Wage‐Earners' Welfare after Economic Reform: Refurbishing, Retrenching or Hollowing Out Social Protection in Australia and New Zealand?

Abstract

Australia and New Zealand developed distinctive 'wage-earner welfare states', with social protection largely delivered through high breadwinner basic incomes and residual social policies. Market reforms then pursued in both countries during the 1980s and 1990s retrenched important elements of the Antipodean model. Our article offers a novel characterization of major reforms to both welfare states from the mid-1990s to the early 2010s. We focus on industrial relations, as a form of wage-earner welfare, and expansions to social provision for families and retirees that may be viewed as responding to the evolving needs of wage-earners as family patterns diversify and populations age. Policy reversals complicate the picture of the long-term path of industrial relations. Voters rejected the Employment Contracts Act in New Zealand in 2000 and WorkChoices in Australia in 2007, with incoming labour governments moderating policy to favour wage-earner expectations of decent wages and fair bargaining. Alongside this, governments expanded both paternalistic social policies and private social provision. We argue these changes taken together produced a 'hollowing out' of wage-earner welfare in both countries, accompanied by increasingly stratified welfare, which marginalizes and stigmatizes many outside the workforce. But, we also note persistent differences, reflecting the more radical and 'pure' New Zealand experiment, its relatively centralized politics and stronger liberal tradition. Hence, Australia retains more progressive taxation and family support less connected with employment status, while making greater use of tax expenditures to support private welfare.

Coming Together or Drifting Apart? Income Maintenance in Australia, New Zealand, and the United Kingdom

“…Labor's political rhetoric around poverty and the unemployed was also less moralizing than in the other two countries, with a new Minister for Social Inclusion and a Social Inclusion Unit reflecting a commitment to assist the most disadvantaged geographic areas and communities to re‐enter mainstream economic and social life (Wilson et al . ). Once the Liberal‐National government returned to power in 2013 (and Australia's economic performance weakened), however, a rhetorical focus on welfare dependency and austerity framed recessionary‐like policies such as public servant salary freezes and a three‐year Temporary Budget Repair Levy on incomes over $180,000 (Hockey ; Meagher and Wilkins ).…”

“…In Australia, income quarantining, which was originally introduced in 2007 as part of an emergency intervention into Aboriginal communities in the Northern Territory, was later extended to benefit recipients of all ages by Labor (Saunders and Deeming ; Wilson et al . ). In 2015, under‐25s in the United Kingdom were excluded from the Conservative government's National Living Wage and those aged 18‐21 lost automatic entitlement to housing benefit in 2015 (Osborne ).…”

“…Table indicates that the policies of the three countries were more similar in the mid‐2010s than two decades earlier, despite continuing differences, after 18 weeks leave finally became available in Australia from 2011 (Humpage ; Stewart ; Wilson et al . ).…”

“…Increased generosity in tax concessions for mandatory private superannuation largely benefited high income earners, particularly after 2006, with tax expenditures peaking at around $46 billion in 2007 (Collard ; Saunders and Deeming ; Wilson et al . ). In that year, the newly elected Labor Government initiated a pension review (Harmer ) which reported that current pension rates did not fully recognize the costs faced by single pensioners living alone, paying ad hoc bonuses did not provide financial security, pension indexation should be more transparently linked to community living standards and price changes and system complexities inhibited the financial security of pensioners.…”

“…Labor also introduced a resources super profits tax aimed at providing revenue for raising the Superannuation Guarantee Contribution to 12 percent between 2013 and 2019 (Saunders and Deeming ; Wilson et al . ). Although it is not mandatory for employees to contribute, since 2003 lower‐income workers have been able to access government co‐contributions (matched savings) up to maximum entitlement (originally 150 percent of savings) and further improvements for low‐income workers were announced in the 2011 Budget.…”