Joe Hockey was fond of talking about the end of the age of entitlement, basically meaning that people should not expect support from government and should buy their services in the market — including health and education services if he had had his way. There are, however, various good reasons why government should be fully involved in welfare and the delivery of services. I will look at one of them, one that we do not often think about.
Early this year in his pieces on tax reform, 2353 pointed to the fact that couples with young children may look to government for financial support because the children are non-productive members of the family. The question is whether that is a legitimate claim on the government. Joe Hockey would likely have said not but, historically, I believe it is because it is government, and society in general, that has played the major role in creating that situation by regulating access to the labour market.
The economic role of children has changed as society has changed. In hunter-gatherer societies children of both sexes from a very young age assisted in the collection activities of their mothers — they actually learned by being involved. As the boys got older, they would join their fathers, uncles and other males in the hunt and learn to track, pursue and kill game.
In agricultural societies (and even on modern farms), children also contribute from a young age. In Australia in the 1800s, after schooling became widespread, it was still common in rural areas for school attendance to drop significantly at harvest time as the children’s first priority was to help on the farm, and that applied to both female and male children. As an example, in 1870 at a place then known as Moorwatha in south-western NSW, a regular school attendance of over 40 dropped to fewer than 20 at harvest time.
In the early years of the industrial revolution, children as young as 7 or 8 worked in factories and mines but, even in Britain from the 1830s, the government changed the rules to limit the hours children worked and the age at which they could.
From the 1930s to the 1960s in Australia it was common for male children, usually around 12 to 14, to work as paperboys on city corners or walk suburban streets selling their newspapers, or to see them assisting with the daily delivery of milk or bread. (Who remembers milk and bread deliveries?)
So it can be argued that until about the mid 1900s children were not unproductive members of a family but were essential economic contributors. It was only the wealthy who had unproductive children (and, as much as I would like to, I won’t get into the argument that they also became unproductive adults).
We also made formal education for children compulsory and gradually increased the years of schooling that we thought necessary. Early on it was normal for children to leave education at the end of primary school (aged about 11 or 12): then 14 was made a compulsory age for schooling, and then 15. We now encourage everyone to complete Year 12 (aged 17 to 18) — some, but not all states have made 17 the new minimum age for leaving school — and then to undertake further tertiary education at TAFE or university so that ‘children’ now may not complete their education until they are at least 19 or 20, if not older, in effect giving up from 5 to 10 years of productive work.
In our modern society, students can find part-time work from age 15, particularly in the retail and fast food industries, and still remain in education. In that regard, there is still some scope to contribute economically but it is now more limited.
If society and government have changed the rules so that children can no longer contribute economically to their families as much as in the past, then who has the responsibility to make up for that lost production?
In many early societies, elderly people were acknowledged as the repository of wisdom, of experience, life skills and knowledge of the world in which a community operated. Even if they were no longer physically productive, they may know the best foods, the best places to search for food. They retained the knowledge of the medicinal qualities of plants. They were sought out and valued for that knowledge. That changed with the means of retaining knowledge in books, then those books being printed and becoming widely available. Now we have computers, the internet and the knowledge explosion. Older people are now often seen as ‘behind the times’ but that doesn’t mean they still don’t have extensive knowledge of life skills, of the informal rules that operate in their communities and emotional knowledge and understanding.
In some societies elders were (and still are) given additional status by the practice of ancestor worship. As the elderly approach the time at which they will join the ancestors they are cared for by the living to ensure that they continue to contribute to their descendants’ good fortune after they pass over.
Pensions were introduced partly to meet the needs of a growing population. It was a way of providing for people when they became too feeble to work. In the 1800s in England, older people often ended their days in ‘workhouses’ and later ‘alms houses’. A growing population meant it was cheaper to provide pensions and allow elderly people to support themselves rather than build many more alms houses. Australia never had a system of workhouses, so aged pensions were introduced, initially at the state level, some years before they were in the UK.
The other argument, based on Australia’s lead in social welfare, was that after people had worked for over 50 years, originally from age 12 or 14 to 65, they had made their contribution to society and deserved an adequate retirement. (It was a similar argument used to justify long service after each ten year period of service.)
Then came the baby boomers. Long term projections at the time raised the prospect that when the baby boomers entered the workforce there would not be enough jobs. There are two means by which the size of the available workforce has traditionally been managed: by lengthening the period of education and/or lowering the retirement age. To ensure enough employment would be available for the baby boomers, Australia relied mainly on lengthening the period of education, thus allowing time for more of the then existing workforce to retire before the baby boomers entered. We also allowed early retirement in some cases without changing the official age of retirement. In the current climate, with fears of a smaller workforce as the baby boomers retire, we have focused on increasing the retirement age rather than lowering the age for compulsory education. In Europe, facing a similar problem, many governments initially lowered the retirement age and are now increasing it again.
On the other hand, much modern work is information based, rather than relying on physical labour, and there is no good reason why older people cannot continue in such work. They would often be the keepers of corporate knowledge. With the knowledge explosion, we seem to have forgotten the old adage about learning from the past and not repeating its mistakes. In Australia people who lose a job when they are over 50 have considerable difficulty finding new work and often become long-term unemployed. Their life-time skills and knowledge are disregarded as irrelevant in our modern world.
I have a personal example when a young woman from another government department suggested her department had a ‘new’ idea for Aboriginal affairs. I informed her that it had been tried over 15 years previously and not worked: if it was to work, it required acceptance of higher costs and the government had not then, nor when we spoke, been prepared to accept those costs. I might say that without my corporate knowledge a mistake would have been repeated. Why such corporate knowledge is now seen as ‘old fashioned’ is a mystery to me.
Although the government in recent years has been encouraging people to remain longer in the workforce and offering incentives for employers to retain older people, it does not yet appear to be happening to any significant degree. The government allows the market to determine what it does and employers are not taking up the opportunities that changes in government policy are providing. So there is much lost productivity, for individuals, their families and the economy.
Longer periods of education are justified not only in terms of managing the size of the workforce but because more knowledge is available for learning and many jobs in the new economy require higher level skills. Hockey and his fellow neo-liberals have been keen to increase university fees on the basis that graduates will have access to higher incomes — that may be true but comes in return for giving up years of potential earning. That lost earning capacity comes at a cost not merely to the individual but to their family — which is one reason why participation of lower socio-economic groups in higher education has not improved as much as expected.
The point is that it is actually the government that is determining the period when people can be economically productive members of society.
Despite governments having over the years made the rules that reduced the productive activity of children and the elderly, the likes of Hockey, and other believers in the neo-liberal agenda, suggest that services for the young and old should be provided by the market — rather than alms houses we now have privately owned retirement villages and the encouragement of private schools. Can you see the inconsistency in that approach?
How can the young and the elderly purchase in the market when the government has put in place rules that restrict them from earning in the market? They are left with only two options: reliance on the earning capacity, and support, of the productive members of their families or reliance on government assistance, whether in cash or services. To the extent that the changes have reduced the total productive activity of families, by removing the young and the elderly, then surely it is logical that government meets the costs of the changes it has made.
I am not suggesting that we should turn back the clock to the worst of child labour, or elderly people working until they drop, but we need to acknowledge the historic changes that have taken place in our society, that have changed the economic contribution of the young and the elderly, and consider who bears the responsibility.
If it is government, as the political representative of society, that has changed the opportunity for effective economic productivity for children and the elderly then why shouldn’t it be government that accepts the cost? The argument becomes a market-based argument, not a welfare argument — which should be acceptable to Morrison, Hockey and their ilk: as a society we have, even if for good reason, removed the right of children and the elderly to participate in the labour market and therefore we, as a society, through our government, have an obligation to make up for that lost production for the individuals and their families.
What do you think?
As Ken has presented a very different and unusual argument supporting government provision of welfare and services, we will be very interested in your reaction. Does Ken’s historical argument stand up?
Next week, as the weather forecasters are predicting a severe El Nino this summer, Ken takes a look at the state of water in Australia and some of the politics involved, in ‘Where does all the water go?’.