Social Policy Whisperer: Which way out? The Abbott Government's social policy alternatives

Prof Paul Smyth examines the similarities between the Australian Government's approach to social policy and the UK's Big Society agenda and warns that rather than emulate this unsuccessful approach to social investment we should be adopting alternatives such as Inclusive Growth.


I must admit the United Kingdom is not a country I have looked to in recent years as a model for future social policy development in Australia. I was vaguely aware that its dire economic circumstances had produced a bout of social policy bloodletting but thought the strength of our own economy would preclude that kind of agenda. However, having read a recent volume by British social policy doyen, Peter Taylor Gooby entitled, The Double Crisis of the Welfare State and What We Can Do About It (Palgrave, 2013) I was startled to see how similar the Conservative’s welfare agenda is to the big ideas informing the Abbott Government’s first budget. It makes for such a stark alternative to the ideas which have re-newed Australian social policy in recent years that one must wonder whether the Australian government will have to take an alternative tack.

The big story from Britain is not that its GDP shrank more than other G7 countries in the GFC or that – having embraced austerity economics with a vengeance - it is the slowest to recover. Rather it is what Taylor Gooby calls the ‘radical liberal’ policy response of the Cameron Government. Its ‘profound program of structural change’ to state spending - which had been around average for the G7 - is predicted to shrink it to less than that in the United States by 2016\7– the firsttime this has happened in the last century since records began to be kept.

The author describes this policy alternative as ‘a project to embed cuts permanently and shift political values in support of a new radical liberalism’ as a solution to Britain’s economic difficulties. In this process the government ‘has redoubled its efforts to cut welfare spending, especially for poorer minorities, reinforce work incentives and privatise state provision. The objective is to embed cuts and shift ideas permanently to the right’ (p.46).

Australian history does show us that people have been willing to buy into welfare restraint when they are convinced that it is necessary for economic recovery. Keating’s ‘Banana Republic’ tactic is an eminent example. But having the remarkable good fortune of avoiding the GFC and to be living in a society which has not had a recession since most can’t remember when, it is not surprising that voters are rejecting the British medicine. Ross Gittins is surely correct when he observes: ‘It doesn’t seem yet to have dawned on Tony Abbott that he was elected because he wasn’t Julia Gillard or Kevin Rudd, not because voters thought it was time we made a lurch to the Right’.

The point of Taylor Gooby’s book is to show that Britain has an alternative. This is along lines of ‘social investment in inclusive growth’, a new paradigm which had already begun to be embedded in Australia over the last decade. It is an alternative based on the productive value of investments in human capital and the need to reshape the welfare regime to meet the ‘new social risks’ of the contemporary economy and demography. As most are now becoming aware it represents very much a new consensus among international economic and social policy agencies such as the OECD, IMF and World Bank.

To get a sense of the alternative, the Australian government need only look at a short paper published in June 2014 by the OECD entitled: ‘Tackling High Inequalities. Creating Opportunities for all. United States’. Getting moving towards Inclusive Growth, it shows, doesn’t require a revolution merely extending existing policies to: invest more in human capital; create more and better jobs; make the tax\transfer system more efficient and progressive; and provide more efficient public services. If the government does not take this alternative, others surely will. 

By Prof. Paul Smyth