The moral hazard of conditionality: Restoring the integrity of social security law

Abstract

This article examines the extent to which the Australian and UK social security systems meet their legal obligations to provide basic relief to citizens in need. Conditionality and “mutual obligation” are at the core of both the UK and Australian social security systems and are based on the concept of moral hazard, the goal being to ensure that claimants do not consider living on benefits to be preferable to engaging in paid work. Yet, we argue that the element of “mutuality” is missing in both systems; welfare claimants are subject to myriad conditions and obligations, whilst the state operates free of any legal responsibility to provide even basic relief to those in need, to prevent or alleviate extreme poverty and destitution. We outline the extent to which Australian and UK social security laws require governments to relieve destitution, examining both domestic and human rights law. We conclude that legal protections are weak and that both systems fail to meet the basic conditions of humanity toward their citizens. On this basis, we argue that such failings demonstrate a lack of integrity which undermines the standing of both the UK and Australia to invoke a claim of moral hazard to defend claimant conditionality.

Introduction to the special issue on welfare conditionality in Australia

“…McKeever and Walsh ()undertake a comparative legal analysis on the “mutual” obligations of states. Focusing their analysis on the UK and Australia, they note that conditionality is based on the concept of moral hazard, that is the risk that benefit claimants may prefer living on benefits to engaging in paid work.…”

Responsibility for homelessness: Lived experience perspectives and their alignment with neoliberal discourse

“…Collectively, the narratives indicate participants believe governments were largely failing to meet their responsibilities. In questioning what governments can and ought to do to address homelessness, their views problematise presumptions of appropriate mutuality and fair reciprocity (McKeever & Walsh, 2020; Nethercote, 2017) underpinning neoliberal discourses of personal responsibility. In contrast, they suggest that when apportioning responsibility for homelessness in Australia, there should be more emphasis on the unmet responsibilities of governments, rather than simply demanding those affected demonstrate greater personal responsibility.…”

“…Welfare contractualism envisions mutual obligations between citizens and the state in a relationship of fair reciprocity (Watts & Fitzpatrick, 2018). Implicit to this conceptualisation of contractualism is the reciprocal responsibility for the state to also uphold its obligations to citizens by ensuring sufficient levels of welfare (McKeever & Walsh, 2020; Nethercote, 2017). Neoliberal interpretations of contractualism, however, presume the primary obligations of governments are to facilitate political (liberal democracy) and economic (capitalist free market) conditions within which individuals can compete and prosper, not to mobilise their power and resources to guarantee greater levels of economic security or social welfare.…”

The expressive function of human dignity: A pragmatic approach to social rights claims

“…54 It includes measures – whose adoption is a condition for financial assistance – providing for the cut of labour and welfare expenses, price stability and national budgetary constraints. Within this ideological framework, welfare conditionality would prevent the moral hazard effect normally associated with unemployment benefits by preventing the recipient from deliberately eschewing work (McKeever and Walsh, 2020). A more recent trend in welfare policy is to prioritise work-related sanctions over enabling measures, such as training programmes and work projects (Adler, 2016).…”

“…In such circumstances, a test on the plausibility of the claim that welfare legislation aims to tackle moral hazard fails from the start, since the focus “is on the punitive surveillance of benefit recipients rather than the provision of assistance and support at a level sufficient to enable individuals to meet their mutual obligation requirements” (McKeever and Walsh, 2020: 10). The idea of “punitive surveillance” is akin to that of the criminalisation of benefit recipients already mentioned.…”