Is Australia’s egalitarian society slipping away?

An egalitarian society can be defined as one which looks after its poor and treats them with dignity, actively discourages all forms of discrimination, widely shares the benefits of rising national productivity, allows its workers an adequate say in the workplace on matters affecting their wellbeing, and strives hard to achieve 'equality of starting opportunity' (i.e. where income and quality of life differentials in the market place are due overwhelmingly to differences in personal capacities, skills, attitudes to risk, motivation – rather than to low parental family income, inadequate education, poor location or inadequate access to affordable public services).

The record

On these five criteria, Australia's record over the last quarter of a century is mixed. On the positive side, we have reduced discrimination against minority groups and women, increased life expectancies all round, widened participation in higher education, made superannuation more universal and got official unemployment down to a 30 year low. As well, low income families, taken as a whole, have shared equally in the nation's increasing prosperity – an experience which contrasts strikingly with that of other English-speaking reforming nations like US, UK and NZ over most of this period.

Yet the future of Australian egalitarianism is very uncertain for two basic reasons – many of the 'social safety valves' which helped prevent rising income inequality are now disintegrating; and there is a growing threat to social mobility.

The disintegrating social safety valves

One important social safety valve in the past has been reform gradualism. Although governments have for some time been revising and reinterpreting traditional national goals and values (such as access to full-time work for everyone wanting it; dignified welfare for those in need, a balance of industrial power in the workplace, a good regional spread of economic opportunities and equality of access to basic services), the pace and scale of social change has been limited by checks and balances in our political system, such as the Federal System and a normally hostile Senate. With an intoxicated Federal Coalition soon in control of the Senate and increasingly asserting itself in areas of traditional State responsibility, we are bound to see a radicalisation of policy reform.

A second safety valve has been the trend decline in unemployment – at least since the early 90's. This trend cannot be sustained because unemployment (among active job seekers) is now close to its core equilibrium rate (although there is still scope to reduce 'inactive' joblessness). A third safety valve has been broad-based increases in real wages – mostly a result of strong gains in national productivity, booming terms of trade and regular minimum wage adjustments. All three look unsustainable in the medium term.

A further critical safety valve has been the willingness of successive governments (including the Howard Government) to spend big on redistribution programs so as to make up for the widening gap in private incomes. With the prospect of more radical reform, the scale of fiscal redistribution will need to be at least as large again to achieve the same result. Political ideology will make this difficult but so too will slower economic growth and an ageing population.

Without the four safety valves noted above, incomes will surely become more unequal.

The threats to social mobility

But the main threat to egalitarianism will come not from widening income dispersion but from diminishing social mobility.

One dimension of this threat is the growing polarization of employment opportunities. We are seeing an emerging underclass of 'working poor' – workers trapped in low-paid, relatively unskilled, casual jobs and often under-employed. Many of them are earning less than half median earnings (the poverty line). But it is their quality of life that is suffering most. They have no leave entitlements, receive little or no in-house training and are required to work unpredictable hours from nought to 45. This is flexibility all right – but it is all on the side of employers. If you want the full horror story, read Elisabeth Wynhausen's recent book (2005).

Not far behind in levels of vulnerability are many of the growing numbers of non-employee independent contractors and 'contract' workers in third-party 'labour hire' positions. They are beyond the reach of Arbitration and increasingly of trade unions. While many are thriving, those with little or no individual bargaining power are as much at risk of exploitation by employers as casual workers. Like the 'working poor', they are bearing many of the financial risks previously borne by corporations and governments.

Another manifestation of employment polarization is the high incidence of no-job households where, on the last count, 15 per cent of our dependent children live. They are headed by people of working age who are ill-equipped to compete in today's partially deregulated labour market and at the mercy of a meaner, more conditional and demeaning social security system.

Families located in relatively remote, job-poor and under-serviced regions are also competitively disadvantaged. Amongst them are our indigenous people, many of them living under third world conditions. Spatial employment inequality is higher now than in the 1980s.

As well, Australia is slowly but surely developing an entrenched dual system of education, health and housing and public transport – one for the rich and one for the poor. This has been euphemistically called 'universalism with choice' but in terms of effective choice, accessibility and quality of service, the gulf in Australia is large and widening all the time.

The increasing inequalities in access to employment and public services will make it impossible for many young Australians to get an equal start when they move into adulthood. We are going backwards on social mobility.

Why more egalitarianism?

The case for egalitarianism is essentially social and moral. One could also make a respectable economic case (as I have tried to do). But egalitarian policies are generally perceived to have net adverse economic effects. And they encroach on individual freedom. So to get more equality, Australians may have to forego other things they also value. In a vibrant democracy it is the community which ultimately decides how the trade-offs should be resolved.
Do Australians want more egalitarianism?

So what weight (priority) do Australians assign to egalitarian values?

While they see themselves as staunchly egalitarian, polls have consistently shown that, for the most part, they do not have much time for 'passive' redistribution to achieve more equal income/wealth outcomes per se. Indeed, the community's tolerance of inequality appears to be on the increase in Australia, with attitudes now closer to the US than Europe. Australians are also strong on self-reliance – 'having a go' – and look askance at working age recipients of welfare. Moreover Australians are suspicious, even distrustful, of governments. And there is a strong stream of competitive materialism.

But in one key respect, Australians are indeed egalitarian. The polls show they believe strongly in equality of starting opportunity – which they see as an essential part of a just and fair society. It is intrinsic to their belief in a 'fair go' for everyone. It explains, for example, why they are strongly and increasingly supportive of policies which improve the quality and accessibility of key public services.

Thus, I believe Australians would back a policy agenda which sought to enhance social mobility, provided they knew where and why the extra money was being spent and it did not seriously threaten their material prosperity.

Some policy suggestions

An egalitarian agenda should pursue its social goals in ways which are consistent with mainstream community aspirations and values and are economically viable (indeed help strengthen the economy's long term productive potential).

These criteria could be met by an incremental policy agenda which expanded people's capabilities and opportunities and broadened participation in society through measures which, help young people at risk, through greater investment in early childhood development and pre-schooling and through intensive support for potential early school leavers, increase the capacity of the jobless and underemployed to participate in the labour market, ensure adequate work incentives at the lower end of the income spectrum, make public health, education, housing and transport more accessible and affordable to disadvantaged people and regions, and improve the ability of asset-poor, low-income people to access financial capital for housing or productive purposes.

To fund such a wide-ranging program, the Government could redirect spending away from poorly targeted 'upper-class' welfare programs, get rid of a raft of selective tax breaks and tax shelters, extend the use of HECS (e.g. applying it to loan schemes which assist economically disadvantaged regions), explore efficient new revenue-raising devices such as a national land tax and make greater use of public borrowing for investment in longer term social infrastructure.

To strengthen the politics, new revenue and borrowings could be linked specifically to new spending programs ('hypothecation') and there could be a requirement for recipients of government assistance to recognise their responsibilities and change their market behaviour.

Governments need not rely solely on fiscal instruments of redistribution. In my view, regulation should be used where it is the only effective way to protect the quality of life of vulnerable workers – even if it entails some loss of workplace flexibility.


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