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Poverty in Australia--it's good to talk: perhaps it's time for an inquiry into wealth, rather than another inquiry into poverty.

When Richard Hil suggested in Arena Magazine No. 57 that the government was due to 'rediscover' poverty, I suspect he didn't have in mind the desultory debate that ensued soon afterward around the Smith Family's second annual report on financial disadvantage in Australia. That report, prepared by the National Centre for Social and Economic Modeling (NATSEM) at the University of Canberra, was roundly attacked by the right-wing lobby group, the Centre for Independent Studies, for overstating the extent of poverty in Australia. The debate suggested to many that we are more prepared to argue around technical issues about the measurement of poverty than make any progress on policies for its alleviation.

One would hope that a chance for a more productive debate has arisen with the recent establishment of an inquiry into poverty by the Senate Community Affairs Committee. The Committee's brief is wide. It will not only examine the extent of poverty, with an emphasis on child poverty, regional poverty and the working poor, but will also look at the effect of changing labour market conditions and the effectiveness of current income support arrangements. In doing so it will examine some of the key questions fundamentally avoided by the government's recent reference group on welfare reform.

Of course, there remains the distinct possibility that technical argument about appropriate poverty measures will again dominate a substantial part of the debate. Yet while this type of argument should never be a substitute for action, it would be wrong to see such discussion as always counter-productive. We do need some sort of consensus on the extent of the problem and, if we are trying to evaluate the impact of either changing economic conditions or changing policies, we need to have a measurement of poverty that is fairly consistent across time.

Furthermore, debates about appropriate poverty measures can also help us articulate a range of value judgements that might otherwise go unquestioned.

NATSEM was quite upfront in its Smith Family report as to there being a variety of ways to measure income poverty. They include the Henderson Poverty Line (first formulated in Australia in the 1960s); a line set at 50 per cent median disposable household income; and a line set at 50 per cent mean disposable household income. Each line gives a different headcount of poverty. NATSEM argued in favour of the last of these measures, a decision CIS took issue with. CIS pointed out that measures of mean income, like any average, are notoriously prone to being skewed by outliers--in this case, by very high wage growth at the top end of the income distribution. With a mean artificially inflated in this way, people at the bottom of the income distribution who have experienced notable rises in their real incomes may still fall below a poverty line set by relation to the mean.

Yet this was precisely NATSEM's intention: to highlight the current strong growth in incomes at the top of the income distribution which would not be captured by alternative measures. What they didn't go on to say was the obvious point: that while most relative poverty lines tell us little about the material circumstances of poverty or deprivation, they do tell us about shifts in income distribution and who is making up the tail end of the distribution. In short, they are 'inequality' measures, but, it appears, ones which dare not speak the name.

The perils of 'social exclusion'

Why is it difficult to raise debate about inequality? Recently, sociologist Ray Pahl suggested that whereas there appears to be some shared belief--at least in those remnant social democracies that characterise themselves as the 'Third Way'--that the poor should not be allowed to get too poor, there is no similar consensus that the rich shouldn't be allowed to get too rich. The reasons for this are no doubt complex. There has, admittedly, been a recent brouhaha over massive executive remuneration in the corporate sector, but this appears to be deflected into an issue for shareholders, not the community at large, and, moreover, an issue for shareholders only in the context of a bear market now failing to deliver 'shareholder value'.

The shift away from a serious debate on inequality also seems partly facilitated by the new rhetoric of 'social exclusion', a term that increasingly structures the debate for both Left and Right. The term emerged in European policy debate in the 1980s because the right-wing governments of Britain and Germany didn't like to tall about poverty. Furthermore, for some on the Right, it resonates with the idea of an underclass or the older, racially-inflected, 'culture of poverty' thesis: too many poor people living together, reinforcing each other's bad habits. Here there's a specifically spatial spin and a link with the idea of 'ghettos'.

Issues of locational disadvantage and neighbourhood renewal definitely dominate much of the Blair Government's current thinking on social exclusion. Generally, however, social democrats tend to avoid the 'underclass' or 'ghetto' tags but are drawn to the discourse of social exclusion because it promises to offer a more multi-dimensional account of disadvantage than one concentrating on income poverty. Measures such as those used by NATSEM use income to stand in for living standards more generally, and by 'living standards' we tend to mean 'more stuff'. Yet even those classic studies of poverty that, unlike the Henderson or NATSEM reports, have started from an examination of multiple deprivation or exclusions tended to conclude that such exclusions were the consequence of a primary deprivation whose origin was economic. This is perhaps unsurprising as time and space are rearranged in contemporary capitalism to favour the production and consumption of commodities while degrading subsistence-oriented activities which satisfy needs directly. This suggests that income redistribution remains a policy imperative, along with the creation of social spaces and social settings that allow needs to be met outside the market or cash nexus.

The inability to engage in consumption has led social theorists such as Zygmunt Bauman to refer to the link between the 'new poor' and consumerism, and to the shame-inducing effects of the poor's inability to consume. But as British analyst Firm Bowring has argued, to impute feelings of shame to the poor in the absence of clear evidence possibly says more about sociologists' own attachment to convention than about the outlook of the poor themselves. Evidence suggests many poor people don't think of themselves as poor or as 'excluded'. In contrast, recent work by Clive Hamilton at the Australia Institute shows many households in the top half of the income distribution feel their income is inadequate to keep pace with the demands of the new consumerism. It would appear that the pathologies of consumerism infect--and are largely driven by--the middle and upper classes. They, in turn, practise a voluntary 'social exclusion' as they withdraw from the structures of collective provision.

Turning from the realm of consumption to that of production, commentators of a radical bent would use the term social exclusion to indicate the social redundancy of large sections of the poor who no longer even function as a reserve army of labour. Again, I'm sceptical of this usage as evidence suggests that many of the current poor are functioning as an effective reserve army, not in production but largely in service industries, constantly churning between being 'unemployed', 'not in the labour force' and in precarious or contingent employment. While we could have a polarised economy of the very rich and the very poor with the poor excluded from or marginal to that economy, the poor appear to be integral to that economy by being integral to corporate profit-making strategies as a low wage, under-employed, contingent workforce.

Indeed, much social policy in Anglophone countries is actually about integrating the poor--through 'workfare', active labour market programs, tapered means tests, and so on. The problem for corporate strategy intent on union busting and driving down wages is that the long term unemployed do not function as an effective reserve army of labour. Their skills atrophy--or are presumed to have atrophied, which is the same thing--and they can no longer exercise competitive pressure on other workers. One response is to periodically generate new reserve armies by a series of rolling recessions, a strategy pursued in Australia from the mid-1970s. The social--and electoral--costs of this, by the early 1990s, appeared too great, and so the policy quest came to be about bringing the unemployed and other jobless back close enough to the labour market to exert competitive pressure. The dominant welfare paradigm has become keeping welfare recipients 'job ready', using both carrots and sticks so as to allow them to churn in and out of the low wage sector. In this way the US manages to combine stark inequality with little long-term unemployment: the poor are obligated to engage in paid work, but in the low wage economy. Similarly, much Australian welfare policy has become merely a way of channeling people into the workforce, with greater or lesser degrees of coercion. As Ian Watson chillingly observed in the Journal of Industrial Relations last year, 'under-employment has become official government policy'.

It is for this reason that 'social exclusion' and 'exclusion from the labour market' tend to be used virtually interchangeably by social policy mandarins, which presumes that those not currently--or ever--engaged in paid labour are not, nor can be, integrated into our social life. The attractiveness of 'social exclusion' rhetoric is probably that, pace Thatcher, it represents a rediscovery of the social, yet it proceeds to dissolve 'society' into a new set of market relations.

In short, the 'up-or-down' problem suggested by studies of inequality is replaced by one of 'inside-outside', suggested by social exclusion. I would argue that we don't want to lose sight of the 'up-or-down'. Ruth Levitas, commenting on current social exclusion rhetoric, cautions that in our desire to take people from the 'outside' and bring them back 'inside' we might lose sight of the fact that we are often integrating them back into fundamentally unequal and exploitative positions.

Eat the rich

Perhaps I am unfair to Blair's Third Way. One of its policies has been picked up in Australia by Mark Latham precisely because he sees it as a potential counter to wealth-based inequalities. He has been one of the few MPs to mobilise class rhetoric to attack what he sees as Tory privilege. Prior to the NASDAQ collapse this involved expounding on the virtues of share ownership for all, proposing a 'First Shareowners Scheme'. Now, it means spruiking Blair's Child Trust Fund or 'Baby Bond' whereby a savings account is opened at the time of a child's birth with a government contribution. The accrued assets are then available to the child on reaching early adulthood, to be used toward the costs of education, housing or starting up a small business.

There are at least two ironies in Latham's latest advocacy of 'asset based welfare'. It has long been recognised that access to education, home ownership, healthcare and so on can involve massive capital outlay for people on low incomes and can entrench major inequalities--which is why social democratic governments tended to make them available free or heavily subsidise them. The irony is that the 'user-pays' principle has become so sacrosant even for the Left that its only response appears to be to facilitate the accumulation of capital by those users who would otherwise be unable to pay. This seems a rather circuitous route to what used to be achieved much more directly by old-style social democracies. The other irony is that the report of Latham's proposal appeared in Melbourne's Age immediately above a story indicating that the Federal Department of Finance had privately canvassed reintroducing death duties (a proposal, needless to say, immediately quashed by the Coalition government). Again, here was a much more direct method of redistributing wealth that, alas, appears too old-fashioned to appeal to 'New' Labor.

As the political adviser in Robert Penn Warren's All the King's Men put it, the massive wealth at the top of the distribution offers good prospects for 'soaking the fat boys'. Australia is one of the few OECD countries with no tax on accumulated wealth. Relative poverty measures are also telling us that growth in community incomes is currently accruing disproportionately, favouring those at the top of the income distribution. Yet it is their incomes and consumption choices that inflate property prices, residualise public health and education provision and generally encourage polarisation. All of which suggests that it is perhaps time not for another inquiry into poverty but for an inquiry into wealth.

Anthony O'Donnell is a Research Fellow in the Centre for Employment and Labour Relations Law at the University of Melbourne.
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Author:O'Donnell, Anthony
Publication:Arena Magazine
Geographic Code:8AUST
Date:Jun 1, 2003
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