Opinion article

Australia must do more to address entrenched disadvantage: Professor the Hon. Stephen Martin

Despite Australia's low unemployment rate and record levels of workforce participation, there are a significant number of communities in Australia experiencing entrenched disadvantage. To coincide with the launch of CEDA's first research report for 2015, Professor the Hon. Stephen Martin discusses how and why Australia should do more.

It is an absolute disgrace and a damning indictment on governments of all persuasions that in a first world economy that has experienced uninterrupted growth for more than 23 years between one and 1.5 million of our fellow Australians are currently experiencing the worst form of entrenched disadvantage arising out of poverty.

Under the current public policy regime, those classed as being in entrenched disadvantage have little to no hope of ever being able to move out of poverty. Australians should be both appalled and alarmed by these figures.

And for those that don’t find those figures appalling from a societal perspective, keep this in mind. While we fail to invest in the extra layer of support needed to help people get permanently out of entrenched disadvantage the cost of welfare to taxpayers will continue to increase.
What is most concerning is that governments, both Liberal and Labor, have focused almost exclusively on labour market solutions to this problem – the ‘big stick’ approach telling people they’ve got to get a job or face even further financial disadvantage.

I’m sure polling tells government this works because it makes them appear tough on ‘dole bludgers’ and on cutting taxpayer funded welfare. However in reality, it is economically short-sighted and likely to end up costing taxpayers more as the problem is never properly addressed, if not made worse by this approach.
This approach never tackles the heart of the problem. The main problem for many who face chronic poverty isn’t simply that they don’t have a job.

Lack of employment or underemployment is often a consequence of a range of other issues, which might range from education levels, mental health, social exclusion or discrimination. Telling someone they have to apply for X number of jobs a month isn’t going to get them into employment.

We know for example that children raised in entrenched disadvantage are at high risk of being trapped in entrenched disadvantage as adults.

We need much better early intervention that targets both the parents and children that provides long term support. This type of approach would ensure that children currently living in poverty won’t be the next generation of adults that are unable to escape this miserable existence.

In addition, by properly addressing this issue 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.

The other side of the ‘big stick’ approach that government seems to think we need right now is that the figures don’t support it. 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.

In addition, CEDA’s report released this week 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.

Under the umbrella of examining entrenched disadvantage in Australia more generally, CEDA has examined three key areas: education gaps, Indigenous disadvantage and mental health. These areas have been selected because they highlight significant characteristics of those at risk of chronic poverty.

What this research has shown is that while there are many programs and policies of varying size and success – it’s not all bad news there have been many programs that have worked well – the problem is that getting access or navigating the policies and programs to receive the help and support long term is very difficult for many that need the help the most.

What is needed is a whole of government approach that focuses on early intervention and ongoing evaluated support to get people out of entrenched disadvantage. If we can do that, that’s when we will make a real difference to the number of people receiving welfare and to workforce participation.

That’s not to say we haven’t come a long way. There have been significant policy shifts in some key areas that have had a significant impact.

For example the shift in how we view mental illness today – particularly depression and anxiety – compared to 20 years ago (we still have some way to go with how we deal with more severe mental health illnesses), is due in part to the National Mental Health Strategy first introduced in 1993 and the work that has been ongoing under that strategy since. 

However, about 30 per cent, the largest group, of those receiving the disability support pension are people living with mental health conditions. Policies that back early intervention and support, and improved access to services and community-based care could make a significant difference to this group of people and to the contribution they can make to society more broadly.

In fact that is the finding of both CEDA’s research released this week and the National Mental Health Review, released quietly last week.
It is unlikely that any country can wholly eliminate poverty and disadvantage. But for a country that has just experienced a prolonged and significant boom period the number of people living in long term poverty is Australia is shameful and we must do better.

CEDA – the Committee for Economic Development of Australia – is releasing a report today (Tuesday April 21) on Addressing Entrenched Disadvantage in Australia.

About the authors

Stephen Martin

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Professor the Hon. Stephen Martin
Chief Executive, CEDA

Professor the Hon. Stephen Martin has had a long and distinguished background in the Australian Parliament, academia and the private sector.

Read more about Professor the Hon. Stephen Martin.

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