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Professor Martin said the past 20 years had essentially been a massive failure by successive governments to address entrenched disadvantage and policies have been economically short-sighted.
“It is a disgrace given more than 20 years of economic expansion in Australia that four to six per cent of the population – one to 1.5 million Australians – is classed as being in entrenched disadvantage, with little to no hope of getting out of that situation,” he said.
“We need to tear up the rule book and have a radical overhaul of how we tackle entrenched poverty. Labour market programs – essentially using a big stick to tell people they’ve got to get a job or face even further financial disadvantage – should not be the primary policy instrument for this group of people.
“It is absolutely clear that labour market policies have not worked because they fail to tackle the heart of the problem and yet it seems they are the only approach successive governments are willing to focus on.
“The main problem often isn’t that people don’t have a job, but the consequence of a range of other issues including education levels, mental health, social exclusion or discrimination.
“It may well be that welfare spending may have to increase but the payoff longer term is potentially significant.”
Professor Martin said it is a complete waste of taxpayers’ money, and short-sighted, to continue to spend welfare money without having effective policies in place to support people to move out of entrenched poverty.
“While there is much media attention on the need to rein in welfare payments such as unemployment benefits, the contribution to welfare payments as a share of GDP in Australia is relatively low compared with other OECD countries,” he said.
“In addition, our report shows that the distribution of welfare payments has been well targeted – about 42 per cent of social benefits go to the lowest 20 per cent of households – compared with the OECD average of around 20 per cent.
“However, the area where we are missing the mark is early intervention. Telling people who do not have a stable home base or in some cases even basic education levels to go and get a job is pointless. People need a stable foundation to start with for labour market programs to work.
“What they need is a ladder of opportunity to pull them up – support to make them employable – not further penalties to push them down”.
Professor Martin said there have been government funded early intervention policies that have worked, but they have not been sufficient to tackle the enormity of the issue.
“This is as much an economic issue as it is a social one. We know for example that children raised in entrenched disadvantage are at high risk of being trapped in entrenched disadvantage as adults,” he said.
“By properly addressing this from an early age we can reduce the burden on government budgets of supporting people later on and increase workforce participation which is good for our economy as a whole.“It is unlikely that any country can wholly eliminate poverty and disadvantage. However, Australia most definitely can and must do better.” Professor Martin said CEDA’s report focuses on three key areas- education gaps, Indigenous disadvantage and mental health – because they highlight significant characteristics of those at risk of chronic poverty.
Key recommendations in the report include:
The report will be launched at an event in Melbourne, with Victorian Minister for Housing, Disability and Ageing, Mental Health and Equality, the Hon. Martin Foley along with Alison McClelland, Commissioner, Productivity Commission and report advisory group member; and contributing authors Dr Francisco Azpitarte, Ronald Henderson Research Fellow, Melbourne Institute of Applied Economics and Social Research and The Brotherhood of St Laurence and Anne Hampshire, Head of Research and Advocacy, The Smith Family.
Click here to read Addressing entrenched disadvantage in Australia