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Fault Lines Exposed: Advantage and Disadvantage Across Australia’s Settlement System

CHAPTER TWO

WHY DO DISPARITIES OCCUR AND HOW MIGHT WE UNDERSTAND THEM?

Scott Baum
Kevin O’Connor
Robert Stimson

This chapter provides a big picture view of the socio-economic and demographic changes that have occurred in Australian society over the past few decades as they apply to our understanding of the fault lines that exist across the settlement system. It focuses on three inter-connected areas of social life – changes in the economy and shifts in the nature of work, changes in primary social support mechanisms and changes in the welfare state – and argues that these three are crucial in generating the unequal outcomes considered in the book. The chapter also considers how the big picture translates into an understanding of outcomes at the aggregate locality level.

THE BIG PICTURE

Prior to diving headlong into the sketch of what is happening around Australia’s metropolitan regions and its regional localities, it is useful to consider the big picture. That is, what are some of the big picture issues that are important when understanding advantage and disadvantage across Australian communities? Consider the following:

 

  • We now have a workforce that is less likely to be unemployed than at any time in the past decade.
  • Home loan interest rates are at historically low levels, a far cry to the nightmare rates of the 1980s.
  • Australians are now wealthier than ever before (but we also owe more).
  • Technological change has meant that the way we live today is considerably different from those even thirty years ago.
  • The nation as a whole is more connected to the global economy and society.

There is no doubt that Australia’s society and economy has transformed since the 1970s. Some might say matured. Is this transformation good? Many politicians think so and are more than happy to tell us. In fact during recent election campaigns, many of the positive outcomes are accredited to the sound macro-economic management of the incumbent party.

This rosy picture painted by these statements often miss some of the pressing issues which now face our communities whether they be suburban localities in the metropolitan regions, or communities in regional towns or rural Australia. Economist Jeff Borland and others (Borland et al. 2001 p. 2) tap into these issues arguing that:

 

Australia enters its second century in a state of social crisis. This social crisis in the midst of a buoyant economy is evident from many signs in Australia’s cities, towns and rural areas. These range from manifest inequalities in entry to rewards from economic activity, to increasing demands on emergency relief agencies, public hospital casualty wards, crisis centres and services for the homeless.

Put simply, and using a much used phrase, what is happening here is a case of a rising tide not lifting all boats. Social commentary has, for some time, recognised this fact, illustrating that change does not necessarily equal positive outcomes. Thinking about this more closely, change in economic, political and social life has impacted in positive ways for some people and places, while at the same time impacting in negative ways on other people and places. The general view then, is that despite around 14 years of positive economic performance, divisions and inequality are still a feature of modern Australian society. Of course changes such as these are not new, a fact that could be amply illustrated by considering the vast amount of literature that has been produced on the subject over the past few years, some of which was referred to in the first chapter. What is new, are the routes towards unequal outcomes and the driving features of these processes and the shape the outcomes take. We consider some of the factors driving unequal outcomes in this chapter and then consider the outcomes in the remainder of the book.

UNDERSTANDING SOCIO-ECONOMIC OUTCOMES IN THE NEW SOCIETY

GLOBALISATION AND MODERNITY

Michael Mazarr (1999) in his book Global Trends 2005 illustrates that contemporary history is about the transformation of human society. Quoting Peter Drucker, Mazarr argues that ‘every few hundred years in Western history there occurs a sharp transformation. Within a few short decades, society rearranges itself – its worldview; its basic values; its social and political structure; its arts; its key institutions’ (p 1). In a similar way Australian Hugh Mackay (1999) considers that a significant cultural shift is under way changing values and attitudes together with ways of doing things and ways of living. What Mackay, Mazarr and a host of others are discussing is a move to a new period of social and economic organisation. A move that impacts on all areas of social and economic life. Some talk about a move to an information or knowledge society. Globalisation is always mentioned somewhere. In much academic writing modernisation is a blanket term which covers these changes, but one also hears terms such as post-industrial or post-Fordist mode of production. The key here is that modern economic activity has moved from a primary focus on goods to a focus on process and this shift has impacts across all areas – economic, social, political and environmental. Therefore, the change is that it is not so much about making things as it is about analysing things. Knowledge industries become more the norm rather than the exception. This knowledge economy sees the application of new knowledge to more traditional industry sectors (such as agriculture or manufacturing) as well as its application to modern knowledge or information sectors. Old-economy sectors do not disappear. However, they do make up a smaller share of jobs. Futurist Phil Ruthven (1999 p. 20) points out that:

 

Australia is moving on from a period of sweeping change in the structure of its industries. The enterprises, their activities and their importance to the economy differ significantly from the position 50 years ago and show radical changes from the position that existed at the beginning of the [last] century.

All these changes have significant impacts on socio-economic outcomes for both people and places. In terms of understanding the new ways and new forms of inequality, the impact of globalisation and modernisation has been widely discussed, with the changes being reflected in a new set of analytical tasks and questions. While for the past two or three decades concerns about social processes have tended to focus on the economy and the way changes to labour market processes have impacted on advantage, disadvantage, social inequality and social exclusion, concern today has identified the importance of a broader set of interconnected influences across several aspects of social life. In other words, it is no longer just about the economy. Changes to demographic trends–families, ageing populations, marriage and divorce–matter; and changes to social support – government welfare programs – matter.

This wider frame of reference takes into account three inter-connected areas of social life that are crucial factors in generating unequal socio-economic outcomes across a range of levels of abstraction–from individuals to aggregate regions and nation states. Internationally, sociologists talk about changes in the economic system and the nature of work, transitions in primary support systems, and a crisis in the welfare state as all being important to understand division occurring in society (Benassi et al. 1997; Mingione 1996). While the institutions may differ, the general picture for Australian outcomes is, broadly speaking, compatible. Basically, while transformations in the economic system, which include changes in the types of jobs available and the nature of work, are at the forefront of our understanding about diverse socio-economic outcomes and therefore about questions relating to inequality, social exclusion and disadvantage, changes in primary support systems, that is mainly changes in the family/household structure and changes in the welfare state, act to alter the risk of becoming more or less disadvantaged.

THE CHANGE TO THE WAY WE WORK

Considering the social transformations of the past few decades, and the way these transformations have impacted on socio-economic outcomes, it is generally transitions in the employment system and labour markets that are considered foremost. Discussions about the impacts of globalisation, the move through different modes of production and the arrival of the post-industrial society, all recognise that the processes accompanying these social and economic transformations are creating new forms of work. Sociologists and other social scientists talk about ‘the new world of work’ (Martin 2003; Harding and Sappey 2002) and point to the reorganisation of work and our understanding of what work is. The changes include, but are not entirely limited to, a reorganisation of the occupational structure associated with an economy based largely on manufacturing, shifts in the traditional labour force career, and a changing structure and meaning of work and non-work. While this transformation has had positive outcomes for business with increasing productivity, making labour more efficient and resulting in a fall in costs, the impact on individuals and communities is mixed (Walby 2000; Watson et al. 2003). In fact, while some of these transitions have positive outcomes, especially for those who are best placed to benefit, there has been a continuing appreciation of the ways in which the employment transformations that have characterised the past two or three decades, have increased the risk of certain individuals being disadvantaged in social, economic and political terms.

The key to understanding these transformations in jobs and the nature of work is a consideration of the distinction between the development of ‘good jobs’ and ‘vulnerable jobs’ and a consideration of who has the opportunity to gain work. The good job/vulnerable job distinction relates to the fact that the transitions associated with globalisation, and the development of a knowledge-based economy, have resulted in privileges for those with high levels of education, and have led to the emergence of categories of well paid, relatively secure, rewarding jobs. When considering the flip-side the same changes have resulted in some jobs being less secure, providing a lower level of rewards, especially income, and being highly vulnerable to further transitions and restructuring. The division involves a focus on human capital (with formal education) knowledge and information being an important commodity in the increasingly knowledge driven sectors, but it also draws attention to the way job quality, measured in terms of security, hours worked and level of autonomy has also changed.

The good job/vulnerable job distinction is reflected in a range of conceptual arguments regarding the emerging post-industrial occupational structure. Among these, American political scientist Robert Reich (1992) set out a trichotomous classification of the new occupational structure arguing that old ways of thinking about occupations were becoming less relevant given the changes to the economy and society, especially the impact of globalised business structures. Reich argues for three broad categories of occupations; routine production service workers, in-person service workers and symbolic-analytic workers. The key to this division is the ability of workers to utilise knowledge, and to have command and control over the process of production, with symbolic analytic workers being at one extreme and routine production service workers – ‘the foot soldiers of the information economy’ (Reich 1992 p. 175) – at the other. Divisions exist in terms of remuneration levels and job flexibility, those characteristics differentiating between good jobs and vulnerable jobs. Discussing the uneven socio-economic outcomes of these new occupational classifications, Reich argues that while economic history may have seen everyone in the same economic boat rising and falling together with the economic tide, the situation in the modern economy is different. Three different boats now exist – ‘one sinking rapidly, one sinking more slowly and the third rising steadily’ (p. 208). Symbolic analytic workers are in the boat that is rising steadily.

Similar classifications have been presented elsewhere including the work by Australian economist Peter Brain (1999) who introduced the concept of the C21 (or century 21) worker and most recently the work by Richard Florida (2002) into the creative class. Florida’s work, which has become somewhat the flavour of the month in recent times, points to the link between the increase in human creativity associated with the rise in the knowledge or information economy and the rise of a new class (the creative class). Although smaller in number than other groups (Florida gives the example of the service class and the declining working class) it has a crucial economic role and is hence highly influential. Again the implication of this re-shuffling of classes is that socio-economic outcomes are uneven. In particular Florida (2002) argues that ‘The Creative Class is dominant in terms of wealth and income, with its members earning nearly twice as much on average as members of the other two classes.’ Clearly, while these different treatments put an alternative spin on the changes taking place, they all acknowledge that these different types of jobs and occupations represent mixed and diverse opportunity structures.

While much of the discussion regarding the changes taking place in the way we work have focused on the shift in occupational structures, the nature of work has also changed. The key here is that while the shifts in the occupational structure could have left organisation of the labour market unaffected, shifts in the way labour is utilised and organised, have also changed resulting in further fragmentation between jobs. Here the good job/vulnerable job dichotomy becomes slightly muddier as these changes have not only impacted on one occupational categorisation, but have been felt across all categories.

So just how have jobs been reorganised? Across most countries the shift to a post-industrial mode of production has been accompanied by an increase in the number of jobs that are part-time or casual and also a slow creep in the number of working hours and a reduction in job security in some sectors. There has also been a redistribution of jobs between males and females shown most dramatically with the decline in male labour force participation and increasing female labour-force participation. These changes have impacted across occupational sectors, but the negative impacts are most likely to be felt in jobs at the bottom of the hierarchy. The classic case of these changes and the negative connotations involved is subsumed under discussions associated with the rise of McJobs. McJobs are part-time or casual, usually poorly paid, and with little career path, and some would argue have become an increasing feature of the new way of working. They are associated with the rise of service-based industries, many of which suffer from a lack of security. McJobs are also related to the rise in a new form of disadvantage–the working poor–‘whereby the levels and concentration of low pay are combining to see incomes, in a significant number of households, fall below the poverty line even where family members are in paid employment’ (Eardley 1998 p. i). Monash University’s Bob Birrell and Virginia Rapson argue that the ‘problem for the working poor is an insufficiency of well paid employment opportunities appropriate to skills’ (Birrell and Rapson 1997 p. 47). That is, there is a shortage in the supply of appropriate jobs in local areas. According to Wayne Swan (2005) it is the working poor who are becoming part of Australia’s new risk society. Again, the good job/vulnerable job dichotomy suggests that outcomes for some are positive, while for others they are negative.

Where is Australia in terms of these shifts? There is ample evidence that the widespread changes, often talked about under the umbrella of economic restructuring discussed above, have been underway in Australia for a significant period of time. Taking broad economic indicators, the shift to an economy increasingly focused on service based industries – one based on processes rather than products – is evident (Table 2.1). Between 1985 and 2004, the share of employment in extractive industries and transformative industries – those often associated with the old-economy – has fallen, while the share of employment in producer services, those industries associated with business and finance steadily increased. Indeed the biggest falls were in transformative industries (from 26.4 per cent to 20.1 per cent), while the largest gain was in the producer services category increased from 10.4 per cent to 15.4 per cent.

Thinking about shifts in occupation, and the good/vulnerable jobs distinction, one way to consider the shifts is with reference to the changes that have occurred across occupations, divided into skill levels, and the characteristics of these skill level divisions. The ABS occupational classification can be divided into five skill levels (1= high skill, 5 = low skill). Change in these broad categories, over the 1990s and into the beginning of the new decade, has seen growth across all skill levels, but higher levels of growth in some categories (Table 2.2). The highest level of growth (99.9 per cent) was recorded for skill level 2 (associate professionals) while skill level 4 (intermediate clerical and service workers; intermediate production and transport workers) had the second highest level of growth (63 per cent). The lowest level of growth occurred in those skill categories most often associated with old-economy employment patterns. Skill level 5 (elementary clerical, sales and service workers; labourers and related workers) grew by just 25.4 per cent between 1991 and 2001, while skill level 3 jobs (tradespersons and related workers; advanced clerical and service workers) grew by only 7.4 per cent. Considering the shift in the share of jobs across skill levels, the largest increases were in new-economy jobs located in skill levels 1, 2 and 4.

Table 2.1 The share of the Australian workforce in industrial categories, 1986–2001
Source: Australian Bureau of Statistics (ABS) (various years) Labour Force, Australia cat. No. 6291.0.55.001

Table 2.2 Employment by occupation skill level, 1991 to 2001
Source: ABS Labour Force, Australia, cat. No. 6291.0.55.001

The good job/vulnerable job division has as much to do with the conditions of the jobs as the characteristics of occupations. Keeping with the analysis of skill level, the fragmentation of remuneration, discussed by Reich (1992), Florida (2002) and others is clearly evident when wages and rates of pay are considered. Considering a single year, 2004, a clear relationship was evident with higher skill levels earning higher average weekly wages and also earning higher hourly pay rates. Professionals and managers (skill level 1) earned on average $1281.15 per week (an hourly rate of $33.19) while at the lowest skill level elementary clerical, sales and service workers; labourers and related workers (level 5) earned an average of just $731.05 per week ($18.23 per hour), just over half of the top skill level. Incidentally, workers in the top skill level occupations worked on average 38.6 hours per week, while those at the bottom worked 40.1 hours per week.

Table 2.3 Skill level, average weekly earnings, full-time, non-managerial, 2004 and level of casual employment
Source: ABS 2004 Employee earnings, benefits and trade union membership, Australia cat no. 6310.0
ABS 2004 Employee Earnings and Hours, Australia, cat. No. 63306.0

A clear good job/vulnerable job distinction is already beginning to emerge. Taking things a step further, not only are some occupations better remunerated, but the level of job security (taking casual employment as a measure) is lower in certain occupation skill levels. Within the Australian labour market those with the lowest skill levels (level 5-elementary clerical, sales and service workers; labourers and related workers) were more likely to be employed casually. While the percentage of casual employment for managers and professionals (skill level 1) was just 14.2 per cent, the level of casualisation in occupations associated with skill level 5 was significantly higher. In fact 48.3 per cent of jobs in this category were casual.

THE WAY WE DON’T WORK

While the type of job one has may result in uneven socio-economic outcomes, not having a job (but wanting to work) is more precarious. In fact when one thinks about disadvantage arising from labour market changes and transitions, it is usually changes in the level of unemployment that most often spring to mind. This is perhaps not surprising as labour market failures – either as the outcome of economic policy or economic restructuring – are at the centre of the unemployment problem (Bell 2000). The changes in the economy described above, especially the restructuring of industry and occupations and shifts in the way that work is being carried out, has produced substantial dislocations in employment. In contrast to earlier periods which saw low levels of unemployment which some might say are acceptable levels, much of the past two decades have seen persistently higher rates of unemployment, with a ratcheting up of what is considered to be normal, and a general increase in the duration of unemployment. Whereas once, spells of unemployment were generally short as workers transited between jobs, increasingly the unemployed in contemporary labour markets are confronted with much longer spells of inactivity.

The reported rate of unemployment is only half of the story. What the unemployment rate is at any given time depends on the definition used, with official rates grossly underestimating the real level. Important here is consideration of those who are under-employed and those who are discouraged workers. The underemployed are those who are working less than the desired number of hours or cases where people are taking jobs not commensurate with their level of skills and qualifications. Discouraged workers on the other hand are those, who while available for work, think they are too old or too young, lack the relevant level of human capital or other skills (such as language) or think there are no suitable jobs in their location – in short discouraged from work. The impact of adding these people to the unemployment mix is to raise the stated unemployment level. University of Newcastle economists Mitchell and Watts (1997) have been among those who have considered a wider view of unemployment suggesting that the ‘official’ unemployment rate underestimates what is really happening. Therefore, modelling through the impact of discouraged workers and those who are underemployed increases the unemployment rate by something like three to four percentage points.

Like the growth in vulnerable jobs, unemployment is linked to negative socio-economic outcomes. In terms of the growth of poverty, welfare agencies are quick to point to the problems imposed by unemployment (Samaritans 2003), with the wider implications also being discussed in the public policy arena. For example, the Senate Community Affairs Reference Committee (2004) considered that unemployment, and particularly long-term unemployment, is the key driver in understanding poverty and disadvantage in the Australian community. Furthermore, researchers have looked at a broad range of costs associated with unemployment including the fiscal cost; one estimate for Australia put this at $40 billion per annum (Watts 2000). They have also looked at the impact of increased psychological stress and reduced health status, the impact that unemployment has on human relations and social values, and the reduction in social networks (Watts 2000; Junakaw and Kapuscinski 1992).

During the period of the past few decades the rate of unemployment in Australia has risen and fallen in line with changes in economic trends (Table 2.4). During the late 1970s the unemployment rate was 7.5 per cent and climbed to 10.6 per cent during the early 1980s. As economic outcomes improved the rate of unemployment once again fell during the late 1980s before once again rising to significant levels in the early 1990s (12.2 per cent in 1993). Following this the long run trend has been downward, with unemployment sitting at around six per cent in 2003. There have also been changes in the time spent out of paid employment. Whereas the median period of unemployment in 1988 was 17.7 weeks, by the early 1990s this had increased to 27.4 weeks, before falling to 16.5 weeks in 2003 (Table 2.4). Associated with these shifts, long-term unemployment has also changed with the percentage of long term unemployed rising in the early 1990s and then falling again into 2003.

Table 2.4 Unemployment, Australia 1978 to 2003
Source: ABS, various years, Labour Force Survey, cat no. 6291.0
ABS, various years, Australian Social Trends, cat. No. 4102.0

Another way of considering the unemployment rate is to consider the occupation of the last job held. Certainly, some new-economy occupations appear to be less likely to be associated with unemployment. If we consider again the skill level categories, ABS data from the Labour Force Survey shows that the lowest skill level category comprising elementary clerical, sales and service workers; labourers and related workers had an unemployment rate of 7 per cent, while for the highest skill level, professionals and managers, this rate was only 1.5 per cent. Clearly, while the unemployment picture has improved, workers in particular occupations are at a greater risk of being out of work resulting in a disadvantaged position.

CHANGING SOCIAL SUPPORT MECHANISMS AND NETWORKS

The changes in the way we work (or don’t work) is, in the first instance, acutely tied up with the diverse outcomes we are interested in. However, as we noted, it is no longer just about the economy and jobs, although these remain among the key drivers of advantage and disadvantage. Demographic changes matter as these can exacerbate disadvantage in the labour market, as can shifts in other forms of social support, most notably shifts in public policy connected with welfare provision.

Across time changes in economic processes have also been accompanied, at least in part, by changes in the social structure of society – that is the institutions making up the broad social fabric. Changes to the social intuitions have been widespread, but the ones we are most interested in relate to re-shuffling of age structures, and transitions in normal family and or household structures. Placing these changes into an understanding of the uneven socio-economic outcomes we are interested in, means realising that traditional support mechanisms provided by the family and other personal networks have become less able to cope with negative outcomes when they have occurred.

There has been significant social commentary pointing to the changing life roles, changes which social scientists might link to increases in social uncertainty and a breakdown in the ability of families to cope in difficult times (Arndt 1999; Campbell and Charlesworth 2004; Newman 2000; Stone 2000). Agencies such as Mission Australia (2002 p. 1) recognise these issues arguing that ‘with changes to family structures and increasing pressures and stresses on families, the support they need in difficult times is also changing’. Similarly, such thinking has been behind the Federal Government’s Stronger Families Policy with ex-Minister for Family and Community Services Jocelyn Newman (2000 p. 2) arguing that ‘strong family and community networks nurture children, care for those in need and help people take up opportunities and find work’. The implication is that weak families are unable to do this, or at least are less successful, and therefore a strong family equates to positive social outcomes, a point picked up by John Howard, who when asked about the link between social health and the family argued that ‘the stable functioning family still represents the best social welfare system that any community has devised’ (quoted in Terrill 2000 p. 16).

So the argument is that we have seen the ability of the family and community to act as social and economic buffers weakened, because there are increasingly larger numbers of individuals who are socially isolated for longer periods of time, and there are an increasing number of individuals caught in households that lack the social and economic resources needed to cope with day-to-day living.

The economic resources are easy to understand and relate to disadvantage stemming from the labour market and elsewhere. Disadvantaged households and families have less disposable income with which to provide a buffer to external shocks therefore resulting in a more disadvantaged position. This is a familiar picture in the research by economists such as those at NATSEM in Canberra and by welfare groups such as the Brotherhood of St. Laurence. Social resources are said to relate to the decline in social capital – those networks of social relations characterised by norms of trust and reciprocity – which exist at different levels and put simply are thought to help with coping in various situations. The reality is that the changes in the family and households that have become characteristic of modern societies result in a lowering of social capital, which creates a decline in the ability to cope successfully under negative situations (Hughes and Stone 2003; Fukuyama 1999; Putnam 1995). The end result is an increased risk of further disadvantage.

We don’t have to look far to see the changes. There are increasing numbers of single-person households (especially aged households) divorce has increased, marriage rates are down and the number of female headed single parent households have increased. This is a universal phenomenon. The Australian figures are marked (Table 2.5). Over the period 1990 to 2004 ABS figures tell us that the percentage of female single parent families increased from 13.2 per cent to 20.3 per cent, while over the same period the proportion of male single parent families increased from 1.6 per cent to 2.8 per cent. Additionally, births outside of marriage have increased from 21.9 per cent in 1990 to 31.6 per cent in 2003. Couple families with dependent children have been declining – 86 per cent in 1990 to 76.9 per cent in 2004 – while lone-person households have increased from 21.1 per cent in 1991 to 24.6 per cent in 2000. Associated with these changes is a declining marriage rate, which over the decade has gone from 6.9 per 1,000 people to 5.4 per 1,000 people. We also are seeing the signs of a more aged society. At the beginning of the 1990s, 11.1 per cent of the Australian population was aged 65 and over. Population estimates suggest that the percentage of the population aged 65 years and above reached 13.0 per cent by 2004, with long term estimates predicting that this figure will reach 27 per cent by 2051.

Table 2.5 Selected demographic and family trends, Australia
Source: ABS various years, Australian Social Trends, cat. No. 4102.0

Looking at these changes a bit further, if we consider the types of household and family structures associated with these changes, for example single elderly households and lone parent households which are rapidly increasing, then it is easy to begin to consider the probable outcomes. Single-elderly households are at risk since they lack involvement in the productive economy, being reliant on pensions or private savings. Single-parent households are also at risk, since their ability to bring in significant income through a single wage may reduce opportunities (this may also apply to traditional family structures with only one income). Additionally, in cases where a single-parent or both parents in a couple family are unable to find work, dependency on periodic payments in terms of welfare support or family payments (neither of which is likely to be sufficient) is also likely to further increase disadvantage.

Moreover, it is not just about immediate impacts, as there are also concerns relating to the flow-on of disadvantage to other family members. Sociologists and others recognise these issues and point to the impact of intergenerational transfers of disadvantage that may occur in unemployed households. ABS data illustrates that in 2001 over 50 per cent of all single parent families have no employed parent and that 8.5 per cent of couple families have no employed parent (Table 2.6). Bob Gregory (1999) of the Australian National University has argued that children who are in families with no employed parent are at particular risk of disadvantage because the lack of a resident employed person may impact on future outcomes including social class and employment prospects, a point echoed by the Australian Bureau of Statistics (2004 p. 46):

 

In 2002, just over 600,000 children aged less than 15 years were living with no employed resident parent. Their families were more likely to report financial difficulties than were families where at least one parent was employed. Their families were also more likely to be affected by selected indicators of financial stress than families where at least one parent was employed.

The point is that the inability of some families to provide support may have wide ranging repercussions and in these cases multiple disadvantages are a likely concern.

Table 2.6 Families with children under 15 years: employment status of parents
Source: ABS 2004 Australian Social Trends, cat. No. 4102.0

THE POTENTIAL OF SOCIAL SUPPORT

The government’s welfare role and the changes that have been characteristic of the ‘new welfare state’ are also important for understanding the socio-economic outcomes we are interested in. Internationally, Social Scientist Gosta Esping-Anderson (1996 p.1) recognises that the traditional role of the welfare state has changed, noting that:

 

Many believe that the welfare state has become incompatible with other cherished goals such as economic development, full employment and even personal liberties – that it is at odds with the fabric of advanced post-industrial society.

In Australia, similar viewpoints have been expressed by academic researchers such as Adam Jamrozik (2001) and Frank Castles (2004) and have been an ongoing concern to welfare agencies. What we have seen in Australia is that the changes in the economy have been mirrored by changes in welfare policy, whereby despite shifts in demand for publicly provided goods, the support role provided by governments has changed. This changing role, like that of the primary support networks noted above has the potential to increase disadvantage.

Although the post-welfare state is increasingly aimed at those who have become disadvantaged by transformations and processes in the free market economy it has, in many cases, become ill prepared to do so. The flavour of these concerns are reflected in the following quote by Fred Argy (2003 p.17) who observed that:

 

Developments in our social security system – a much tougher set of eligibility criteria and penalties, the erosion of relative benefits for many welfare recipients, deliberate attempts to ‘shame’ recipients and a shifting of responsibility to non-government players – are pregnant with significance. They strike at the very heart of egalitarianism – equal access to welfare benefits as a right. A large number of welfare recipients, notably the long term unemployed, face an income support system that has become less generous and more conditional, arbitrary, demeaning and moralistic.

The changes underway have been considered in a number of ways. Most notably have been discussions relating to a ‘crisis in the welfare state’ (Esping-Anderson 1996). The crisis has resulted in a scaling down of services, a tightening of eligibility criteria and the privatisation of many programs. The outcome is an increasing burden on family and kinship networks which as has already been argued are in some cases less able to cope. Taking this further, the crisis is blamed on the inability of existing programs to keep pace with the changing characteristics of the clientele, and equally a range of exogenous problems, including the incompatible nature of old style welfare regimes with new economic realities. In this case old style welfare regimes were premised on particular social, demographic and economic characteristics. Traditional family units, as we have already seen, are becoming less and less the norm. The increase in two earner double career family units, and the rise in divorced single parents, spells problems for old welfare systems.

The contemporary Australian picture reflects these changes. The shift to a post-welfare state has seen a move from a culture of welfare as entitlements to a culture of welfare as responsibility. Driven by a need to increase international competitiveness (among other things) Australian welfare policy has evolved towards greater selectivity and a gradual erosion of benefits and coverage. The official line is that during the last couple of decades reform, in the shape of better targeting, has been widespread within Federal Government welfare programs. Now it is debatable as to whether that is a good or bad thing. Measures implemented by the Federal Government to improve targeting include a tightening of eligibility criteria across payments, income testing of previously un-means tested payments, and directly assisting particular target groups. Self reliance and mutual obligation have become the catch-words in terms of benefits for the unemployed, with a general tightening of obligations for those out of work (Whiteford and Angenent 2001). This has supposedly resulted in a fairer and more streamlined welfare system.

Others have been somewhat less favourable, focusing on the decline of the welfare state or the incompatibility of older style welfare systems with the new economic and social realities. Considering this at length, Frank Castles (1996 pp. 96–97) has written:

 

In the 1980s and early 1990s, Australia… [was] amongst a group of largely Anglo-American nations which did more than simply seek incremental and piecemeal ways of coping with the economic and social policy consequences of major new disruptions in their external economic environment.

This lead the Australian government to ‘reshape institutions in such a way that they would become more responsive to market disciplines’. Furthermore, Castles (1996 pp. 96–97) said:

 

The kinds of economic policy and welfare outcomes associated with the new right triumphant – a greater emphasis on price stability than unemployment, labour market deregulation, reduced taxation, cuts in public expenditure and stringent targeting of benefits and greater inequality in the distribution of income – are simultaneously the outcomes often associated with a post-industrial future in which the supposed fate of the welfare state is ‘poor, nasty, brutish and short.

So where does welfare spending stand? There is some debate as to whether a ‘race to the bottom’ is under way (Castles 2004). It is clear that signs of a roll back in the total dollar amounts spent are mixed. Official figures suggest that as a percentage of Gross Domestic Product (GDP) government spending on welfare has risen from around 3 per cent during the 1960s to a stable rate of about 7.5 per cent during the late 1990s and early 2000s. However over the last couple of decades spending on social security has been characterised by both rises and falls. While the general trend has been upwards, spending as a percentage of GDP fell between 1978 and 1981, 1984 to 1989 and in 1995 and 1998. Using a slightly different set of figures social scientist Adam Jamrozik suggests that some of the variation is a result of the social philosophy of the government of the day with differences in the commitment to spending reflecting a clear divide between Labor governments and Coalition governments. Times when Coalition governments have been in power have usually meant either no new initiatives or a regress in social policy, while most advances in social policy have occurred during Labor government terms. He says that ‘social expenditure… both as a proportion of the GDP and as a proportion of total outlays, was always higher during Labor governments than during Conservative Coalition governments’ (Jamrozik 2001 pp. 67–68) (Table 2.7).

Table 2.7 Changes in budget outlays, Australian government 1972/73 to 1999/2000 (constant prices)
Source: Jamrozik (2001)

But the total spent as a proportion of GDP is only part of the story. The big issue would appear to be whether people can actually survive on social security payments. According to the Australian Council of Social Services (ACOSS) (2004) the answer is apparently not. In their report released in 2004, they argue that compared to other wealthy countries Australia’s payment levels are mean and lean, suggesting that currently the system does not provide enough income for families and individuals to survive on. For a single unemployed adult they suggest that payments are about $134 per week below the minimum cost of basic essentials and for couples with children it is about $88 dollars too low. Similar pictures emerge for other forms of payment recipients all of which point to the potential problems that are posed by changes in welfare state transformations (Table 2.8).

Table 2.8 Low cost budget standards and social security payments, 2004
Source: Australian Council of Social Services (2004)

SO WHAT DOES THE BIG PICTURE TELL US?

The story from the big picture is that the changes across the three areas of social life (economy, family/demographics and welfare policy) are having diverse outcomes in a range of areas. The diverse outcomes are seen at the individual level, and we often see reference to this with stories of unemployment, poverty and homelessness next to stories about individual success. Clearly, changes in economic functions together with the shifts in demographic trends and the restructuring of welfare mean that some are disadvantaged, while for those who are able to ride the new-economy wave, the near future looks rosy. But the changes are also seen at a more aggregated level in local communities, neighbourhoods and towns, which are the focus of this book.

Two of the authors of this book have written about the ‘geography and the worried county’ and considered the uneven spatial outcomes that have come to be reflected in the daily lives of people and across space in competing places (O’Connor et al. 2001). Similarly, Federal Politician Wayne Swan (2005) has recently talked about the splintering of the nation along spatial lines. Individual-level advantage and disadvantage gets reflected in localities, neighbourhoods and towns through the uneven spatial impact on local labour markets, and through the operation of housing markets. In short, the broad types of changes in social and economic life discussed here are linked to the circumstances in localities, neighbourhoods and towns because of where particular people live and their roles in society and the economy. For example, some groups are able to exercise a broader choice, across a wide range and diversity of living environments within Australia’s cities and towns, because their economic advantage provides them with the wealth and/or capacity to borrow, enabling them to choose to live in high-cost housing market areas. Others do not possess these economic means and have to make residential choices that are constrained within low-cost housing market locations.

But it is not only this differentiation between individuals and households, in the relative constraints within which their housing choices are exercised, that is a significant issue in the social and spatial differentiation that is readily discernable across our cities, towns and regions. Rather, it is in addition to the differences in the potential of people to engage in the labour market, influenced by among other things the supply of jobs and the ability of people to tap into new opportunities, that becomes crucial in that social and spatial differentiation. The patterns of variation in advantage and disadvantage across communities, neighbourhoods, cities and towns will therefore reflect a complex set of both individual and societal-scale issues, and in addition will reflect the stages of communities in the transformation from the past to the contemporary economic era. Some examples will illustrate these contentions.

Individuals who once prospered in the expanding industrial sectors of the old-economy created vibrant communities, neighbourhoods, cities and towns, which at that time may have had all the hallmarks of advantage. Mark Peel (1995) showed that the new circumstances of fewer jobs and lower wages have created disadvantage in communities such as Adelaide’s northern suburb of Elizabeth. A similar picture was portrayed in the newspaper stories outlined in Chapter one whereby disadvantage was seen across different places, places that were once prosperous including regional towns such as Wellington in Victoria, where reliance on the rural economy has lead to the town’s decline. Against these declines, however, other individuals have been able to tap into new opportunities presented by the new modes of production in the new-economy and have sought out housing in gentrifying areas or in clearly identifiable high-socioeconomic status suburbs such as Sydney’s Mosman (see story Chapter one) or in regional cities and towns that have been able to benefit from the strong resources sector or have been able to tap into a new range of sunrise industries (Beer et al. 2003).

These examples are some of the stories of advantage and disadvantage that are reflected in the performance of localities, cities, and towns across Australia. It is stories such as these that provide the impetus for the patterns discussed in the chapters that follow.

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Cite this article as: Baum, Scott; O’Connor, Kevin; Stimson, Robert. ‘Why do disparities occur and how might we understand them?.’ Fault Lines Exposed. Melbourne: Monash University ePress; 2005. pp. 02.1–02.18.

 

Fault Lines Exposed: Advantage and Disadvantage Across Australia’s Settlement System

   by Scott Baum, Kevin O’Connor & Robert Stimson