Away from Welfare and Towards Economic Independence



By Aida Morden PhD


This article shares the view that while welfare benefits are necessary and had been and always will be the solid foundation of a truly democratic, humane and egalitarian country, one must view welfare benefits as a temporary anchor and not a basis for planning ones future.  Reliance to welfare benefits can retard potentials, cripple chances for financial independence and impair self-confidence and self-pride. For those who are strong with no debilitating barriers, welfare should be regarded as temporary help, and not a permanent crutch. Your aim is to stand on your own two feet without a crutch, to be able to return the good that the country had given you and share your fortune with those who needed a crutch in their initial settlement.  To achieve this, one must explore all avenues to achieve financial independence.



The Welfare State


A welfare state is a form of governance in which the state or government plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity and equitable distribution of wealth. The state assumes public responsibility for those unable to avail themselves of the minimal provisions for a quality of life. A welfare state provides health, education and social services on a universal basis, that is, as citizenship rights. Through social security systems, welfare states provide insurance against risks like unemployment, disability and sickness, and to redistribute income across the life cycle, either to periods when individuals have greater needs, such as for example, when there are children in the household, or to periods when they would otherwise have lower incomes, such as in retirement. Nicholas Barr from London School of Economics, describes this as the “piggy-bank objective. Peter Whiteford surmise that another objective of the welfare state is to redistribute wealth which can be described as “taking from the rich to give to the poor” – or what Barr describes as the “Robin Hood’ method. Australia is as example of a country using this approach. Australian social security system relies more heavily on income-testing and directs a higher share of benefits to lower-income groups than any other country in the OECD. Peter Whiteford, from InsideStory writes that the poorest 20 per cent of the population receives nearly 42 per cent of all the money spent on social security; the richest 20 per cent receives only around 3 per cent. Consequently, the poorest fifth receives twelve times as much in social benefits as the richest fifth, while in the United States the poorest get about one and a half times as much as the richest. At the furthest extreme are countries like Greece, where the rich are paid twice as much in benefits as the poorest 20 per cent, and Mexico and Turkey, where the rich receive five to ten times as much as the poor.


Social spending is the term used for welfare expenditures.  These are benefits such as  Age Pension, Disability Support Pension, Carer Payment, Wife Pension, Widow Pension, Service Pension, Newstart Allowance, Parenting Payment, Partner Allowance, Widow Allowance, Sickness Allowance, Bereavement Allowance to name a few. There are also other forms of  subsidy in housing, health and education including. Examples are rent assistance, NILS, Medicare, etc. Social spending is derived from taxes as citizens pay tax through a progressive tax system, that is, citizens are taxed according to their income. Hence although often pointed out in a derogatory manner, it is true that taxpayers subsidise welfare recipients.


It is comforting to know that Australia is a welfare state. Once citizenship is acquired, an individual gains the right to social security benefits. The lower the income the more welfare benefits await a citizen. For example a person who earns 0-$19,400, is exempt from paying tax and at the same time, is eligible to receive the full social benefits such as housing assistance, either as a social housing tenant or a private tenant receiving an additional weekly allowance to pay rent regularly; free health services; discounts when using transport and buying prescriptive medication. There are other benefits such as a no interest loan of up to $1000, utilities vouchers, etc.





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