Science & Technology

The Importance of Middle-Class Welfare: A Study Case of Australia

Many Countries globally develop their welfare policy to reduce poverty and inequality that are commonly targeting to the lower-class people. However, recent debates have surfaced about whether the higher-class may receive benefits from welfare because these people probably struggle to live. Therefore, this essay will examine Australia`s welfare system regarding the benefits that may be received by the middle class. This essay argues that middle-class generally deserves to receive some benefits of welfare but some programmes need to consider carefully to determine the effective target of welfare. As the starting point, the essay will limit the debates of the welfare state and middle class. The next discussion is the development of Australia`s welfare and analyses Australia`s welfare for whom this system is actually made for. Then, the final part of this essay may examine the model of Australia`s welfare of middle-class regarding distribution, mean-tested scheme, and the universalism of non-poor programmes.

It may be tough to define middle class because those people not merely being accounted by statistical income, but also with broader complexity. Although OECD (2016, p. 2) able to define middle class as a person who has net income between 0.75 to 2 times median of population, many research also consider to define it in further context such sociological context that may capture changes in social perspectives (Whiteford, Redmond and Adamson, 2011, pp. 83–85). Consequently, the middle-class concept may be defined with no boundaries and uncertainty and these may blend to below or upper class in today era (Wolfe, 1993, p. 59). However, this essay merely sets middle-class in the Australian context are those who are not in both the poverty line where they are not as targeting or being passed means-testing and not too rich. This definition is closely related to Australia`s welfare programs that make the framework of Australian welfare more visible to chart.

Although the definition of the middle class can be imposed on a more straightforward definition, the relevance to welfare probably rather complicated and tends to be broader. In Australia context, the broad welfare term refers to ‘the wellbeing of people’ that a right to feel happy, healthy and safe (AIHW, 2017, p. 12-13). Also, the welfare state refers to policies where rules and measurements are fundamentally the responsibility of the country (Luke Buckmaster, 2008). These rules are to making sure that people are protected by social security programmes. There is not a fixed pattern of welfare because each country has own characteristics to manage their welfare although in Australia is more selective to choose benefits recipients than other countries.

Australian Welfare State: Does the Middle-Class Deserved to Access Welfare?

Critics an Australia`s welfare that historically formed in very long time it seems to be filled with many perspectives. Several points of views to chart Australia`s welfare regarding middle-class has to come from the dynamics of Australia`s middle class and its`s problem. Luke Buckmaster (2008) also consider the main characteristics of Australia`s welfare which are the distribution and the main-testing scheme. Consequently, through the statement of Mendes (2017) that the scheme may bring effectiveness of Australia’s welfare by the proportional programmes for mainly poor and some non-poor.

After a significant migration policy deployed in the 1970s, the number of middle-class in Australia increases rapidly (Colic-Peisker 2011, pp.562-279). It makes the characteristics of middle-class in Australia become diverse, multiculturism, and complex. OECD (2016, p. 4) analyse that middle class in Australia in 2013 is approximately 60% of the total population even though it is less than the average of OECD countries (70%). A large number of Australia`s middle-class brings debates of their right to access welfare which may confuse and emotional where many critics accuse them as ‘unjust’ and ‘shameless’ (Whiteford, Redmond and Adamson, 2011, p. 82). This is because this discourse related to the complex subject and it included in a different political debate (Luke Buckmaster, 2008). Australia`s deep history of openness to immigrants can be a determinant factor that Australia`s middle-class more dynamics and not easy to predict.

However, some facts show that middle-class struggle with their life. OECD (2016, p. 7) argues the middle class received disadvantages from the distortion of price due to the gap between the middle and top incomes; for instance, the growth of housing prices in OECD countries grows twice, while the inflation of middle-class income increases 30 % in the last 30 years. This phenomenon also occurs in Australia generally. According to The Conservation (2015) using ABS data, most house prices have increased in the most Australian cities; for example, in Sydney median of house price increase from $393.5 (2002) to $760,0 (2014), whereas the ownership rate of 25-34 years old nationally steadily decrease by 21.5% for the last three decades. This reflects that middle-class may be still difficult to satisfy their basic needs. The accessibility of welfare benefits more likely a solution to help middle-class to improve their quality of life.

Those middle-class difficulties not merely to be solved by cash benefits, primarily through welfare`s programmes. This is because Australia`s welfare has very selective scheme to set the needy people as their target through the redistribution concept. Redistribution is one important main purpose of welfare state where in the Australia context, the welfare state in terms of redistribution has four main spheres which are improving wellbeing factor that affected directly or not directly by determinants, welfare service and assistance, and other services through contextual factors (Goodin and Grand, 1987, p. 4; AIHW, 2017b, p. 13, 2017a, p. 3). These programmes philosophically use two concepts which are Barr (2001) explained it as Robin Hood and Piggy Bank. Robin Hood means merely taking money from the poor and distribute it to the rich, while Piggy Bank refers to provide income maintenance to all classes to manage all risks. The most wealth countries commonly use ‘piggy bank’ concept that threat the welfare universally to classes through ‘social insurance’ however in Australia`s welfare benefits tends to be ‘Robin Hood through main-testing which means they have to be assessed selectively of their income and wealth through ‘main-testing’ to identify them as a deserved people to access welfare (Saunders, 1999, p. 493; Mendes, 2007, p. 15; Luke Buckmaster, 2008). In Australia, Luke Buckmaster (2008) argues Australia adopts both concepts where 62% is Robin Hood, and 38% is Piggy Bank. It may cause Australia’s welfare expenditures less than the average of OECD countries (Mendes, 2017). Consequently, more than 40% redistributed tax allocated to the bottom 20%, while only 3% distributed to the top 20% (Rose and Mill, 2007, p. 49; Whiteford, Redmond and Adamson, 2011, p. 81). Those facts have clearly explained that Australia`s welfare system has been designed not for middle-class but mostly for the low-class.

However, Luke Buckmaster (2008) doubt that Robin Hood will be an practical approach to reduce poverty and inequality than a piggy bank. Although selectivism accurately targeted the welfare to the poor, there is a paradox to avoid that logic. Korpi and Palme (1998, p. 662) argued this kind of paradox of redistribution which means the more the poor being targeted to receive benefits of welfare in order to grow equality by the same treatment of public transfer, then it may hard to achieve the eradication of poverty and inequality. It means that the enormous cash benefits to the poor target may affect to they confidence with the poverty and being dependence on welfare services or they are being trapped to poverty and lose the desire to improve their life. This situation may change the perspective of ‘who needs first’ which is it not only the poor, the middle class probably has more urgent and essential needs. It merely supports that middle-class may still have a right to access benefits to cover their social security.

In details, the means-testing effectively does not merely stop benefits for non-poor but to provide a fairer scheme with the poor as a party that must be helped first. Australia is the highest means testing country in the OECD, with around 80% of spending on cash benefits (AIHW, 2017a, p. 15). It means only two fifth programme may not be means-tested. World Bank (1990) agree that programs of well-targeted transfers successfully to reduce poverty through a systematic approach. However, a mean-testing concept criticised restrain to solve an urgent occurrence (Reisman, 2001, p. 94). Some problem sometimes could not standardise with the same treatment because some events may need urgency yet it is pressed for complicated administration. Therefore, means-tested programmes need to be formed carefully and should to be considered in several perspectives and contexts rather than income; for instance, all policies that related to children in order to prevent poverty in their future (OECD, 2017, pp. 51–52). In short, the selectivism through means-testing is proven effective, but the government should consider further sociological values than income and wealth standardisation.

Mendes (2017, p. 71) argues that Australia`s system is the most effective in welfare among OECD countries. This is because the expenditure of Australia`s welfare is less than average OECD countries although middle class still received benefits of welfare in some programmes. Australia`s welfare provide programmes to help middle-class regarding their common obstacle in particular sectors; for instance, first new home grant that provide up to $10,000 cash for those who want to buy a house for the first time (NSW Government, 2016), $ 5,000 baby bonus for non-poor couple in order to increase the rate birth in 2008 (Phillip Coorey, 2008), and tax free for whose income after 60 years old (Luke Buckmaster, 2008). Also, Australia also has a non-means tested programmes in health security. Medicare is a national health insurance scheme that subsidy treatment in a public hospital and provide free medicine under the Pharmaceutical Benefits Scheme (PBS (Luke Buckmaster, 2008).

Moreover, according to Grand (1987), the framework which sectors may relevant to middle-class welfare which are health care, education, a graduate tax, housing, and public Transport. Related to Australia`s Welfare, Medicare and ‘First Time House Allowance’ reflects the needs in health and housing sector that middle-class may be unable to satisfy. In short, it may reflect in the other perspective Australia`s welfare not fully adopted selectivism but also universalism in limited context. This proportion concept may be caused Australia`s welfare to become efficient and effective to determine their welfare target. OECD (2017, p. 57) explains the effectiveness of the welfare state as the measurement of well-targeted to specific groups. This well-targeted programmes on low incomes play an important role of preventing inequality (ACOSS, 2015, p. 26) as well as for those are not in the low incomes in order to avoid them fall to poverty. Therefore, it is relevant that Australia`s welfare tries to achieve fairly equality both low-class and middle-class as much as possible. Even though middle-class are not treated equally in accessibility welfare among lower-class, but middle-class can receive some particular services where they commonly need them most. The principle of justice applies in Australian welfare system where the middle class can grow well with limited access of welfare that is not too much but sufficient.

In short, it is clear that Australia`s welfare has not been designed for middle-class. However, this essay has explained the increasing of Australia`s middle-class for the last decades and made these people struggle with their life. The Robin hood scheme that Australia`s welfare mainly adopted may have two opposite sides which are eradicating poverty and inequality or making poverty trap. In contrast, Australia`s welfare system effectively makes some of the programme more universal that intersect with poor and non-poor to accommodate the middle-class needs. Also, the mean-test is an efficient scheme to set welfare` benefit recipients, but the government should consider examining another form such as sociological context to replace income and wealth measurement in order to cover outliers urgently occurrences. Therefore, Australia`s expenditures on welfare may less than others country, but Australia effectively makes a well-targeted benefit for poor or non-poor. As a result of this, Australia`s middle class still needs to access some welfare under a contextual condition or limited universalism.

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