Creating a crisis for people on income support? Psychology says bad idea


With recent inquiries into many aspects of the Coalition government’s welfare reforms, including jobactive and ParentsNext, a more foundational question is raised: What is the point of aggressive and austere policies? In today’s piece, Policy Whisperer Susan Maury (@SusanMaury) of Good Shepherd Australia New Zealand (@GoodAdvocacy) employs a psychological frame to examine why putting people into crisis is counterproductive.

Poverty takes a toll

I was recently on a call with some of our practitioners who work with young parents, asking them questions about their experiences of ParentsNext – the ‘pre-employment program’ primarily aimed at women (many Indigenous) with very young children. When I asked what an effective pre-employment program for their clients would include, there was a long pause. Then one of them said, “Well, they aren’t really in a position to even think about work. They are nearly all in unstable housing and severe financial stress. They are in crisis – they can’t think about long-term plans like a job”.

Indeed, the research is clear on this point. The effects of poverty are multi-faceted, including psychological dysregulation, poorer physical health and a reduced lifespan. These are not short-term issues; growing up in poverty takes a long-term toll, becoming ‘biologically incorporated’ and increasing the likelihood of experiencing poor health and reduced outcomes across the lifespan. The combination of low socio-economic status (SES) and medium to high stress has a multiplier effect on incidences of heart-related or stroke-related mortality.

A particularly important finding is that the burden of poverty reduces decision-making capabilities. Possible contributors may include high stress levels, reduced nutrition, and/or poorer sleeping habits, although fascinating research by Mani et al (2013) indicates the biggest contributor is the cognitive burden of poverty – a limited resource is being co-opted to deal with what is a constant state of crisis. The authors explain:

“Being poor means coping not just with a shortfall of money, but also with a concurrent shortfall of cognitive resources… the very context of poverty imposes [cognitive] load and impedes cognitive capacity. The findings, in other words, are not about poor people, but about any people who find themselves poor.” (p. 980).

This is a critical distinction: If the conditions of poverty can be lifted for an individual or family, their cognitive bandwidth can be restored.

So what might this mean for government policy?

Individual failure within the marketplace

When the government adopts a neoliberal lens, the citizenry are expected to do their part to support the economy – with the assumption that ‘the economy’ represents the wellbeing of the nation or the broader public good. As a result, individuals who are dependent on income support payments are seen as a drag on the nation’s progress, and labelled as unproductive ‘unemployed workers.’ This is in contrast to earlier underpinning philosophies of income support in Australia; consider, for example this quote from ABS in a 1994 review of payments:

“The philosophy underlying the current sole parent pension is to provide lone mothers and fathers with adequate income for themselves and their children under 16 years of age, if they wish to stay at home with them. However, schemes like JET (Jobs, Education and Training) encourage and help lone parents to obtain paid employment and thus to improve their incomes.”

What’s the point?  Punitive income support policies are counter-productive, pushing people into crisis and making it more difficult for them to re-engage with employment or manage other areas of their lives. Further, research indicates savings in income support are offset by greater expenses in other domains.  Photo credit: Psychology Today .

What’s the point? Punitive income support policies are counter-productive, pushing people into crisis and making it more difficult for them to re-engage with employment or manage other areas of their lives. Further, research indicates savings in income support are offset by greater expenses in other domains. Photo credit: Psychology Today.

In other words, it was acknowledged that supporting individuals to stay at home and care for their children should be a viable option for lone parents – other responsibilities and other identities were accommodated. In contrast, today employment status trumps all other identities, including parent, partner, carer, asylum seeker, Aboriginal or Torres Strait Islander, migrant, LGBTIQ+, or person with a disability.

This viewpoint was solidified by the Howard Government’s introduction of Welfare to Work in 2006, adapted from reforms introduced in the United States by Bill Clinton in 1996. The ‘unemployed worker’ narrative was consolidated in 2013, when the Gillard government moved thousands of people – many of them single mothers – from Parenting Payment Single onto the lower Newstart Allowance, which is designed to support those who are temporarily unemployed. The National Commission of Audit explains the deliberately low rate in delicate terms: Newstart is “designed to be temporary and is less generous than pensions… The rate of unemployment benefit attempts to balance adequacy of support for people who are unemployed with the incentive for them to seek work and the cost to the Commonwealth”. In other words, keeping the payment artificially low is expected to work as an incentive for people to get back into employment.

Perhaps this would be all right if recipients were actually temporarily unemployed. However, many people who were forced onto Newstart had many complex and systemic barriers to employment. Our own research found that many single mothers who are on the Newstart Allowance and enrolled in Welfare to Work feel unable to engage in employment due to a variety of reasons, which include past or ongoing experiences of domestic violence, clinical mental health diagnoses, disability, and/or intensive caring duties for children or parents. Some said these complicating factors were temporary and they planned to return to employment at a later date while others did not foresee a time when they would be able to do so. Caring, as has been argued elsewhere, is itself a form of work and makes a significant contribution to the economy.

As a result of inflexible and harsh policies, many people are forced to forego employment (yes - really!) and/or further study in order to ensure they remain compliant. It could be argued that compliance activity is itself becoming a new form of work. The mental stress of compliance activity is clearly articulated by our research participants:  

“It’s like seeing a parole officer for a crime I didn’t commit.” – ‘Stephanie’[i]

“I feel it’s terribly unfair that my choices and options are taken away from me because I’ve become a single parent…. Suddenly all of my options have been taken away and I’ve been made to feel like a burden.” – ‘Billie’

“I am always on the brink of being cut off because they keep changing their minds about whether I am meeting my obligations or not.” – ‘Amanda’


The counterproductive nature of the Compliance Framework

With over 20 years of implementation of similar policies in the US, perhaps Australia should have taken a closer look at the outcomes. While some claim the reforms have been successful because the overall number of people reliant on welfare has diminished, a more nuanced analysis indicates that savings have been offset by increasing reliance on other government support programs while poverty levels and intergenerational welfare dependence have increased.  An extensive and long-term exploration into the impacts of welfare conditionality in the UK found that it simply doesn’t work; their key findings include:

  • there is little evidence that conditional systems increase motivation to enter paid employment;

  • conditional systems pushed some into poverty, ‘survival crime’ and compromised health;

  • experiencing sanctions ‘triggered profoundly negative personal, financial and health outcomes’; and

  • support is too inflexible and limited to provide meaningful help into viable and sustained employment.

Government policy such as Welfare to Work creates a complex system and also interacts within a complex system; there are many reasons which may be influencing its ability to effect the intended change. However, the heavy cognitive load that is associated with being in a constant state of crisis is at least one reason why it is destined to fail.

What psychology can tell us about creating a more effective system

There are three primary considerations for creating a system which is more likely to effectively support people into employment. The first one has little to do with psychology – ensure the people who are enrolled are actually ‘unemployed’ (or underemployed). Provide a living wage, provide intensive, person-centred support to those who have the capability to work but cannot in their current circumstances, and respect the dignity people who are simply unable to engage with employment.

Second, create a system which reduces the cognitive stress load on individuals. The first step is to increase income support payments so that they are not deliberately keeping people in poverty and working against obtaining and maintaining employment. It is not surprising that people feel stressed when they are experiencing financial precarity; the current compliance framework increases anxiety levels exponentially by the constant worry that payments will be cut off for such infractions as missing a meeting or not achieving participation plan requirements. Ensure adequate accountability systems are in place to safeguard against errors or poor judgement.

Schram et al. (2010) argue convincingly that welfare to work policies are not primarily about supporting individuals into employment, but rather about both creating “degrading conditions and stigma [to signal to] low-income populations that even the meanest wages and work conditions are better than the shameful status of the ‘welfare poor’” (pp. 739-740) while also paternalistically ‘training’ clients to develop “self-discipline that lead [them] to ‘freely’ adhere to normative standards for acceptable behaviour” (p. 741). In other words, the poor will be ‘managed’ into compliance through stringent requirements. This is a form of external, or controlled motivation (more on that below).  

Third, create a system which actively supports individual autonomy, competence and social interconnectedness. These components are linked under the banner of Self Determination Theory, and are considered to be a psychological necessity for all humans to experience flourishing. In relation to income support, this means respecting individuals, their capabilities and plans for their own future. Removing, or at least limiting, mechanisms of controlled motivation (that is, adherence to compliance requirements) is necessary to support individuals’ autonomy over their own life choices. Isn’t it odd that the current jobactive system in Australia rewards contracted service providers but not the individuals who actually make the difficult life changes?

Social connectedness is an innate human need, one that poverty can interrupt. An income support program that encouraged meaningful and supportive social contact (for example, through ensuring access to social activities or even just keeping people above the poverty line so that they could afford to socialise) would allow individuals to meaningfully contribute to their communities (what Social Determination Theory calls ‘relatedness’) while improving physical and mental health through increasing levels of social capital.

It is also odd – although not without precedent – to see government policy processes working against each other in this area. Just as the government expanded the punitive ParentsNext program the government also commissioned the Productivity Commission to investigate the effect of mental health on people’s ability to participate in and prosper in the community and workplace, as well as broader effects on the economy. This approach to the social determinants of health is a good one, although at odds with government policies which seem specifically designed to erode mental health.

I have written before about the importance of considering wellbeing effects when formulating policy, and of the limited effects of ‘sticks’ over ‘carrots.’ This isn’t about ‘soft’ policy, it’s about appreciating the humanity of the individuals who rely on income support and it’s also about responsible policy implementation. As a direct result of increasing austerity in the UK, 120,000 excess deaths occurred between 2010-2014. In January of this year there was an alarming spike in deaths which appears to be the direct cause of policy decisions. Welfare changes are also increasing poverty in the UK.

This is a prime example of political determinants of health; our health and wellbeing is compromised for a partisan stance. In a multi-country review of unemployment benefits, O’Campo et al (2015) report that generous and accessible unemployment benefits provide measurable physical and mental health protections – not just for those who are using it, but also for people who are currently employed. The authors point out that, following the Global Financial Crisis, there has been an increased focus on shaving government costs while hurrying people back into employment. They caution, however, that their research shows “how generous unemployment policies can alleviate poverty and improve psychosocial health [while] encountering little evidence to the contrary” (p. 91). When governments seek to ‘punish’ people for not being in employment, it is a case of cutting off the nose to spite the face – the attendant costs create more social expenditures while simultaneously making it more difficult for people to be active participants in our communities.

 This post is part of the Women's Policy Action Tank initiative to analyse government policy using a gendered lens. View our other policy analysis pieces here.

[i] Names have been changed.