as a shield said to do exactly that. Cities first, get positive cash flow happening, then do the rest. Even though public corporations aren’t supposed to cross-subsidise. The whole project was an utter pork barrelling farce. Yet even now Conroy is still trying to save face. If there were only one Rudd/Gillard minister who could be publicly humiliated in every capital city with a barrage of rotten fruit, I’d vote for Conroy (Swan would be a close second).

  28. john constantine

    no-one hates abbott more than leftie ex-cabinet member kelvin thompson.this labor pollie actually put a lot of work into his paper on the effects of the population explosion of australian cities,and how it has sucked the infrastructure spend from the regions.

    the stark example of the ‘basis’ being the premium paid for current delivery australian grain over paper trade international values is an unarguable real world example of what happens when regional infrastructure rots through underinvestment overseas. lot of grain in the world in patches,but it can not get to the markets that demand it in the required timeframe,so australian grain basis goes up. fact.

    the massive population explosion of australias cities towards 10 millions in greater sydney and melbourne–without regional infrastructure spend to drop the food onto tables,social discontent rises. people that can take food security so much for granted that they disregard the importance of infrastructure need to have a bit of a think about their assumptions.

  29. Luke

    Unfortunately, I think the campaign to derail this change has made in roads and has it’s grabs. Right to be a bigot and referring to 18C as the Andrew Bolt laws.

    I note there is no mention of the other people who have been prosecuted under this law and the fact that no white person has successfully ever been able to use this law. Tim should be using his role at the commission to go through it’s own statistics.

    I love the irony of those who claim to be against bigotry. You know, the ones who scream that anyone who doesn’t agree with their PC view of the world should be silenced and made a criminal. The next time someone says I don’t support the right of anyone to be a bigot, make them tell you what that world means. I’m betting 10 out of 10 will think it’s just another world for racist and/or homophobic.

  30. richard

    You are correct Richard, yet the original business plan, which Conroy used as a shield said to do exactly that.

    I wish I saved a clipping of the press release because I seem to recall the opposite- the plan was always to start with the countryside first. I recall because at that point I was working for Telstra’s Cable Internet division when I saw the press release and thought, “wow, our recently released 100Mbps cable service will be around for a while yet” because Telstra rolled out the cable service to the cities first, and would have had to dismantle that when the NBN came through.

    Politically smart to court the country vote first, but commercial suicide. This and while Telstra was entrenching wireless and 100Mbps cable services.

    the massive population explosion of australias cities towards 10 millions in greater sydney and melbourne–without regional infrastructure spend to drop the food onto tables,social discontent rises. people that can take food security so much for granted that they disregard the importance of infrastructure need to have a bit of a think about their assumptions.

    As I did say earlier, subsidising infrastructure to remote farms is the price we pay for fresh fruit, vegetables and milk. That being said, I’m not convinced that we have a horrible shortage of fresh food because of lack of rural infrastructure.

  31. .

    As I did say earlier, subsidising infrastructure to remote farms is the price we pay for fresh fruit, vegetables and milk.

    No. You don’t subsidise ARTC and you don’t subsidise the carbon tax of Toll/IPEC.

  32. richard

    Peter56, while your sentiment that “welfare for neediness and not race” is correct, your racial and homophobic epithets are bigoted and disgusting. Ultimately we are all people and should be blind to race, just as justice should be blind to privilege, and we should measure each other by individual deeds and character alone.

    You don’t subsidise ARTC and you don’t subsidise the carbon tax of Toll/IPEC.

    ARTC- “Federal Government owned corporation established in July 1998 that manages much of the interstate rail network”… sounds government funded to me. I wonder how much of the tax take for establishing ARTC, and the roads, railway tracks, cables and pipes in the bush actually come as a proportion from city dwelling citizens. How much additional funding is required to build and maintain each government facility in a remote area. It’s a similar concept to how Tasmania receives far more funding from the mainland than it collects in tax receipts.
    If most people live in the city and most people do business in the city, it would seem that the money flows towards the countryside, not the other way around. Unless you count the mines, of course, who pay to build their own roads to remote sites they control.

Comments are closed.