Showing posts with label social disadvantage. Show all posts
Showing posts with label social disadvantage. Show all posts

Wednesday, May 18, 2022

Modern politics goads us to be greedy, and forget the needy

Mark, a voter in the Melbourne electorate of Higgins, told the ABC’s Virginia Trioli this would be the last federal election he’d be alive to vote in. So he’d decided his vote should not be for him, but for the younger generation coming after him.

He wanted to cast his final vote for the party that best represented young people’s aspirations for their future. So he went to the local high school and got permission to talk to the senior students.

And which side did they pick? “It’s the Greens. And that’s the first and last time I’ll be voting for them,” he said.

It’s a sad commentary on modern politics that no mainstream politician would dare suggest we vote for them because they’d best advance the public interest. They know that we know their greatest interest is in advancing their own career so, to attract our votes, they offer bribes.

They’ve trained us to see elections as transactional, not aspirational. You want my vote? What are you offering? And is that better or worse than the other side’s offering?

That’s how, with climate change and so many other, lesser problems needing attention, we’re devoting most of this campaign to grappling with the great challenge of our age ... the cost of living. Really?

Now, I don’t blame people on low incomes with big commitments who really do struggle to get by for wanting to see what the two sides are offering that might make their lives easier.

But you don’t have to be struggling to tell yourself your life’s a struggle, and you wouldn’t mind voting for a pollie offering you a few more bangles and baubles.

I can’t be the only voter in the land whose comfortable lifestyle is not in any way threatened by the rising cost of living.

A reminder from Struggle Street would be timely. My co-religionists, the Salvos, release today a report on how their clients are faring, preparatory to knocking on your door the weekend after the election. (If you’re wondering, at present I hold the rank of backslider, but there’s still a lot of Salvo in me.)

The Salvos took a random sample of 10,000 of the people who had attended their emergency relief centres in the past 12 months. More than 1400 people responded to the request to complete an online questionnaire.

The survey showed that, after paying for housing costs, 93 per cent of respondents were living below the poverty line, with almost two-thirds needing to ask for financial help from family and friends.

The high proportion of these people’s meagre incomes devoted to rent is their biggest problem, leaving too little for food and all the rest.

Although some respondents would be working poor, most would be on government support payments, including the parenting payment and disability support payment. Among these people, 60 per cent say they can’t afford medical or dental treatment when they need it, and well over half say they’re going without some meals.

Dr Cassandra Goldie, head of the Australian Council of Social Service, reminds us that poverty isn’t an unfortunate but unavoidable fact of life, it’s a policy choice. We have a system of support payments that’s supposed to keep people out of poverty, but choose to set the payment level below the poverty line.

A recent national poll of 1000 adults commissioned by ACOSS and conducted by Ipsos has found that 76 per cent of respondents say they couldn’t live on $46 a day, the present rate of Jobseeker. Two-thirds agree the rate should be above the poverty line, which is $70 a day.

When the first lockdown in 2020 prompted the Morrison government to almost double the rate of Jobseeker, the payment rose above the poverty line. People couldn’t believe how much easier their lives had become, and requests for help from outfits like the Salvos fell away – although many overseas students and other holders of temporary visas needed feeding.

But Scott Morrison’s Christian charity lasted only six months. In the end, the biggest permanent increase he could afford was $6 a day. Need for help from the Salvos has returned. In this campaign, however, Morrison has been able to promise various new benefits to self-funded retirees who, by definition, are too well-off to qualify for the age pension.

When Anthony Albanese abandoned Labor’s promise from last election to review the level of unemployment benefits, he pointed to the big budget deficit he’d inherit. I can see his problem. If he were to spend more helping people living below the poverty line, how could he afford the $9000-a-year tax cut he (like Morrison) has promised me and my ilk in 2024? He’s saving up.

Last word to my superior officer, the Salvos’ Major Bruce Harmer: “We’re calling on the next elected federal government to focus on the most vulnerable in society. Being able to meet basic living expenses should be the norm for all in an advanced economy like Australia, and not something we are still discussing in 2022.” Amen to that.

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Wednesday, August 28, 2019

Greater social inclusion makes us wealthier, not just happier

If you like made-up, clunky words you could call it the humanisation of economics. And it’s one of the most exciting developments in a field most people don’t consider very exciting. It’s the product of economists’ search for reasons why the economies of the developed world have stopped working as well as they used to.

This week our Reserve Bank governor, Philip Lowe, gave a short but sobering speech at a conference of central bankers in Wyoming exploring the deeper, structural reasons why economies – including ours - aren’t growing as fast as they did, and admitting this wasn’t likely to change any time soon.

A big part of the reason for weaker growth is a slower rate of improvement in the productivity of labour – the use of improved technology to increase the output of goods and services per worker.

Also this week, Treasurer Josh Frydenberg gave a long, carefully researched and highly informative speech about the deterioration in our productivity performance. His one controversial proposition has been monstered by the business media, but the speech was an encouraging sign that the Morrison government may be moving from happy slogans to careful consideration of the problems besetting our economy.

Now to my new word, humanisation. Until the past couple of decades, it was relatively easy to achieve high annual rates of productivity improvement by using bigger and better machines to increase the efficiency of our farms, mines and factories in their production of goods.

These days, goods are produced by machines, helped by humans. Services, on the other hand, are delivered by humans helped by machines. Goods have come to account for an ever-smaller share of the value of economic activity, with services contributing an ever-bigger share.

But installing more productive goods-producing machines is a lot easier than making the human providers of services (ranging from prime ministers to scientists, doctors and teachers on to waiters and cleaners) better at their jobs. This does a lot to explain the slowdown in productivity improvement.

So economists have had to turn their minds to humans, and how you make them more productive. An obvious response is to ensure they’re well educated and trained, equipped with the right skills to take them onwards in an ever-changing economy.

Equally obvious is making sure our workers are in good health – mental as well as physical. These are things we could be doing better than we are.

Less obvious is economists’ relatively recent discovery of the economic importance of “place” – where people live and work. Particularly at a time when knowledge has become a more critical ingredient, big cities have become incubators, bringing together talented workers to promote experimentation and learning, as well as enabling the transfer of knowledge. (Bit surprising in an age where digital connections are ubiquitous.)

Another less-obvious realisation is that, in the services sector, productivity depends on creativity and imagination, which drive innovation. Increasingly the services sector is the home of start-ups aimed at finding innovative ways to deliver new and existing services to larger numbers of customers.

This is very touchy-feely stuff for hard-nosed economists. One of our leading economists, Professor Ian Harper, dean of Melbourne Business School, says creativity and imagination “are generally stimulated by human interaction, social creatures that we are".

“And the more diverse we are when we gather, the more we stimulate, challenge and goad one another to greater heights of imagination and creativity.

“But for diversity to work its magic, there must also be inclusion. No matter how diverse we are, without inclusion we remain separated by physical, social, cultural and emotional barriers, and the creative spark is quenched by sameness and group think,” Harper says.

Enter the SBS network, which has commissioned Deloitte Access Economics to study the economic benefits of improving social inclusion.

By this is meant affording all people the best opportunities to enjoy life and prosper in society. It includes the Indigenous, and almost 7 million immigrants, from 270 ancestries, since 1945. All the women who should have more senior jobs. Almost 50,000 same-sex couples, and one in five people with a physical or mental disability.

About a third of small businesses in Australia, representing 1.4 million employees, are run by migrants to Australia, the great majority of whom didn’t own a business before coming here. And most migrants feel socially included.

Greater social inclusion means people are less likely to experience discrimination in employment, less likely to experience health issues, especially anxiety and depression. By lifting wages and workforce participation in districts of socioeconomic disadvantage, the benefits of economic growth can be shared more evenly across the community.

All this could save the taxpayers money, as well as making businesses more productive – which, by Deloitte’s modelling, could yield an economic dividend of more than $12 billion a year. And that’s not to mention the small matter of allowing the individuals to lead happier, more satisfying lives.

For many years economists believed economic efficiency and fairness to be in conflict. You could make the economy a fairer place only by making it a less-rich place.

That’s the economists’ exciting discovery in recent years: if you play your cards right, you can make the world fairer and a bit richer.
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Saturday, February 10, 2018

Indigenous middle class arises despite slow closing of the gap

It's easy for prime ministers to make big promises at some emotion-charge moment of national attention, but a lot harder to keep those promises when the media spotlight (and that prime minister) are long gone.

I could be alluding to the promise Kevin Rudd made that the federal government would never forget the needs of the victims of Victoria's Black Saturday bushfires in 2009, but I'm referring to the promise he made a year earlier, at the time of his apology to the stolen generations, to Close the Gap between Indigenous and non-Indigenous Australians.

The gap needing to be closed – and the commitments Rudd made – referred particularly to health, education and employment.

But all of those gaps contribute to another one: the gap between Indigenous and non-Indigenous incomes. What's been happening there?

I'm glad you asked because Dr Nicholas Biddle and Francis Markham, of the Centre for Aboriginal Economic Policy Research at the Australian National University, have just written a paper on the subject.

And, on the face of it anyway, the news is reasonably good.

First, however, some background. You won't be surprised that there is a gap between the two group's incomes. But it's worth remembering that gap has existed since the early days of European settlement of the Wide Brown Land.

To be euphemistic, it's a product of our colonial history. To be franker, Indigenous people were systematically and violently deprived of access to economic resources, especially land, a process that continued until well into the second half of the 20th century.

And though Aboriginal and Torres Strait Islander people engaged with the settler-colonial economy in many ways, underpayment or theft of wages was systematic in many parts of the country until the 1950s and '60s.

This colonial legacy endures into the present, Markham and Biddle say.

They quote another academic saying that "Aboriginal people, families, households and communities do not just happen to be poor. Just like socioeconomic advantage, socioeconomic deprivation accrues and accumulates across and into the life and related health chances of individuals, families and communities" (my emphasis).

The authors use the censuses of 2006, 2011 and 2016 to study what's been happening to the level and distribution of incomes within the Indigenous population, and between it and the non-Indigenous population.

The good news is that the median (the one dead in the middle) disposable equivalised​ household income for the Indigenous population rose from 62 per cent of non-Indigenous income in 2011 to 66 per cent in 2016. ("Equivalised" just means adjusted to take account of differences in the size and composition of households.)

That's the highest the percentage has been since reliable data started in 1981. And, in fact, it's been trending up since then.

There's progress, too, on the Indigenous "cash poverty rate", which measures the proportion of Indigenous incomes falling below 50 per cent of the median disposable equivalised household income of the nation's entire population.

So, as is usual in rich countries, it's a measure of relative poverty (how some incomes compare with others) rather than absolute poverty (whether people's incomes are high enough to stop them being destitute).

It's called "cash poverty" in recognition of the truth that there's more to poverty than how much money you have. As well, it acknowledges that no account is taken of "non-cash income", such as the value of food gained by hunting and gathering in remote areas.

Remember, however, that there are also costs involved in hunting. And the prices of basic necessities are much higher in remote areas.

Measured this way, the Indigenous poverty rate has declined slowly over past decades. More recently, it's gone from 33.9 per cent in 2006 to 32.7 per cent in 2011 and 31.4 per cent in 2016.

Sorry, that's where the good news runs out.

For a start, the rate of improvement is far too slow. Markham and Biddle calculate that if the gap kept narrowing at the rate it did over the five years to 2016, the medians for Indigenous and non-Indigenous incomes would be equal by 2060. That fast, eh?

Now get this: while the gap between the two groups has been narrowing, the gap within the Indigenous group has been widening.

If you take the weekly disposable personal incomes of all Indigenous people aged 15 or older, adjust them for inflation, rank them from lowest to highest, then divide them all into 10 groups of 10 per cent each, you discover some disturbing things.

Between 2011 and 2016, the average income of those in the top decile rose by $75 a week, compared with $32 a week for those in the middle decile. Individuals in the bottom decile had no income (possibly because they were students or home minding kids), while those in the second and third lowest deciles saw their incomes fall.

But what explains this growing gap between the top and the bottom within the Indigenous population?

Turns out it's explained by where an Indigenous person lives. Household disposable incomes are highest – and have grown fastest - in the major cities, with a median of $647 a week, but then it's downhill all the way through inner regional areas, outer regional, and remote, until you get to "very remote", where the median income is $389 a week.

Over the five years to 2016, the real median income in remote areas hardly changed, and in very remote areas it actually fell by $12 a week.

Got your head around all that? Now try this: despite the weakness in median incomes in remote (but not very remote) areas, the incomes of the top 20 per cent are higher and have been growing relatively strongly.

Get it? However poorly we're doing on Closing the Gap, we are getting an Indigenous middle class.
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Saturday, November 4, 2017

We're Closing the Gap, but far too slowly

The latest report on government spending on Indigenous people makes shocking reading. So let me explain it to you before some One Nation-type gives you her version.

The report estimates that federal and state spending on Aboriginal and Torres Strait Island Australians was more than $33 billion in 2015-16, a real increase of almost 24 per cent since 2008-09.

That amounts to spending $44,900 a year per Indigenous Australian, twice the equivalent spending per person on the rest of the Aussie population.

See? Proof positive of what many radio shock jocks and One Nation supporters have always said: Aborigines get a host of government benefits the rest of us aren't entitled too.

After the nation's vow to Close the Gap between Indigenous and non-Indigenous Australians on health, education and employment, it's hardly surprising Indigenous spending has grown.

Trouble is, there's little likelihood this apparently massive spending will see the Closing the Gap targets reached.

Bad, eh? Waste on a grand scale.

Fortunately, however, all is not as it seems. As associate professor Nicholas Biddle, a fellow of the Centre for Aboriginal Economic Policy Research, at the Australian National University, has explained in an article on my second-favourite website, The Conversation, a closer look at the figures shows there's no reason to swallow the rubbish peddled by the downward-envy brigade. ("Oh, Aborigines get it so much easier than we do.")

First point is that the $44,900 in annual spending per Indigenous person covers more than 150 spending categories, including social security payments, but also government spending on health, all levels of education, law and order, housing, community welfare, transport and even a share of the cost of the public service and defence.

So most comes in the form of services provided, rather than cash in hand. A bit over half of the spending comes from state and territory governments, leaving a bit less than half from the feds.

The report divides the $44,900 into "mainstream services" – services available to all Australians regardless of ethnic origin – and "Indigenous-specific services".

The latter account for just 18 per cent of the total – about $8000 a year per person. This proportion is down on earlier years.

But this still leaves the annual cost per person of mainstream services for Indigenous Australians exceeding the equivalent cost for other Australians by about $14,500. How's this explained?

Mainly by the greater intensity of Indigenous people's use of mainstream services. For instance, their rate of unemployment is higher. And, rightly or wrongly, a disproportionate share of law and order spending is devoted to Indigenous people.

As well, the Indigenous population is, on average, younger – meaning disproportionate spending on education.

The rest of the difference between the levels of spending on mainstream services is explained by the higher cost of providing those services in remote locations. Biddle says that 22 per cent of Indigenous Australians live in remote and very remote areas.

And remember this. While real spending on Indigenous Australians seems to be rising rapidly in absolute terms, so too is the Indigenous population. It's up by almost 16 per cent over the seven years to June 2016, compared with a little more than 11 per cent for the non-Indigenous population.

Biddle calculates that while real Indigenous spending per person has risen by 6.9 per cent over the seven years, real gross domestic product per person has risen by 7.5 per cent.

Sadly, it's true that the Closing the Gap targets set by the Council of Australian Governments in 2009 look unlikely to be achieved.

That's because progress to date has been so modest. The targets were worthy, but unrealistic. At this stage it's probable that setting revised, more achievable targets would do more to motivate governments to keep trying.

But this isn't to say we're making no progress. Biddle and a colleague at the Centre for Aboriginal Economic Policy Research, Francis Markham, have been examining last year's census for evidence on how we're going with the gap.

On employment they find no noticeable improvement since the previous census in 2011. On education, however, the news is more encouraging.

"Indigenous people are getting into the education system earlier and staying for longer," they say. "This is likely to lead to improved socio-economic outcomes in future."

The proportion of three to five-year-olds attending preschool is up from 43.5 per cent to 48.5 per cent. The proportion of 15 to 18-year-olds at high school is up substantially from 51.2 per cent to 59.7 per cent.

The proportion of Indigenous people who've completed year 12 has risen from 28 per cent to 34.6 per cent. And the proportion of 15 to 24-year-olds in tertiary education is up from 14.1 per cent to 16.2 per cent.

But let's get real in another sense. Checking the figures to see what's been happening to government spending on Indigenous people is fine, but it tells us nothing about whether that spending is efficient, effective or even adequate.

What's more, looking at how we've been going on the various indicators of progress during the same period tells us little about whether that money is being spent well or badly.

Why? Many reasons. Because spending in one year may take many years to have an effect. Because spending in one area can affect multiple outcomes. Because outcomes in one area can be influenced by spending in many areas.

We know we're spending more but not achieving the improvement we'd hoped for. What we don't know is whether we're wasting our money or need to be spending a lot more.

Why not? Because we know too little about the effectiveness of particular spending programs. We haven't done nearly enough research to see what works and what doesn't.

We won't get as far as we should in Closing the Gap until we do our homework. That includes making more data held by government departments available to researchers.
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Wednesday, November 2, 2016

Pick on the weak and friendless to pretend to fix the budget

Did you know our social security system is so open to rorting that it's possible for some people to get more from benefits than they'd earn if they took a job? And we wonder why we have problem with debt and deficit.

This scandalous state of affairs was leaked to an  Australian newspaper by sources close to the minister for Social Services, Christian Porter.

Specifically, single parents with four children can get welfare payments of more than $52,000 a year if they don't work, but less than $50,000 after tax if they work and receive the median full-time wage.

Small problem with this appalling news. It's a cock and bull story.

The welfare experts took no time to demolish it.

For a start, it's a contrived example. How many people do you know with four dependent children? There must be some single parents with four kids, but they'd a small fraction of all welfare-dependent single parents and an infinitesimal fraction of the 5.2 million recipients of federal "income support".

Worse, it's a false comparison. If the sole parent took the job they'd still be eligible for the $32,000-odd in family tax benefits per year. By supposedly preferring to accept the "parenting payment single" of less than $20,000, they'd be passing up the median full-time wage of almost $50,000 after tax.

What Porter doesn't seem to know is that family payments are specifically designed to be the same whether parents are working or not, precisely to ensure they don't discourage parents on benefits from taking a job.

So the Minister for Social Services has grossly misrepresented the workings of his own system.

Relative to people like Joe Hockey and Scott Morrison, Porter seems smart and well-spoken, eminently capable explaining a tricky concept in simple words. He's next most likely to be treasurer.

So why did he risk his reputation by putting out a line that was so quickly and easily debunked?

Perhaps because he thinks it's his job to convince us that the allegedly unsustainable growth in welfare spending is the main reason for our debt and deficit.

And because it's the job of he and his ministerial offsider, Alan Tudge, to counter the Senate's reluctance to agree to a range of cuts in the dole and other welfare benefits by creating the impression in voters' minds that welfare spending is rife with rorts and rip-offs by the undeserving poor.

Also because the Liberal heartland is desperate to believe they won't have to pay higher taxes if the welfare bill can be chopped back to size. Worse, I suspect Porter and Morrison actually believe it.

In a speech a few weeks' ago Porter worked hard to demonise his own portfolio, grossly exaggerating the size of the problem.

Today's "welfare spend" is about $160 billion a year. This makes it the largest category of (federal) government spending, representing 80 per of all individual income tax collections, he says. (Except that personal income tax represents only about half of all the federal tax we pay. Oops.)

He wants us to assume most of this $160 billion goes on people who could work, but won't: dole bludgers, sole parent bludgers and people on disability pensions pretending to have bad backs.

Except that half the money goes to bludgers who don't want to work because they're over 65. Another quarter goes to bludgers with children (the family tax benefit) or young mothers wanting subsidised childcare so they can do their bludging at work.

Most of the alleged projected "unrestrained growth" in the welfare spend will come from the continuing retirement of the baby-boomer bulge and the success of investment advisers in helping people get the age pension despite their big super payouts.

Have you noticed how many political fights in recent times arise from the government's efforts to get penny-pinching spending cuts and tax changes through the Parliament?

There's the tax on backpackers, the removal of the "energy supplement" worth $4.40 a week or so to pensioners and people on the dole, the cuts in family payments that would hit sole parents hardest, the cuts to make people wait four weeks before they get the dole and raise the eligibility age for the adult dole to 25, and even the move to stop evil maternal double-dippers using employer-provided paid parental leave to prolong the period they have at home with the baby.

Porter says we can't continue to borrow money to fund today's welfare system growth because this would burden young Australians.

He avoids admitting that apparently we can continue to borrow money to cover a tax cut for people earning more than $80,000 a year, hugely expensive cuts in company tax, a much-delayed crackdown on multinational tax avoidance and a massive increase in spending on defence.

Heard of priorities, Christian?

These penny-pinching cost cuts aimed mainly at the socially disadvantaged and politically defenceless – if roughing up asylum seekers and their kids goes down so well with voters, why not extend the attack to bottom-of-the-pile Aussies? – are far from sufficient to make much impact on the budget deficit.

They show the government is near the bottom of the barrel in the quality of budget savings it's prepared to make.

It wants us to believe the federal budget is close to bankruptcy but, in truth, it's this government that's nearer to being morally, politically and economically bankrupt.
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Wednesday, June 3, 2015

A fair go for the poor should be above partisanship

There was one thing I liked about last year's unfair budget. Mesmerised as they were by the Business Council, Tony Abbott and Joe Hockey took leave of their political senses and were unfair to just about everyone, bar the well-off.

What's so good about that? Well, it meant the budget's unfair measures were overwhelmingly rejected by the public. No non-government-controlled Senate would ever have passed such measures.

It has taken most of the past year but, as we saw confirmed in this year's budget, Abbott has now abandoned or modified most of those nasties.

Trouble is – and this is my point – I fear Abbott and Hockey have now reverted to the standard cynicism demonstrated by their Coalition and Labor predecessors over the decades.

The fact is, most budgets contain unfair measures or continue unfair policies that should have been corrected, without arousing anything like the outcry last year's did.

Why not? Because most governments take care to reserve their unfairness exclusively for the poor and, in particular, for the people many Australians regard as the undeserving poor – the unemployed (who could all get jobs if they weren't so lazy) and sole parents (who are no better than they ought to be).

To most Australians, the only deserving poor are the elderly and maybe the physically disabled (provided their disability is clearly visible; anyone with a bad back is obviously a malingerer). The mentally disabled should pull themselves together.

Last year, when Abbott proposed to change the age pension from being indexed to wages (meaning it keeps up with incomes generally) to being indexed only to prices (meaning it doesn't) the public was outraged and the government has finally dropped the idea.

But the dole has been indexed to prices rather than wages for decades, causing it to fall further and further below the pension, without there ever being sufficient public disquiet to prompt any government – Labor or Coalition – to relent.

Governments of both colours have pushed people, mainly women, off the less inadequate "parenting payment" – what in less obfuscating days we called the sole parent pension – onto the more inadequate dole without any great protest from the public.

Of course, there are limits to our lack of charity towards the jobless. When, in one of his more notorious captain's calls, Abbott proposed denying every unemployed person under 30 access to the dole for six months of every year, we decided that was over the top.

But when the government relented and abandoned the idea in this year's budget, it replaced it with a plan for those under 25 to have to wait four weeks before their dole payments began, rather than the one week for everyone else.

Few people noticed, let alone cared. Yet no measure could be better calculated to make survival harder for people dependent on the dole. By the time the four weeks are up, any savings you may have had are gone, meaning that if some large unexpected expense arises you're done for.

Last week my co-religionists, the Salvation Army, reported the results of a survey of 2400 people from the 160,000 a year requesting emergency relief. Of those who responded to the survey, 88 per cent were on the dole, the disability support pension or the parenting payment. Only 5 per cent were employed and 4 per cent retired.

More than three-quarters were renters and 13 per cent were homeless. Respondents paid a median amount of $180 a week for accommodation, representing almost 60 per cent of their income. That left them with $125 a week – or less than $18 a day – to live on.

So their most pressing economic problems were the inadequacy of the benefit payments they received and the lack of affordable housing.

But this year's budget contained an initiative that deserves praise. The government has accepted the recommendation of the McClure review that it follow the New Zealanders by adopting an "investment approach" to welfare.

The idea is to use methods similar to those actuaries use to estimate risks and set insurance premiums to estimate the total amount of benefits likely to be paid to particular classes of welfare recipient over their lifetime.

Knowing how much it's likely to end up having to pay to support someone over the long term provides the governments with an incentive to "invest" in measures that will get them into lasting employment and thus save the taxpayer money.

If it encourages governments – and the Department of Finance – to be more far-sighted in their attitudes towards people on benefits, to spend extra money now to save paying more later, and to be more active in fixing people's problems rather than just passively handing out money, it will be a big improvement.

If, by quantifying the government's future liability if it fails to help people onto their feet, it encourages the politicians to do more evaluation of how well its programs work, and more experimentation to find what works and what doesn't, it will be a good thing.

You never know, it may even encourage politicians to be less cynical in their treatment of the poor and disadvantaged. To see concern about the poor the way someone who grew up in the Salvos would see it. To me, it's way beyond left and right.
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Wednesday, March 18, 2015

Our kids need social skills, not just high marks

My father raised me to be contemptuous of fashion in all its forms, and I try not to be overawed by the rich and powerful. But, like my mum, there's one thing I am impressed by: brains.
My job brings me into regular contact with the econocrats at the top of the Reserve Bank, Treasury and other departments. Let me tell you, they're the brightest of the bright. I have to keep telling myself this as I struggle to keep up with them. All of them could hold down jobs as professors, or earn a lot more money in business.
These days, most have PhDs - though it's disturbing that, so far in his time as Prime Minister, Tony Abbott has relinquished the services of five economist department secretaries: Dr Martin Parkinson, Dr Don Russell, Blair Comley, Dr Ian Watt and now Dr Paul Grimes. Not sure we have that many brains to spare.
In recent years, however, I've realised that being super-bright ain't enough. To be really successful you also need "people skills". I've decided an extra unit of EQ - emotional intelligence - is worth a lot more than an extra unit of IQ. And if a genie appears from a bottle, that's what I'll ask for.
Most of our politicians have heard that the development of children's brains is hugely significant in influencing their success throughout the rest of their lives. Hence governments' increasing attention to early childhood education and care.
What people may not realise is that brain development doesn't matter just because of its effect on kids' intellect. As a new report from the Organisation for Economic Co-operation and Development, The Power of Social and Emotional Skills, makes clear, it matters also for children's social development.
We don't need telling about the importance of "cognitive" skills. These days, governments conduct periodic tests of children's literacy, numeracy and scientific literacy as they progress through the school system.
They make the results available directly to parents, but also put them on websites so the whole world can compare the academic performance of particular schools. Teachers object that good teaching involves a lot more than the three Rs and that the emphasis on competition via "metrics" encourages schools to "teach to the test" and spend much time drilling for coming tests.
The OECD's PISA exercise now compares our cognitive tests with those undertaken in other countries, so that every year or so we agonise because we've slipped back in the international comp on this cognitive measure or that.
The point of this latest report is to agree with the teachers: there is a lot more to the adequate development of our kids than just nurturing their IQs. It finds that children and adolescents need a balanced set of cognitive and social and emotional skills in order to succeed in modern life.
Cognitive skills - as measured by achievement tests and academic grades - have been show to influence the likelihood of individuals' success in education and the jobs market. They also predict broader outcomes such as our self-perceived health, social and political participation, and trust.
But social and emotional skills - such as perseverance, sociability and self-esteem - have been shown to influence numerous measures of social outcomes, including better health, improved subjective wellbeing (aka happiness) and reduced odds of antisocial behaviour.
If that doesn't impress you, try this: cognitive skills and social and emotional skills interact and cross-fertilise each other, empowering children to succeed both in school and out of school.
For instance, social and emotional skills may help children translate intentions into actions, and thereby improve their likelihood of graduating from university, sticking to healthy lifestyles and avoiding aggressive behaviours, the report says.
For children who are talented, motivated, goal-driven and collegial, and thus more likely to weather the storms of life, cognitive skills aren't enough. They need to be combined with social and emotional skills, which include conscientiousness and emotional stability.
The report stresses that "skills beget skills". They build on each other, and the earlier kids start acquiring them and the firmer their foundation the more skills are gained and the better the kids do in life.
You may say that children from "good" homes will acquire social skills from their parents without any fuss. That's fairly true and it's why, apart from making attendance at preschool universal, early intervention programs are best targeted at disadvantaged families, offering parents training and mentoring.
But though an early start is best, children's acquired skills remain malleable through adolescence. Programs aimed at older children emphasise teachers' professional development. Among adolescents, mentoring seems to work well, while hands-on experiences in the workplace can instil skills such as teamwork, self-efficacy (strong belief in your ability to reach goals) and motivation.
Improvements in social skills don't necessarily require major reforms or resources but can be incorporated into existing curricular and extracurricular activities, the report says. A lot of social and emotional skills can be gained from sport, arts clubs, student councils and voluntary work.
The report finds that recent developments allow us to measure social and emotional skills reliably within a particular culture and language. I reckon that as long as we retain our obsession with measuring and comparing academic performance we need to balance this with regular measurement of progress in acquiring social skills.
Surely our econocrats are bright enough to see that.
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Wednesday, May 1, 2013

What it's like to be genuinely poor

Don't be too alarmed by all the talk of budget black holes and everything being on the table in Julia Gillard's search for savings. It's more likely we're being softened up for a lot more budget deficits than for a horror budget in two weeks' time.

Even so, it's clear there will be more cuts in spending and tax concessions. And though they're hardly likely to be draconian, you can be sure they'll draw howls of protest from those affected, egged on by shock jocks and opposition pollies on the make.

What's more, it's a safe bet they'll be aimed mainly at the better-off. So before we're engulfed by another round of upper middle class self-pity, I thought I'd get in early and tell you a little about the lives of people who really do have difficulty making ends meet.

According to a survey conducted by the Bureau of Statistics in 2010, almost one in five Australian adults experienced "financial stress" that year, where this means not being able to pay their bills, rent or mortgage on time or make minimum repayments on their credit cards, or they had to sell or pawn something because they needed cash.

A newly published report by Dr Nicola Brackertz, of Swinburne University, for the Salvation Army (my co-religionists), tells us a lot about the who, how and why of people suffering genuine financial stress. She surveyed 225 of the clients of the Salvos' free financial counselling service, Moneycare, operating for 20 years.

The first thing to note is that a third of respondents were living alone and another 28 per cent were sole parents. Only 14 per cent were couples with dependent children.

Two-thirds were women. Almost 80 per cent had a government pension or benefit as their main source of income. Only 15 per cent had wages as their main income.

Almost 40 per cent of respondents were renting privately and 22 per cent were renting public or community housing. Only 21 per cent were paying a mortgage and just 5 per cent owned their homes outright.

Put all this together and it tells me we're dealing with people right at the bottom of the heap. Most of the respondents would be unemployed, on the disability support pension or sole parents (many of whom have been relegated to the dole by a caring government).

Since the great majority of age pensioners own their homes, we're dealing in the main with only those age pensioners living alone and renting. It all goes to show how close people on the dole live to the poverty line, the more so if they have to rent privately.

With rents as they are, it's no surprise people in privately rented accommodation on a very low income are highly likely to experience financial stress. The surprise is the disproportionate number of respondents living in public housing.

The rent these people pay is generally set at 25 per cent of their income, no matter how low that income is. This sounds pretty generous; the standard measure of housing stress is rent or mortgage payments exceeding 30 per cent of income.

The trouble is the cost of true necessities such as food, clothing and power tends to be a reasonably fixed amount, whatever your income. So if your income is very low, you may not be left with enough for spending 25 per cent of the total on rent to be easily manageable. By the same token, if your income is quite high, a lifestyle choice to devote a lot more than 30 per cent of it to housing doesn't leave you feeling the pinch.

If you're as comfortably off as I am, it's a surprise to discover how small were the total debts that got the respondents into trouble with their creditors. Although a third had debts of more than $20,000, the typical (median) debt level was $5000 to $10,000.

Almost half had three or more sources of debt, with the most common being utility bills, credit cards, phone bills and personal loans. Well over half the respondents had been experiencing financial difficulties for two years or more.

Why did the respondents get into financial trouble? In their own words, "the leading causes were insufficient income caused by retrenchment, unemployment or underemployment and an insufficient level of government allowances and pensions", the report says.

"Health reasons, including disability and mental illness, often prevented respondents from earning sufficient income." It's easy for you and me to tell ourselves these people are just bad money-managers. But American research I've been reading says they're no better or worse managers than the rest of us. Their real problem is that life at the bottom is so much more unforgiving.

When your income's so low you need all of it just to get by, there's no scope to build a buffer of savings to cover you when quarterly utility bills arrive or some unexpected expense arrives. And when you can't afford car insurance or home contents insurance, big unexpected expenses are more likely to arrive.

When some service is cut off because you haven't paid the bill, you can't get it back on until you've paid the arrears and a reconnection fee. When you borrow to tide yourself over, you pay much higher interest rates than the rest of us - including to "payday lenders" and pawnbrokers.

If none of this applies to you, count your blessings (as we used to sing in Sunday school).
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Wednesday, December 12, 2012

Poverty rises as you move from the centre

In Bill Bryson's fascinating book, Shakespeare, he says we know remarkably little about the man, and most of what we think we know has been dreamt up by overenthusiastic scholars. But of at least one point he was sure: in Shakespeare's London, rich and poor lived side by side. A case, I guess, of the rich man in his castle, the poor man at his gate.

They don't make cities like that anymore. Or rather, modern cities seem to be a lot more socially segregated, with the rich tending to live together on one side of the tracks and the poor living on the other.

Research undertaken some years ago by economists at the Australian National University found Australian cities had become more divided, and there is much American research to similar effect. But a research report to be issued on Wednesday has found something a bit different. It is Promoting Inclusion and Combating Deprivation, by Professor Peter Saunders and Dr Melissa Wong, of the Social Policy Research Centre at the University of NSW.

They conducted a survey of 6000 people drawn at random from around Australia in May 2010. They got more than 2600 responses, which they divided into six categories according to where people lived: inner metropolitan area, outer metropolitan, large towns (more than 25,000 people), larger country towns (more than 10,000 people), small country towns (fewer than 10,000 people) and rural areas.
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Not surprisingly, they found there were poor, socially disadvantaged people living in all areas. But they also found a strong correlation between where people live and how likely they are to be socially disadvantaged. As the degree of population concentration declines, the rate of social disadvantage tends to increase. To be blunt, the further out you go from the centre of big cities, the higher the proportion of poor people you find.

After allowing for family size, the average disposable income of households was $970 a week. But inner metropolitan households averaged 12 per cent above this, whereas rural households averaged 14 per cent below. (Of course, if some locations have a higher proportion of retired people, the average income will be lower.)

In inner metropolitan areas, the proportion of households living in poverty (that is, with incomes below half the median income) was 12 per cent. It rose to 12.4 per cent in outer metropolitan, 12.6 per cent in large towns, 14.8 per cent in larger country towns and 16.8 per cent in small country towns, dropping a little to 15.5 per cent (still the second highest rate) in rural areas.

Those poverty rates were calculated by the researchers. When the survey respondents were asked whether they considered themselves to be living in poverty, their answers followed pretty much the same pattern.

What's notable, however, is that their subjective assessments were about 2 percentage points lower than the calculated rates. So, unlike many of the rest of us, the genuinely poor don't seem to be feeling particularly sorry for themselves.

But poverty – how much money you have to spend – is not the only dimension of social disadvantage. And there's been controversy over the unavoidable arbitrariness of where poverty lines are drawn. So Saunders and his colleagues have put much work into developing a different approach, one based on people's access to 24 items that a majority of Australians responding to an earlier survey regard as the "essentials of life".

The items include a substantial meal at least once a day, warm clothes and bedding, a washing machine, a decent and secure home, roof and gutters that don't leak, a separate bed for each child, presents for family or friends at least once a year, being able to buy medicines prescribed by a doctor, and up to $500 in savings for an emergency.

When you assess the respondents to the latest survey according to their access to these essentials you find the same story: deprivation tends to rise as you progress from inner metropolitan to rural. The highest levels of deprivation are in social functioning (such as regular social contact with other people) and risk protection (such as car insurance).

All very interesting, but also worrying. Higher rates of social disengagement in smaller communities cast doubt on the happy notion that, in the country, everyone knows each other and everyone looks after each other. But it's not surprising that, the further out you are, the less your access to public services such as dentists and childcare. Nor that unemployment rates are usually much higher.

It's possible the socially disadvantaged tend to gravitate to the country – say, because rents are lower. The greater probability, however, is that people living further from the centre are more likely to suffer disadvantage because of the deficiencies of the areas in which they live.

The trouble is, disadvantage breeds disadvantage. Whatever problems you have of your own, they're likely to be compounded if a lot of the people around you have similar problems.

"Once population decline and poverty become entrenched in an area, further problems emerge that act as barriers for those who remain," the researchers say. "The result is that, increasingly, where one lives (or is born) has a major impact on one's life chances."

It follows that, as governments seek to reduce social disadvantage, they should see the disadvantaged not just as individuals needing help, but also as people living in disadvantaged areas – people unlikely to get far unless something is done to improve conditions in their district.

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