Social Policy Whisperer: Reclaiming the economy

In the latest Social Policy Whisperer, Dr Ben Spies-Butcher discusses the implications of the perceived (and sometimes rhetorical) differences between "social" and "economic" policy. How do we bring these two debates together?

I have spent much of my time as an academic (trained in economics, but working on social policy) interested in how different people describe ‘the economy’. Read any opinion poll on competence in handling various issues and you find out something quite curious. People often feel one side of politics is better at managing the ‘economy’, but the other is better at ‘protecting’ jobs and delivering services like health and education.

What exactly is this ‘economy’ that governments are managing if it doesn’t equate to decent jobs and good quality basic services? Health and education are two of the largest consumption items for most households, and are central to quality of life. All forms of paid care are growing rapidly. Can being a good economic manager really be so separate from what are now the largest and fastest growing parts of the economy?

The strong dividing line many of us seem to have between the ‘economy’ and our ‘society’ is often lamented by those in social services. And while the line is clearly still important for framing debates, it has increasingly dissolved in terms of public administration. The New Public Management and competition policy have extended market competition into social provision.

More recently, a move has begun in the other direction. Those concerned with social provision have begun to focus their attention on issues we normally think of as ‘economic’ – especially taxation. Debates around housing affordability are now debates over negative gearing. Discussion of age pensions leads quickly to tax concessions for superannuation.

This has been building for a while. It was back in the 1980s that Treasury begun to report ‘tax concessions’. These are exemptions or discounts in the tax code that allow people to pay less tax than they would ordinarily be expected to. But unlike a simple tax cut, the discount only applies to some people, and often requires a particular kind of spending or investment.

In this sense, it’s virtually identical to a subsidy. Think about what the difference is between discounting your taxable income by the amount of your health insurance premium (as we once could), with getting a rebate for the premium (as we do now). Yet, if the benefit is given through the tax system it magically disappears from the budget papers – leaving only a shadow of the money that was never collected behind.

This allows two quite different social systems to develop. The first we are all familiar with. It involves direct government expenditure, either to provide services (like health and education) or payments (like Newstart or family benefits). These schemes are subject to enormous scrutiny, are constantly subject of efforts to make savings, and involve close monitoring of anyone attempting to get access. Try applying for a government payment and you are confronted with pages of forms and long queues.

But there is a second system run through tax departments. Often it provides benefits for essentially identical purposes – like superannuation and the age pension. Yet there are few forms, no long queues at Centrelink. And come budget night you would find virtually no mention the schemes even existed. Yet, as many now realize, the tax concessions often cost the budget more than the direct payments and are grossly inequitable in their distribution.

It’s not just how these systems work. It’s also how we talk about them. When we discuss the economy and tax we talk about efficiency and self-reliance. We presume those that engage in markets (like ‘self-funded’ retirees) are doing the heavy lifting, and those that don’t (like carers) are at best noble, but meek, at worst potential rorters.

For me, the take home message is that if we want an equitable system of services and payments we need to reclaim the ‘economic’. Not by talking the language of economists and using abstract models and numbers. But by talking about the real impact all of these policies have on people’s lives – by talking about the economy like it is society, and by understanding the tangible impacts of economic policies.