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?