Welfare Plans An Assault On Our Freedom

Last Thursday Kevin Andrews, then minister for Social Services, wrote in The Australian that income management – the practice of “quarantining” a portion of social security payments for approved purchases like food and accommodation – is central to the Abbott Government’s welfare reforms.

Four days later he was replaced in the social services ministry by Scott Morrison. This has been seen as somewhat a demotion for Andrews, who now takes Defence.

But it is in no way a repudiation of Andrews’ plans. Far from it. Morrison was lauded at the reshuffle press conference as a minister who gets things done. One of the things to be done, no doubt, is the expansion of income management.

This is not a good thing. Income management is paternalistic and illiberal. It’s counter-productive, too: far from discouraging welfare dependency, it encourages that dependency.

Yet income management has bipartisan support.

Income management was first introduced as part of the Northern Territory intervention in 2007. The idea was to prevent the sort of child abuse and neglect that had been described in the Little Children Are Sacred report. The policy was originally imposed on a few dozen specifically nominated vulnerable communities.

The original idea was to use income management as an emergency measure in a moment of deep social crisis. But policies that are introduced in a crisis tend to stick around. They entrench themselves in the policy landscape as bureaucrats build reputations on their success – and try to hide their failure.

So the Rudd and Gillard government decided income management ought to be rolled out to at-risk populations across the country. Income management is now being tested in areas like Bankstown in New South Wales, Shepparton in Victoria, and Logan in Queensland.

Last week the Government released a commissioned report that found that income management had not substantially changed what welfare recipients buy. Nor had income management reduced alcohol purchases or problems like running out of food. (You can read the report here.)

It’s absurd that governments say they want to reduce welfare “dependency”, yet at the same time actively encourage such dependency by taking freedom of choice away from welfare recipients.

And instead of encouraging “financial literacy”, income management appears to reduce it – by treating welfare recipients as incapable and incompetent.

Right now income management affects very few people. Most Australians might not even be aware the system exists.

But it is peculiarly central to the debate about the proper size and shape of the welfare state.

One of the great philosophical arguments concerns how we understand the concept of “freedom”. In the classical liberal story, people are free when they are not being coerced by external forces like governments or other people. This is a negative conception of freedom. It’s all about the absence of constraints.

Social democrats have long criticised this idea of freedom by saying that it takes more to be truly free than just no constraints. A free person is someone who has the capacity – the resources – to pursue their own goals.

Thus, the goal of the welfare state is to enhance a positive conception of freedom, by giving all members of society not only the right to live lives of their choosing, but the ability to do so.

But those welfare recipients who now have their purchases micromanaged by Centrelink are unlikely to feel very liberated.

As this paper from 2013 points out, income management allows government to monitor shopping habits with attendant costs to privacy and feelings of autonomy.

Indeed, decades of paternalism applied to welfare recipients has undermined the idea that government-provided social security is in any way “liberating”.

Those placed on work for the dole schemes obviously do not feel more free for being conscripted to do menial tasks below minimum wage for non-profits.

And would those who would have been subject to the punishing high numbers of job applications proposed in the May budget – 40 applications per month – have felt that they were enjoying any sort of positive liberty? Of course not.

It is certainly possible to imagine a welfare state not built around paternalistic mutual obligation requirements. But, in Australia at least, it seems that every political incentive is driving our real-world welfare state towards them.

A person must not lose their rights the moment they receive government assistance. It would be incredibly dangerous to think otherwise. Governments have involved themselves in so many facets of our lives that there are few people who do not receive some form of assistance.

In 1944 the economist Friedrich Hayek wrote his bestselling book the Road to Serfdom, where he suggested that social democracy’s expansion of government control would undermine civil liberties.

Hayek has been ridiculed for that argument ever since – post-war Britain did not turn into a totalitarian dictatorship.

But 70 years after Hayek published his book, welfare paternalism is demonstrating that when government is involved, coercion almost always follows.

Chifley’s Time Bomb 70 Years In The Making

Joe Hockey’s father named his son “Joseph Benedict” after Ben Chifley.

Little did the family expect their child to be struggling with the legacy of his namesake at the most critical moment in his political career.

Hockey’s first budget is haunted by a political bait-and-switch Chifley made way back in 1942 and 1943.

The story goes like this. Wars are incredibly expensive. During WWII, the Australian government inflated the currency and borrowed massive amounts of money. Nevertheless, when Labor took power in 1941, there was still a huge budget shortfall that needed to be addressed.

And like the Coalition today, Labor had made much political capital opposing the previous government’s taxes, particularly those levied on low income earners.

Once in government, the new Prime Minister John Curtin doubled down. When the first uniform tax case came before the High Court (which effectively eliminated state income tax in favour of Commonwealth income tax) Curtin promised the electorate that the Commonwealth’s new power would not be used as an excuse to raise income taxes.

Labor’s no-tax pledge was unsustainable.

Throughout 1942 it became clear to Curtin and his treasurer Chifley that the government had to close their huge revenue-expenditure gap.

There was a war to be fought, so cutting spending was out. Printing money was out too. Inflation was already a problem. There would have to be some additional taxation. And some would necessarily hit those on incomes below £400 per year.

(There was another rationale for higher income taxes being pushed by the government’s young Keynesian advisors: the need to suppress excess consumer spending during war.)

The solution devised by Chifley was a classic example of policy misdirection.

For the previous decade, parliament had been debating whether to introduce a national social security scheme. One of the key questions in this debate was whether it should be funded by general taxation, as Labor traditionally favoured, or individual contributions, as the conservative Lyons government had proposed in the late 1930s.

So when Chifley announced that they would increase income taxes on rich and poor alike, they also announced a “National Welfare Fund” alongside it.

This National Welfare Fund would fund welfare measures like pensions, unemployment relief, child endowments, even health care. The fund is often seen as the launch of Australia’s welfare state.

Unlike a contributory scheme, the fund would be financed by the new income tax increases. But there were two tricks.

First, Chifley said the revenue from the tax increase was specially earmarked for the National Welfare Fund. Thus Labor wasn’t breaking its promise not to increase the burden on low income earners – they would be getting social security for their money. (Think of the fund like our Medicare Levy today.)

And second, most of the great new social services weren’t to start until after the war. Cabinet agreed that only £5 million of the estimated £40 raised would be directed towards immediate social spending. Money is fungible. The rest could quietly be used for the war effort.

As the historian Rob Watts points out in his book The Foundations of the National Welfare State, what looks like groundbreaking Chifley welfare reform was really just a smokescreen for unpopular wartime tax rises on lower income earners.

The Menzies government folded the National Welfare Fund money into general revenue a few years later. (It is good budget practice not to hypothecate specific revenues to specific programs). But the fund remained in name until the 1980s.

The social contract has always been a complex mish-mash of popular mythologies about what the state owes to the citizen. We are still living with the political consequences of Chifley’s clever little political ploy.

His scheme made it seem like the Australian tax system was a quasi-contributory and fully-funded insurance program.

One former Department of Social Security employee summed up this belief well in Green Left Weekly: “In the late ’60s and early ’70s, many applying for the pension would say, ‘I’m only getting back the money I paid into the National Welfare Fund’.”

The National Welfare Fund has long passed into historical obscurity. But the mythology of welfare contributions it engendered remains – one that imagines the welfare state as a giant piggy bank.

In 2014, Joe Hockey has come smack-bang up against Chifley’s fiscal illusion.

Hockey says he wants to end the Age of Entitlement. But welfare measures like the pension feel a lot less like unjustifiable entitlements to those who believe they’ve already paid for state retirement benefits.

As one aggrieved person told the Treasurer on Q&A, “many pensioners have worked all their lives and paid tax in order to receive the pension and Medicare”.

In other words, the piggy bank model of welfare is not about the well-off supporting the less fortunate. It’s about churning everybody’s money back to them.

So there’s no place for means testing if welfare is less an old-age safety net and more a de facto retirement savings account. (In fact, quite the opposite. The more you put in the piggy bank the more you deserve what you get out).

If the welfare state is just a big piggy bank, there is no case – for instance – to include the family home in the pension assets test, something the Audit Commission recommended.

It’s easy to ridicule people living in multi-million-dollar homes clinging on to the pension. Yet, thanks to Chifley, many Australians worked and paid taxes all their lives believing that was exactly what the social contract made possible.

Is Chifley’s welfare-system-as-piggy-bank good policy? Certainly not. Over time it will fade away as superannuation carries the burden of the pension system.

But right now, as Joe Hockey has learned, it is a very real constraint on economic reform.

Why protecting the pension is a political con job

‘The Abbott government is proposing to reduce the rate of increase of the age pension’ said Bill Shorten.

You’ll only make it in politics if you are willing to be completely shameless.

On Tuesday Social Services Minister Kevin Andrews flagged a major review into Australia’s welfare system. One in five Australians now receives income support payments – 5 million people. That’s a lot, and the Coalition believes it is too many. The budget has to be balanced. We don’t want to become like Europe.

So far, so good. Yet 2.3 million of those people – nearly half, and the largest cohort – are on the age pension. And Kevin Andrews has specifically quarantined the age pension from his review. So, it isn’t quite the major budget-repairing review it sounds like.

Bill Shorten confidently insists that ”the Abbott government is proposing to reduce the rate of increase of the age pension”. (Never say Shorten isn’t trying his little heart out.)

This comically absurd little spat over the pension reveals a lot about Australia’s welfare system and the political system in which it operates.

The list of beneficiaries and the conditions placed on those benefits are not organised by any noble principle of need or fairness or morality, but calculations – often highly crude ones – about voting blocs. Of course it is all dressed up in the language of social justice.

Despite being the largest beneficiaries of the welfare system, pensioners are a protected species. Remember there’s no guarantee a review would recommend a cut to any particular welfare entitlement, nor any guarantee the government would follow through if it did. No, the pension is too sacred to even be studied.

Australians like to say they’re concerned about middle-class welfare. Defenders of the status quo argue our rate of middle-class welfare is relatively low by international standards.

But this week’s little pension quarrel reveals something more fundamental – the modern welfare state is, itself, a project designed to benefit the middle class above all others.

Middle-class welfare isn’t a bug or aberration. It’s the defining characteristic of any democratic welfare state.

This observation is known as Directors’ Law – named after economist Aaron Director, who argued that redistribution policies in a democracy will benefit the largest voting blocs. Invariably this is the middle class. The primary function of a welfare state isn’t to keep people out of poverty. It’s to transfer money to the powerful middle class.

Sometimes the system taxes the middle class to provide benefits to that very same middle class. Such ”churn” is a political confidence trick that relies on citizens’ ignorance of their true tax burden.

You’d be hard pressed to find a philosopher, economist, sociologist or political theorist who could support such a distorting, wasteful, politically motivated transfer system on principle. But that’s what we have. All the big political flashpoints of Australia’s welfare policy – baby bonuses, family tax payments, parental leave – are disproportionately generous to the middle class.

Nor is the age pension solely to protect the poor. Eighty per cent of people above pension age receive a part or full pension. By excluding the family home from its income test, the pension protects elderly home owners from having to use the savings they’ve accumulated in their house to fund their retirement. And, a bonus: it protects the inheritance of their children. No wonder it’s popular.

Welfare is a political compact. Sociologist Gosta Esping-Andersen famously distinguished three models of welfare state capitalism: liberal, corporatist-statist, and social democratic.

Liberal welfare regimes view income support as a safety net. Think the United States, where welfare is an emergency, often short-term measure. The corporatist-statist regimes (found in Germany, France and Italy) uphold traditional class divisions. Scandinavian countries have a social democratic regime where welfare is less about poverty and more about citizenship. All classes get something.

Usually Australia is grouped in the liberal camp. This reflects our English political origins, with a focus on individual rights rather than collective belonging. And welfare for the rich seems to offend the antipodean sense of the fair go.

That’s the theory anyway.

The Abbott government seems intent on destroying the last vestiges of what makes our system liberal.

There’s something deeply alien – well, Scandinavian – about the Coalition’s paid parental leave scheme. The government will pay as much as $75,000 to new mothers for 26 weeks, according to their previous income, not their need.

The Coalition insists the parental leave scheme isn’t welfare, it’s a workplace entitlement. Nonsense. But the philosophy behind this talking point is deeply illiberal. It suggests the state is as responsible for providing your income as your employer is.

Even more symbolic: just two days after Kevin Andrews announced the welfare review, he also announced the government would give young couples $200 for marriage counselling. The average Australian wedding costs upwards of $35,000. Yet the party of free markets and individual responsibility feels the need to chip in another few hundred dollars.

Of course, a review into Newstart and the Disability Support Pension is a good thing. The latter has grown rapidly in recent decades. The chief executive of Mission Australia has said hundreds of thousands of disability support recipients should be helped into work. The social and psychological benefits of employment are unarguable. This is more than enough justification for an inquiry.

Nevertheless, any serious review of Australia’s welfare system must be a review of the entire system. Even the popular bits.

Joe Hockey has been unable to commit to returning the budget back to surplus until 2023. But if the government can’t slay – or at least scrutinise – some sacred cows, this deadline looks far too optimistic.

Lavish Parental Leave Has Nothing To Do With Need

There’s an easy test to see if a politician is spouting nonsense: they use the word “productivity” a lot.

Productivity is an old standby. It sounds intelligent. Economists say it’s important. Yet productivity is the most abused word in the political dictionary.

The Coalition says its paid parental leave scheme is first and foremost about productivity. Mothers would receive a payment at their full salary for 26 weeks, up to the maximum annual salary of $150,000. The taxation office says the average income for an Australian woman in 2010-11 was $42,000. (You can see the tax tables here.)

How will this generosity boost productivity? It’s not clear.

The Coalition’s plan would completely upend the Australian welfare settlement.

It would be a wholehearted, full-throated embrace of the Scandinavian system of middle-class welfare. It would be a rejection of the bipartisan principle that social security should be a safety-net. And, as it would blur the distinction between earned income and government assistance, the Coalition’s scheme would entrench the entitlement culture that has been so harmful to so many economies around the world.

That’s the big picture. Let’s start with the productivity canard. The Coalition’s official parental leave document makes two claims about leave and productivity. Both are apparently drawn from a Productivity Commission study published in 2009.

First, their paid parental leave scheme will encourage mothers to stay at home to breastfeed their babies, which will result in health benefits for those babies, and “likely long-run productivity benefits” for the workers they grow up to be. Nobody disputes the value of breastfeeding. The Productivity Commission found enormous benefits accrue to both breastfeeding mother and child. But it only vaguely hypothesised – with no supporting documentation – that, perhaps, parental leave could “translate to … subsequent productivity improvements” down the track.

It’s dubious to pin Australia’s long-run economic growth on this unexamined chain of causation. Well, if we care about evidence-based policy.

The second argument is not much more convincing. The scheme “would keep some of the most productive people and potentially productive people more engaged in the workforce”. But if parental leave is designed to stop mothers dropping out of the workforce entirely once they’ve had a child, that seems to contradict the first claim: that lengthy maternal care is essential for future productivity.

The Productivity Commission recognised that the interactions between the changed incentives to work or take parental leave were highly complex. The Coalition’s proposal does no such thing.

The extreme generosity of the Coalition’s plan suggests another productivity argument. Highly productive women are less likely to take time out to have children, due to the opportunity cost of their higher wages. Yet highly productive women might have highly productive children. That’s what Tony Abbott meant when he said “women of calibre”. It’s not a nice argument. But it appears to be one implicit goal of the Coalition’s policy – to encourage well-paid women to become mothers.

On this, Abbott has been more candid in the past. He wrote in his book Battlelines that “maternity-leave schemes are better thought of as a means of encouraging more women to keep the most traditional role of all: that of mother”.

The Coalition insists their plan isn’t welfare – it’s a “workplace entitlement”. Yet we usually think of workplace entitlements as part of an employment contract and included in a salary package. Sometimes workplace entitlements are required by law, like annual leave, but they are always provided by employers, and paid for by employers’ money.

Financial assistance provided by government, financed by taxation, and delivered by Centrelink certainly isn’t a workplace entitlement.

The Opposition’s doublespeak conflates private earnings with government transfer payments. Yet the distinction matters. It really matters to conservatives, for whom self-reliance and responsibility are moral virtues.

One of the most influential theories of welfare states was devised by the Danish sociologist Gøsta Esping-Andersen. In his
1990 book The Three Worlds of Welfare Capitalism, Esping-Andersen divided welfare states into three categories according to their philosophical foundations: liberal, corporatist and social democratic.

Liberal regimes are tightly means tested and focused on transition from welfare to work. Welfare is designed to be unappealing. Australia has a liberal welfare regime, as does the United States, Britain and Canada. Corporatist regimes – like France’s – are designed to preserve class and status. In social democratic regimes, access to welfare is universal, plentiful, and explicitly designed to buy off the middle class. (Esping-Andersen later added a fourth. In a Mediterranean regime, welfare distribution is embedded into traditional gender and family structures.)

Full-blown social democratic regimes are rare, and concentrated in Scandinavia. In the Drum yesterday, Emma Alberici emphasised just how lavish their parental leave entitlements are. Tony Abbott’s policy compares favourably to those of Finland, Norway, Sweden, Germany, and Iceland.

In other words, the Coalition’s policy is a Scandinavian scheme for a liberal country. Like a good Scandinavian scheme, it will co-opt the middle class, who benefit the most. Like a good Scandinavian scheme, it will blur the distinction between work and welfare. And like a good Scandinavian scheme, it has nothing to do with need, and everything to do with the privilege of citizenship.

If this paid parental leave scheme becomes law, we won’t be at the end of the Age of Entitlement. We’ll be at the beginning.

Reward Welfare A Recipe For Entitlement Culture

Joe Hockey has been badly verballed. His widely reported speech about Western entitlement culture, delivered in London last week, contains virtually none of the claims attributed to it.

Hockey’s speech is another contribution to that small, odd genre of speeches where Australian politicians travel to Europe to inform Europeans how stuffed their economies are.

The victims in his tale were American, British, and European taxpayers – not Australian ones.

There’s nothing in the speech to suggest he wants to eliminate the welfare system in Australia, as some have claimed, or reduce spending on health or education.

Indeed, Hockey thinks Australia is nearly a paragon of virtue. Sure, we have “not completely avoided” excessively high spending, says the shadow treasurer, but we have reduced spending “to manageable levels”.

In a combative interview on Lateline afterwards, he told Tony Jones:

We need to compare ourselves with our Asian neighbours where the entitlements programs of the state are far less than they are in Australia.

Well, of course we do. Small government means low taxes. Businesses find low taxes attractive. If we, as a nation, are to “compete” with our neighbours, we’d better be offering something more than a profligate welfare system. Restraining company and income taxes has to be a key part of that.

Hockey said Hong Kong’s “highly constrained public safety net may, at times, seem brutal” – this is not high praise, and certainly not a recommendation we imitate it.
So why did the speech spark such fury?

Yes, Hockey gave it a grandiose title – ‘The End of the Age of Entitlement’ – virtually begging to be over-analysed. Tony Jones doggedly tried to pin Hockey down on how Australia would look in a post-entitlement age. But at most Hockey volunteered that “we need to be ever vigilant”.

This isn’t much to base a controversy on. Surely, after the past few years, a more vigilant government isn’t a bad idea.

So lots of smoke, but no fire.

At least, no fire where everybody was looking. Hockey’s speech was not without a domestic purpose. It seems clear he did not intend to propose changes to Australia’s existing policy settings, but to stem future ones.

The ‘age of entitlement’ thesis is a none-too-subtle contribution to the simmering debate within the Coalition about what philosophy will drive a future Abbott government.

The Institute of Economic Affairs, where he gave the address, isn’t your run-of-the-mill free market think tank. It is one of the most influential and iconic in the world, borne out of a conversation between its founder, Antony Fisher, and the great economist Friedrich Hayek. It’s the perfect place to stake a claim as a free marketeer.

And no Howard-era policy is more regretted by the free marketeers within the parliamentary Liberal Party than the former prime minister’s embrace of middle-class welfare.

Yes, by international standards, Australian middle-class welfare is low – the lowest, in fact, in the OECD. But that’s not the point. It is a symbol of the two different visions of Australia’s future on the centre-right.

The contest between free marketeers and big government conservatives rages across lots of policy areas – from free trade to cheap milk to labour market reform – but, overwhelmingly, it is in middle-class welfare that it is most sensitive.

Hockey’s boss Tony Abbott is a big fan of the Howard social spending program. Abbott’s manifesto, the 2009 book Battlelines, goes into great detail defending universal family payments.
In the Opposition Leader’s view, “supporting women who have children should be one of the important duties of governments”.

Abbott frames the debate as between those who see having children as a personal choice and those who see it as a social good.

I argued in the Drum last year that when the Labor Party inherited Howard’s social policies after the 2007 election, they changed their justification.

Where the Coalition had spoken of middle-class welfare as a tool to shape society according to conservative values, Labor simply presented things like the baby bonus as a reward for families working hard.

The importance of Hockey’s London speech becomes apparent when we identify a subtle shift in Coalition and government rhetoric on this subject over the twelve months.

Labor’s policy agenda is increasingly focused on means testing. Abbott is starting to adopt some of the “reward” language in response. He has said means testing the baby bonus is an “attack on middle Australia”.

Such an argument – and it’s really a moral argument – contrasts sharply with the more practical, policy-oriented claims he made in Battlelines.

In this context, Hockey’s thesis about the end of an age entitlement has resonance.

Of course, there’s a big difference between professing a philosophy in opposition and pursuing it in government. Especially when your leader has other ideas.

But Hockey’s right. If governments hand out money simply for working hard – or if oppositions suggest that taking such handouts away is a personal affront to families – Australia will very quickly grow an entitlement culture to rival that of Europe’s most moribund economies.

Middle Class Welfare: Not Happy Julia

Perhaps families earning $150,000 a year are “rich”. Perhaps they’re not.
But it’s intuitively obvious they shouldn’t receive welfare.
That’s because, deep down, we’re all small-l liberals. Welfare should be a safety net, not a web in which everybody is tangled.
The Gillard government’s reductions in family payments announced as part of last week’s federal budget are modest but welcome.
The income test on some payments will be frozen until 2014, as will the size of payments. Inflation will slowly erode eligibility and value. The teacup storm about cost of living pressures and what constitutes rich was inevitable.
But the thing is, direct welfare going to middle income earners in Australia is actually quite low, at least compared to the rest of the world. Our benefits are relatively well means-tested. The Rudd and Gillard governments have made them even more so – a much needed corrective to the Howard years.
Commentators rightly condemn the non-means tested benefits which remain. The tax-welfare churn is extremely inefficient.
But subsidising the middle class isn’t a strange perversion of the welfare state. It’s a key characteristic.
For decades we’ve been told we should emulate the big social democratic welfare states – it’d be the only progressive thing to do. Yet their full cradle-to-grave social support offers far more for middle earners than Australia does.
The prototypical Scandinavian welfare models were built on the concept of universalism. Everybody gets something. Their political support relies on that universalism. Middle income earners approve of those welfare states because they’re the beneficiaries.
Indeed, the Swedish economist Andreas Bergh has argued that redistribution of income from rich to poor is a relatively minor feature of the Scandinavian model – the whole system is structured to service the comfortable middle.
So if it is intuitively obvious to Australians that the middle class shouldn’t receive income support, that’s because we find the social democratic model of the welfare state objectionable.
The Australian conception of the proper role of welfare is a liberal one. Income support should be only given to those who need it – to those whose only alternative to Centrelink is poverty. Not to those who, facing money pressures, could reduce consumption or live in a smaller house or trade in a new car.
Even mainstream Australian social democrats argue against the social democratic model of the welfare state.
In the Weekend Australian, Tim Soutphommasane (of the progressive think tank Per Capita) said “Any fair and efficient system of welfare … should be guided by a principle of need.”
The past decade and a half has seen government extend its generosity to middle income earners, breaking the liberal compact.
Unfortunately the Gillard government hasn’t pitched its temporary freeze on family payments as a principled shift in welfare policy. In fact, quite the opposite: it has stubbornly insisted families deserve whatever they can get.
As Wayne Swan said late last month: “Australians who work hard, who get up every day, send their kids to school, come home, cook the tea, get up and do it again, whether they’re running a small business or working for wages, are deserving of some support for their children when they’re performing that vital role of bringing up the next generation of young Australians.”
This makes welfare less about need, and more like a reward given by the government for being responsible and virtuous. So it’s no surprise that there’s outcry when the government reduces that reward. After all, families haven’t stopped working hard – why is the government suddenly being so miserly?
The Howard government wrapped its middle income support in different rhetoric. For John Howard, middle class welfare was a deliberate program to achieve a specific social goal. Each side favours income support for “working families”, it’s just that they put the emphasis on different words.
Speaking to the conservative think tank the American Enterprise Institute after he left office, the former Prime Minister argued that:
“We should maintain a cultural bias in favour of traditional families … The taxation system should generously recognise the cost of raising children. This is not middle class welfare. It is merely a taxation system with some semblance of social vision.”
For Labor, middle class welfare is a reward. For the Coalition, it’s an incentive.
Howard was a conservative social democrat. Sure, sometimes he looked like a proponent of small government. More often (much more often) he did not.
The Liberal Prime Minister had a distinct pro-family, pro-procreation philosophy which, in his view, supported the expansion of family payments. For Howard, income testing those payments would be contrary to the purpose of the policy, and at odds with the philosophy. You might not agree with that philosophy of government – free marketeers shouldn’t, and didn’t – but it was a coherent one, and one which he often articulated.
By contrast, Labor appears to share Howard’s policy preferences, yet it cannot explain why.
Nevertheless, the end result of both approaches has been the development of a middle class entitlement culture – a culture that’s long been endemic in larger universal welfare states, and now seems to be growing in Australia.