Taxation, Welfare and Government Management - Report Example

TAXATION, WELFARE AND GOVERNMENT MANAGEMENT Customer Inserts His/her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name Date The philosophical basis of the Australian ‘welfare state’ The interim report of the Welfare Reform Reference Group established by the Australia’s Minister for Family and Community Services, Senator Jocelyn Newman to advise on the various options available for welfare reform, pointed out “the modern welfare state will not only help meet the material needs of individuals and their families, but also express and contribute to the overall unity of Australia as a society” (Saunders, 2002, p.53). Moreover it suggested that if properly organized, the welfare system can help fight social disparity, crime and social disadvantage (Saunders, 2002, p.29). Therefore it helps to foster the bonds of trust and reciprocity which are essential for the development of strong communities (Saunders, 2002, p.31). The ‘social rights’ of welfare entitlement has evolved through the nineteenth and twentieth centuries, where, together with earlier legal and political rights, one of the three defining elements in the modern idea of citizenship (Marshall, 1999, p.89). Unlike the capitalist market system that fragments society by emphasizing individual self-interest, the welfare state unifies it by granting equal rights of entitlement to everybody (Marshall, 1999, p.89). It therefore functions as a form of social cement, tempering the individualism of the market with a good strong dose of social altruism (Marshall, 1999, p.89). The image of welfare state as the individual face of the capitalist market system is important in understanding the nature of its popular support in Australia and the unease which surrounds attempts to reform it (University of New South Wales. Industrial Relations Research Centre, University of New South Wales. Centre for Applied Economic Research, 2001 p.34). These are personal and acquisitive cultures that are linked to the principles of private property, competitiveness and market exchange (University of New South Wales, 2001 p.34). The welfare state has a moral dimension underlying it; as seen by many as a necessary feature of a decent and compassionate society thus in Australia it is strongly associated with the idea that everybody deserves a fair treatment (University of New South Wales, 2001 p.34). It is open to squabble whether the welfare state can really be seen as ‘moral’ when it involves individuals delegating their duty to help others to a third party (Turner, 1993, p.220). Morality depends upon the exercise of free choice by individuals, since compulsory levying of taxes to pay for the support of the poor and needy cannot be deemed moral (Turner, 1993, p.120). Indeed, to the extent that state welfare crowds out voluntary and charitable activity by individuals, it could be argued that it weakens rather than strengthens social morality (Saunders, 2002, p.97). Nevertheless, those who argue for an expansion of welfare provision coupled with increased spending have traditionally justified their demands by tapping into the idea that state welfare provision is an ethical as much as a practical imperative (Saunders, 2002, p.97). Taxation, welfare systems and the federal government management of the economy The Australian Government announced a review of its taxation system in the year 2008 (University of New South Wales, 2001, p.78). The review was to analyze the current tax system and make recommendations in order to position Australia to deal with the demographic, social, economic and environmental challenges of the 21st century and enhance Australia's economic and social outcomes (Turner, 1993, p.200). For the last few decades, Australia’s tax and welfare system has undergone a major reform (University of New South Wales, 2001, p.79). While welfare reform has helped to meet the needs of society’s lowest income households, tax reform; particularly reforms to the taxation of superannuation has largely benefited those on higher incomes (University of New South Wales, 2001, p.78). Market forces have tended to widen differences in pre-tax incomes in many developed economies Australia has led to significant divergences across sectors, elements and segments of the community (University of New South Wales, 2001, p.78). The pressure of cost of living on low-income families has increasingly escalated; as the price of essential items such as food, transport and accommodation increases, therefore financial pressure facing the most disadvantaged elements of the community heightens (Keating, Lambert, University of Canberra. National Centre for Social and Economic Modelling , 1998, p.89). The financial pressures facing segments of the Australian community are compounded by characteristics of the tax and transfer system which diminish the rewards to those reliant on welfare from transitioning into paid employment (Keating et al, 1998, p.89). As a result it limited their ability to attain higher income levels and confines them to welfare-dependency and the relatively lower standards of living associated with it (Loney, Boswell, Clarke, 1983, p.236). Such barriers can, over time, heighten income inequalities and contribute to an under-utilization of Australia’s labor force (Loney et al, 1983, p.236). Given that the resources of Government are limited, welfare is largely targeted at those most in need (Loney et al, 1983, p.240). It is achieved by assessing the individual’s or family’s access to other sources of income and assets (Loney et al, 1983, p.179). The difference between the welfare system in Australia and the taxation system is the units (individuals versus families) against which income or assets are assessed (Burgess, 2008). While taxation is levied against individual income, eligibility for many welfare payments is dependent on family structure and on the financial circumstances of the family (Burgess, 2008). In recent years, the Government has set a strategic agenda with three priorities; reducing violence against women, improving women’s economic security and ensuring women’s equal place in society (Suter, 2011, p.29). The agenda has progressed significantly, prioritizing work to address some of the most evident inequalities that remain between women and men in Australia (Burgess, 2008). The Women’s Budget Statement 2011–12 highlights measures that will advance gender equality through building a productive workforce, plans for participation that address deep-rooted disadvantage, provide cost of living relief for families, support children with disability and respond to men’s and women’s mental health needs (Suter, 2011,p.300). Child care is essential in enabling parents who are primary guardians of children, often women, to enter and remain in the workforce (Saunders, 2002). The Australian Government plans to invest over $20 billion over four years in its program for early childhood education and child care (Saunders, 2002). Its focus is on providing Australian families with high-quality, accessible and affordable integrated early childhood education and child care (Saunders, 2002). Enhancing capacity of the early childhood workforce will support the successful delivery of the existing early childhood reform agenda (Suter, 2011, p.310). The Government will invest $9.7 million of the 2011–12 Budget over four years on the Child Care Reform Agenda. The allocation aims to build the capacity of existing early childhood education and care workers and will be particularly important for women, who represent 95.4 per cent of the early childhood workforce. This measure will encourage more workers to upgrade their qualifications (Saunders, 2002) The over $20 billion that the Government is investing in early childhood education and care includes over $7 billion to assist working families with out-of-pocket costs under the Child Care Rebate (University of Melbourne, 2003). Around 700,000 families are assisted currently by this payment (Suter, 2011, p.320). Parliament passed a legislation that will enable from July 2011 to choose to have their Child Care Rebate paid fortnightly either directly into their bank account or as a fee reduction via their child care service (University of Melbourne, 2003). The option of fortnightly Child Care Rebate fee reduction payments to families through child care services will reduce the upfront costs of child care for families and the potential debt burden for services (Burgess, 2008). Of the estimated 251,422 full-time equivalent teaching staff in schools in 2010, 174,594 representing 69.4 per cent were women (Burgess, 2008). The Government has budgeted for $425 million over four years to enhance the quality and status of the teaching workforce through better performance management and feedback processes for teachers and by rewarding teaching excellence (Keating et al, 1998, p.89). National rewards for great teachers will provide up to a 10 per cent salary bonus to around one in ten, or 25,000 teachers from 2014 (Suter, 2011,p.308). The National Centre for Social and Economic Modelling estimates that 25 per cent of the gender pay gap is caused by occupational segregation (the concentration of men and women in particular occupations and industries). Accessibility of the Australian legal system for all Australian residents In Australia and many other countries, the development of welfare systems during the post-World War II boom followed a similar pattern. Systems were enlarged on the back of rising prosperity in a process that extended an increasing number of types of benefits to an increasing number of claimants. During the initial stages of expansion, there were only limited controls on eligibility and systems were highly vulnerable to fraud (Reeve, 2006, p.432). The reasons for these include: • It was often difficult to check on the bona fides of applicants or to monitor recipients for changed circumstances; • Welfare providers were expected to be sensitive to the needs and circumstances of applicants; • Anti-fraud measures generally entailed procedures that could deter and stigmatize recipients and delay urgently needed benefits. In Australia, the Fraser Government (1975–1983) and Hawke–Keating Government (1983–1996) tightened compliance measures. The Howard Government (1996–2007) made welfare fraud a major election campaign issue and boosted resources to combat fraud (Dunlevy & Hannon, 1997, p.83). The Rudd Government, which took office in November 2007, also committed itself to enlarging antifraud programs. In January 2008, Human Services Minister Joe Ludwig declared that the Government was committed to ensuring people in need have access to adequate assistance but will not tolerate people who abuse the community’s willingness to give them a hand up (Ludwig, 2008, p.122). The government’s inaugural budget included an additional $138m to fight welfare fraud, with projected net savings from improved compliance of $600m over four years (Ludwig, 2008b). In early 2009, Centre link announced the allocation of $43.2m to boost the anti-fraud, call centre and online infrastructure capacity (LeMay 2009, p. 215). The Minister also signaled a greater focus on primary prevention through better initial compliance checks with associated avoidance of debt (Ludwig 2008, p.123). These moves were motivated in part by rising inflation, a commitment to reduce expenditures and a range of strong future demand pressures including from the growing longevity of Australians and increasing tertiary education ( Peter & Grabosky, 2002).; Green 2008; Karvelis 2008, p.67). References: Adam Graycar, Peter N. Grabosky, (2002).The Cambridge handbook of Australian criminology. Cambridge University Press. Bryan S. Turner, (1993). Citizenship and social theory. SAGE. Christian Suter, (2011). Inequality Beyond Globalization: Economic Changes, Social Transformations, and the Dynamics of Inequality. LIT Verlag Münster. John Burgess, (2008).New Employment Actors: Developments from Australia. Peter Lang. Joseph Fried, (2003).How social security picks your pocket!: a story of waste, fraud, and inequities. Algora Publishing. Loney, M., Boswell, D., Clarke, J., (1983).Social policy and social welfare: a reader. Open University Press. Ludwig J. (2008). Combating welfare fraud to keep the system fair. Media release 13 May. http://www.dhs.gov.au/media/archives/ Ludwig J. (2008). Combating welfare fraud to keep the system fair. Media release 13 May. http://www.dhs.gov.au/media/archives/ Michael Stockton Keating, Simon Lambert, University of Canberra. National Centre for Social and Economic Modelling (1998). From welfare to work: improving the interface of tax and social security. NATSEM, University of Canberra. Peter Saunders, (2002).The ends and means of welfare: coping with economic and social change in Australia. Cambridge University Press. Reeve, G. (2006). Human services administration: A more intelligent approach to reducing benefit fraud. Public Administration Today Jan/Mar: 37–45 Thomas Humphrey Marshall, (1999). Citizenship and social class: and other essays. University press. University of Melbourne. Institute of Applied Economic Research, University of Melbourne. 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