The Australian Welfare State from 1945 to 1996 - Essay Example

Historical Analysis Changes in the Australian Welfare from 1945 to 1996 and the degree of income equality in the society during this time period. The Australian welfare state under-went a number of changes Post World War 2 from 1945 and till 1996. These changes resulted in income inequality in the Australian society. In this article, we analyze the changes that took place over this period of time and its implications. We also outline here that what changes need to take place in order to achieve greater income equality. Historical Background: The history of Australia since 1945 i.e. Post World War II has under-gone many changes. Let us first look at the historical timeline to observe and assess the changes that took place in the past 50 years. 1945 - 1949: After World War II, Australia launched a wide-spread immigration program and it received significant waves of people from countries such as Greece, Italy, Germany, Netherlands etc. Australia actively sought these immigrants due to expansion taking place in the economy and major infrastructure projects taking place. This had a major change in the Australian society. It improved from its conservative nature before the World War. However, in most conditions, Immigration was still restricted for Europeans (Frost, 2007). 1950 – 1966: In the 1950s, the Immigration policy was made flexible. Australia’s longest- serving prime minister came into power in 1950 and his term continued till 1966. Menzies’s government focused and invested on higher education and industrial development. The Vietnam War also started in 1962. Australia began its participation with commitment of just 30 people in 1962, which increased later on and became the most controversial war Australia has ever fought. This also posed a lot of problems on the economic and welfare front. 1967 – 1972: The Australian culture bloomed in the late 1960s and early 1970s. Greater rights were given to Indigenous Australians. The Australian Parliament elected its first Aboriginal President, Neville Bonner, in 1971. Immigration restrictions, censorship laws and various other restrictions were made flexible. Opera companies were many theatres were established throughout the country. 1972 – 1983: Greater reforms took place in 1972 as Gough Whitlam became the first Labor PM. These reforms included health insurance, reform of divorce and family law amongst others. However due to his radical style he was dismissed in 1975. Many of his reforms were carried out under the new government as well. 1983 – 1996: In 1983, with the election of Bob Hawke, Labor returned to Power. Severe concerns about Australias future economic health, with severe current account deficits and high unemployment at times, was experienced in the 1980s. Hawkes government introduced many economic reforms. Some of them were: Tariff cuts, A floating exchange rate, Privatization of many government services, Finalizing agreement with trade unions to moderate wage demands and accept more flexible working condition arrangements by accepting tax cuts in return. Ultimately, many of the reforms have been successful in pushing the economy along, and have been used by successive governments. Hawke was in power till 1991, and was followed by Paul Keating, who kept Labor in office until 1996. Economic growth continued at a very high rate through the 1990s. 1996 Onwards: The 1990s and 2000s were a flourishing period for Australia. The country didn’t see a recession since the early 1990s. Coalition Government led by John Howard won the general election in 1996 and was re-elected in 1998, 2001 and 2004. This government also brought along many reforms such as: Changes in taxation and industrial relations system. Reduce the influence of labor unions. Collective bargaining for wages in the work-place. Speeding up the process of privatization etc. Economic History explained: Let’s also take a look at the history of Australia again in specific economic terms now. From 1945-1996, the economic history can be divided into two phases: 1. The Initial Period: This period was characterized by rapid, labor-intensive industrialization. This was based on a heavily-pinned domestic market which had foreign-exchange inflows from capital imports and commodity exports (low value-added). 2. The Later Period: In this period the service sector flourished to a great extent. This was because protection and market regulation were both taken to pieces. In the domestic economy and the foreign-trade sector, there was huge development seen by the services sector. Changes and its Impact on Income Inequality: An overview of the history shows the different changes that were taken place by different governments from 1945 to 1996. Furthermore, Post-World War period and then the starting of Vietnam War in 1962 also hindered progress for the country. However, the major change that can be outlined would be the social reforms that were being taken place by various governments. On the basis of that we can say, while income inequality fell in the 1950s, and a bit in the 1970s, it was high during 1980s and 1990s (Leigh, 2005). 1950s was considered a golden period for Australia. Along with positive reforms carried out by Menzie’s government, Australia was rising from the after-effects of World War II and the economic and political environment looked much better, soon after the Vietnam War started and the political scenario again disproved. So we can say the causes of income inequality in the region could be many. It was more like a case of one thing led to another. Let’s classify these into two major changes that became the basis of the rising disparity of income. 1. Political and Economic Distress: The main reason was the political turmoil the country was going through. This would include: The declining power of unions, Less progressive taxes and income redistribution, The rise of technology (both in reducing the number of lower-skill jobs and in increasing the incomes of higher skill ones). The increasing trend of Globalization. Globalization exacerbates income inequality (Gaston & Rajaguru, 2009). Globalization has both advantages and disadvantages. However, gains can be realized to its extent when the environment is more conducive, government institutions and their policies are more sound and credible and education and technological development is taking place in the country (Samuel, 2008). Also, when terms of trade are properly devised and there is greater trade open-ness, equity is enhanced. This indicates that although Australia was trying to progress, but several factors in the globalization process were leading towards income disparity among the country. Globalization has a direct link with domestic, social and political decline. This can be understood by the following points: There is a lot of difference between groups that can and cannot cross national boundaries. Globalization increases the irregularity between such groups. Nations which involve differences in norms (labor, environmental and many other norms) will have an increased number of differences between them. Governments face a lot of difficulty regarding social welfare, for example providing social insurance and this effects people especially the least-skilled workers. Moreover, de-unionization is also one reason for the degree of increase in income inequality (Gaston, 2008). The result for the minimum wage varies across the different measures of income inequality. Pre-tax income inequality is lowered by a higher real minimum wage. Although at just a small percentage level, this impact on post-tax inequality is positive and evident. So we see that for Australia, the progressivity of taxes is relatively more important for generating a more equitable income distribution than are increases in the minimum wage. However, for the wealthy ones, the minimum wage factor has no impact on the income distribution. Therefore, we see that where wage gains are pursued by strong-sectoral unions, relative to some apparent market wage, it results in unemployment, cost-push inflation, declined growth and inequality between various sectors. These negative factors are then acknowledged by the centralized union and taken into its bargaining. So we can conclude that wage inequality increases as unionization declines (Freeman, 1998). 2. Ethnicity, Class & Gender Differences: Another reason for the income inequality in Australia was the ethnic diversity that was produced in the country. It was introduced by post-war immigration and continued for a long time. We can say that this was an indirect factor leading towards inequality. This posed an atmosphere of social turmoil in a country which was already suffering from political and economic changes to a large extent. The instability then lead to a turmoil situation in which progress efforts caused more negative than positive as we discussed above. Let us briefly look into the differences that came across Post-World War II. As the trend of immigration rose after the war, there was greater emphasis on immigrants from Southern Europe regions. The White Australian Policy which restricted non-white immigration was in existence before the War too and continued till 1973. Post-War, Immigration Minister Arthur Calwell sought to have all the non-white refugees deported who had settles in Australia. Many Asians were denied entry. In 1949, Calwells successor gave the remaining refugees and war-brides permission to apply for residency and settle in Australia. The supremacy of the Anglo-Australian society remained till 1970 in Australia. The immigrant settlement government policies were very assimilationist. Other migrants from example the Aborigines were expected to adopt the same values as Anglo Australians to survive. Their lifestyles and even their speech were expected to change. By the 1960s this gap has lessened to a great extent. Mid-1970s also saw a greater shift towards Asia which was introduced by the Whitlam Government. He brought forward the non-discriminatory immigration policy. From this point onwards, multi-culturalism began in Australia. However, we see that post-war tension coupled with such factors and changing governments caused a lot of distress in Australia, which became another reason for income disparity. Conclusion: The following conclusions can be drawn from our analysis of the history and the political, economic and social changes that took place in Australia in the span of 50 years from 1945 to 1996: World War II had great implications over countries all over the world. Australia was one of them. Post-War distress, along with the need to revive the country was enough a hard time for the country. As the country started to see hope, it again plunged into difficulties as it entered the Vietnam War. After this war ended, the country again had to come back on its feet and by 1996; Australia was on its way of progress. The politically worsened scenario led to economic downturn and posed a lot of problems for the country. This coupled with changing governments and changing reforms led to income inequality in the country. Income inequality was caused by various factors, the two most important being de-unionization of the labor force and globalization. Globalization with its many advantages has a different role as circumstances change. Australia’s role in the global environment was very different and uncertain during this time-period and hence income disparity widened. Social distress was also present and led to worsen the economic and political scenario and cause income inequality. Race and ethnicity are not things which exist, but processes which happen (Morrissey, 2001). These social processes did exist in the Australian society for a long time and definitely caused tension. Recommendations: In the light of all the problems that Australia under-went in the past 50 years, certain measures have been taken and are being taken to take progress to a level where the country develops by taking measures that maintain income equality amongst all classes. They say, a nation is happy when its people are happy and equality of income will lead to a more satisfied nation. Here we present some recommendations: Minimum wages should be increased. This is the basic factor on which low-skilled and semi-skilled labor forces determine their incomes. In the past also, when this step has been taken, a positive trend has emerged and income inequality has decreased. Racism has decreased to a great extent in Australia and now immigrants from all countries are successfully making their mark in the Australian society. This trend should be continued and encouraged. An equal society will eventually lead to other factors of equality in all aspects. The last and most-important recommendation is related to Globalization. There is no stopping this phenomenon and when we study its advantages, we find that there is no need to stop it. However, with the advantages comes another important factor i.e. the procedures and the environment in which it occurs. The economy should respond flexibly to the changes in the external environment and displaced workers should be re-trained and re-deployed in the best possible manner. With its proper workings, income inequality can be reduced to a great extent. BIBLIOGRAPHY Journal Articles Mendes, Philips (2008) Australias Welfare Wars Revisited: The Players, the Politics and the Ideologies, Community Development Journal, Volume 44, Issue 2, Pp 268-270. Adams, Samuel (2008) Globalization and Income Inequality: Implications for Intellectual Property Rights, Journal of Policy Modeling, Volume 30, Issue 5, Sep-Oct 2008, Pages 725-735. Leigh, A (2005) Deriving long-run inequality series from tax data, Economic Record, 81(255), S58-S70. Morrissey, M. (1997) The Uses of Culture, Journal of Intercultural Studies, Vol. 18, No. 2, Pp 93-107. Freeman, R.B. (1998), War of the models, which labor market institutions for the 21st century?, Labor Economics, 5(1), 1-24. Other Sources Gaston, Noel and Rajaguru, Gulasekaran (2009) The Long-run Determinants of Australian Income Inequality, Globalization and Development Centre, Available at: http://works.bepress.com/noel_gaston/15 Gaston, Noel (2008) Understanding Australian Income Inequality: The Proper role played by Globalization, De-unionization and the terms of trade, Business Papers. Available at: http://works.bepress.com/noel_gaston/12 Frost, Stephen (2007) Migrants and Social Welfare in Australia [Internet], Published on Asia Monitor Resource Centre (AMRC) (http://amrc.org.hk) Oppenheimer, Melanie (2005) Voluntary Action and Welfare in post-1945 Australia: preliminary perspectives, Article from: History Australia [Internet]. Available at: http://www.highbeam.com/doc/1G1-153764569.html Morrissey, M.J. (2001), Ethnicity, Class & Gender in Australia1945 – 1996, Doctor of Philosophy Thesis, University of Wollongong. Available at: http://ro.uow.edu.au/theses/2091 Australia in Brief [Internet], Available at http://www.dfat.gov.au/aib/history.html Read More