Chapter Synopsis

Introduction

Chapter 1: Welfare Regimes and Risky Speculations
John Murphy

In the broadest sense, welfare policies have always been about the management of risks. Pierre Rosanvallon has argued that the post-war welfare state represented the socialisation of risks, such as poverty, unemployment or sickness; rather than being borne solely by indi­viduals (or families), these risks were effectively amortised across society. In this chapter John Murphy suggests that sometimes the broadest sense can produce the least sense, if it misses a necessary dimension of historical specificity. In the first part of his chapter Murphy considers different conceptions of risk in social policy discourses, and asks whether it is plausible to interpret all welfare regimes as institutions of risk management. He suggests that the most useful and influential of these arguments has been Jacob Hacker’s analysis in The Great Risk Shift of how an American welfare system built around the provision of occupational benefits (savings for retire­ment and for ill-health) was transformed through policies intended to transfer the investment risks of those savings to workers themselves. Hacker also has a sophisticated focus on the idea of ‘path depend­ence’, and this informs the second part of the chapter, where Murphy describes the historical development of social policy in Australia.
He concludes by assessing the plausibility of arguments of a ‘risk shift’ in a regime that is not built on the insurance model of welfare. Murphy asserts that descriptions of the ‘street-level’ administration of the poor, reconceived as sub-populations ‘at risk’, provide an analysis of how powerful and repressive theories of risk analysis can be, and sit alongside analyses of the transfer of welfare administration, out-sourced under formal contractual arrangements. Each of these forms of analysis is as much about different conceptions of the past, as of contemporary ‘risk’.

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Chapter 2: Risk Shifts in Australia: Implications of the Financial Crisis
John Quiggin

Risk’ has become a central theme in 21st-century policy thinking. In particular, there has been considerable discussion of the ‘Great Risk Shift’, that is, the process by which the burden of risk has been shifted away from governments and employers and onto workers and households. The financial crisis that began in 2007 has funda­mentally transformed the problem of social and economic risk management. The outcomes remain hard to discern, but the central ideas of economic liberalism, dominant since the mid-1970s have clearly failed. John Quiggin provides a brief discussion of theoretical views of risk and inequality, a historical survey of the role of government as a risk manager, and consideration of the revival of economic liber­alism since the 1970s. He recognises that changes in theoretical understanding of risk and uncertainty have had important implications for our understanding of social justice and the role of government. Quiggin then applies this same thinking to provide a detailed focus on Australia. He suggests that the development of social risk management in Australia, and the reactions against it followed a path broadly similar to that in other developed countries. Australia is considered as a specific example of this process, albeit with its own distinctive features. Quiggin then turns his attention to the implications of the global financial crisis, observing that that the institutions and economic systems that generated the great risk shift of the late twentieth century have failed, and calling for the generation of alternative social responses.

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Chapter 3: Demographic Change in Australia and Its Social Consequences
Peter McDonald

Population size in Australia is a contentious issue. Taking in turn each of the three essential demographic elements – births, deaths and migration – McDonald examines the major demographic changes in Australia and the challenges this presents for policy makers. He argues that it is very common for economic modelers to assume that demographic change is exoge­nous. In their models, demography is the ‘front end’. It is determined and then fed into the model. The assumption is that there are no feedbacks. Yet McDonald observes that this is not con­sistent with reality and that there are both long and short policy levers that influence population fluctuations and are employed to manage the associated risks. For example, McDonald shows how the incom­patibility of work and care arrangements, alongside policies promoting human capital investment, has served to reduce fertility levels. In Examining migration, McDonald notes that in Australia, there has always been a very close rela­tionship between the demand for labour and international migration. Migration surges in boom times (with a lag) and falls in recessions. Because of the nature of the business cycle, a gradually increasing boom followed by precipitous collapse, the lag is important. Consequently the largest number of migrants in a business cycle usually comes into the country at the depth of the recession to fuel cultural paranoia. McDonald also examines the risks associated with an ageing population including increased costs, particularly health costs, increased political lobbying, housing and locational aspects, consumption expenditure, intergenerational implications and labour force participation impacts. As McDonald contends, demography does not just happen, but is an outcome of deliberate policy decisions – albeit sometimes unintended.

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Chapter 4: Risk and US Social Policy: The Road from the New Deal to the Bad Deal
Howard Karger

A long-held view in some quarters characterises the US welfare state as ‘exceptional’ by virtue of its meagre benefits.1 Academics and policy makers who claim the US lacks a comprehensive welfare state typically point to the absence of national health care and family allowances. While government health care and family support pro­grams are poorly developed in the US, the role of indirect support for families through tax relief and tax deductions for medical expenses is often ignored, as is the significance of Medicare, Medicaid, and other state and local health care programs.
Comparative studies have shown that when social programs, such as retirement pensions, are factored into the welfare equation, the US fares well. Despite this, the US does not compare favourably with other industrial nations in the extent, comprehensiveness, or coverage of its welfare system. Responsibility for attenuating economic risk has been shifted away from government and corporations and onto the narrow shoulders of the American family. Conservative strategies for raising risk levels has been suc­cessful in that private and public support mechanisms had fallen behind the pace of change in contemporary society. In this chapter, Howard Karger explores how an increased tolerance for risk has been deliberately developed in the US. He examines how the appetite for increased risk among Americans was engineered through a concerted effort by conservative politicians and influential think tanks. Karger focuses on a few specific areas where increased levels of risk have been influential in shaping that domain. Specifically, his chapter looks at five areas where risk has dominated US public policy: (1) ideology, using con­servative think tanks to create a risk-friendly social paradigm; (2) arresting the growth of the US welfare state; (3) solidifying the private sector approach to health care; (4) dismantling public assistance; and (5) attempts to privatise Social Security.

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Chapter 5: Welfare Reform and Provision for Old Age in Australia and Britain
Myra Hamilton

Manifested in the New Deals in Britain and reciprocal and mutual obligation policy programs in Australia, ideas about con­tract have transformed the role of the welfare state in the management and redistribution of risk. Myra Hamilton argues that although this process is visible in the area of retirement incomes policy and provision for old age, the shift has been more complex. This chapter examines the role that ideas about contract have played in the individualisation of risk. It illustrates the role of contract by outlining the way in which risks have been individual­ised in the area of welfare reform in Australia and Britain. Australia and Britain were chosen because the two liberal welfare regimes, despite their different models of social provision—social assistance and social insurance respectively—exhibit similar processes of con­tractual transformation both in welfare reform and in the area of provision for old age. Next, the chapter discusses the effects of this process on provision for old age, and argues that this area of social provision can offer a unique insight into the operation of the ‘great risk shift’. Hamilton observes that the inevitability of old age as a condition of life had contributed to the deep and sustained legitimacy of the public age pension and buffered it from the full force of changes in the welfare state. The universality of ageing has meant that old age could not be turned into an individual choice and this to some extent inoculated provision for old age from many of the processes that were affecting other components of the social security system. Finally, Hamilton turns to the idea of a ‘great risk shift’ as a contested one, and suggests that an analysis of provision for old age helps to draw out some of the complexities and contradictions in this transformation.

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Chapter 6: Autonomy: Individualistic or Social and Relational?
Catriona Mackenzie

In liberal democratic societies, the principle of respect for individual autonomy is widely accepted—at least in theory, if not always in prac­tice—as a fundamental normative principle that should guide political decision-making, public policy and practice, as well as our attitudes towards our fellow citizens. The presumption is that most adult citizens have the capacity and the right to exercise this authority, or to be self-determining, even if they do not always exercise it as wisely as they might. In this chapter Catriona Mackenzie problematises the concept of autonomy by presenting sub­stantive philosophical disagreements about what exactly it means to lead a self-determining life. Mackenzie notes the widespread currency in neo-liberal discourse of the ‘maximal choice’ view of autonomy. The ‘maximal choice’ view equates individual autonomy with the satisfaction of subjective preferences and assumes that autonomy, or self-determination, is best promoted by maximising the range of choices available to indi­viduals and minimising regulatory and other forms of constraint on individual choice. She  suggest that this conception of autonomy—which interprets autonomy as equivalent to minimally constrained freedom of choice—provides a central philosophical underpinning and justification for the individualisation of risk and responsibility. If to be autonomous is to be free from constraint in the exercise of individual choice, then to be autonomous is also to be individually responsible for the risks and to bear the costs of one’s choices. The rhetoric of maximising choice in the name of promoting individual autonomy thus goes hand in hand with an emphasis on the responsibilities of individuals to understand and manage the risks attendant upon their choices. It also leads to a corollary de-emphasis on both the social constraints on individual choice and on our social responsibilities to ensure that the burdens of risk are not borne disproportionately by some individuals or social groups.

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Chapter 7: 'Two Conceptions of Risk and Responsibility’
Jeremy Moss

Jeremy Moss explores two important conceptions of risk and responsibility that might be used to conceptualise the obligations of those who receive certain types of welfare in Australia. The first conception, what in the philosophical literature is called ‘Luck Egalitarianism’, is the view that we should compensate people for disadvantage that is a result of chance (bad luck, accidents etc), but not for disadvantage that is a result of a person’s choices. On this conception, individuals should bear the risks of misfortune themselves if their disadvantages come from their own choices. Underlying this conception is a distinction between chance and choice. It is assumed that, at least in theory, we can distinguish between those benefits and burdens that result from chance and those that result from choice. It is this conception of Luck Egalitarianism that permeates the current Australian debate about welfare in several distinct ways. The other conception of risk and responsibility is what Moss calls ‘Equality of Status’. The aim of achieving equality of status is not so much to model the distinction between chance and choice in our welfare theory or practice, but to ensure that people are equal to one another along a range of important indicators. Whatever the merits of these two conceptions, they provide a clear choice between two very different goals for welfare policy and two very different sets of criteria by which to assess who of society’s most disadvantaged is entitled to assistance and under what conditions. Moss argues a Luck Egalitarianism approach is problematic in that it erroneously privileges personal responsibility as the primary goal of justice. He argues that the attempt to shift the risk of disadvantage and its consequences onto the vulnerable individual and away from the State is misplaced. In particular, it leads to disastrous consequences and problems of implementation that place too much of the risk of harm on the most disadvantaged people.

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Chapter 8: ‘The great risk shift at work in Australia?’
Barbara Pocock

In most industrialised societies, and increasingly in developing countries as well, paid work is a primary pathway to economic independence and thus to general independence. The individualised income that arises from paid work buys sustenance, housing, education, mobility and enables familial, household and social reproduction. However, there are other important sources of sustenance beyond paid labour, including the state, private wealth and friends and family. The quantum and nature of the sources of this suste­nance, the conditions that surround its generation and the balance of its sources—whether from individualised paid labour or other sources—affects the welfare of individuals and society. They con­struct risk. These issues are the focus of this contribution by Barbara Pocock. Pocock explores the risks associated with paid work, building on Guy Standing’s model of sources of social income. She reviews the ways in which work-related risks have shifted in Australia in the period 1981-2008, compared to the earlier post-war period 1945–1980. Pocock argues that risk associated with paid work has shifted to the individual in the past three decades and that this ‘great risk shift’ has not occurred evenly, with significant effects on inequality. Conceptually, the notion of risk and its individualisation draws our eye and analysis to the individual and away from the social. It encourages us to focus on personal capacities and resources in plot­ting pathways, and it obscures the causes and effects of inequality and structural factors which lurk beneath variable risk and construct individual chances. It obscures inequality of social class, ethnicity or gender which shapes the lot of the individual. She concludes with suggestions about how risk that is related to paid work might be reduced and shared more fairly.

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Chapter 9: Tertiary Education as Insurance against Risk – What are the Outcomes? For Whom?
Leesa Wheelahan

In this chapter Leesa Wheelahan discusses the way in which the discourse of globalisation and the risk society has contributed to the development of universal tertiary education systems in wealthy countries such as Australia within the context of liberal market economies. Universal systems of tertiary education have been established by gov­ernments as a response to globalisation and have replaced welfare as insurance against risk amidst perpetual change. However Wheelahan argues that such systems also individualise risk as a consequence of their marketised nature.  Different forms of participa­tion in tertiary education are reinterpreted as decisions made by individual consumers about how they will invest in their human capital as a defence against unemployment. This provides the basis for naturalising inequali­ties in which unequal access to education is cast an individual deficit that must be overcome if individuals are to be ‘socially included’, while questions concerning distributive justice in education are no longer central concerns of policy. These processes have obscured the way in which social class continues to mediate unequal access to education, education has been subordinated to the economy and the purpose and content of education have been reshaped to produce the bourgeois possessive liberal individual. Wheelahan concludes by examining the way access to knowledge is mediated by different forms of participation in tertiary education. Access to knowledge is needed to manage risk and to participate in ‘society’s conversation’ about itself, but this access is unequally distributed. Different forms of participation in tertiary education continue to reproduce social class.

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Chapter 10: Very Risky Business: The Quest to Normalise Remote-Living Aboriginal People
Jon Altman and Melinda Hinkson

Jon Altman and Melinda Hinkson take the Northern Territory Intervention as a prism through which to explore a distinctive cultural shift that is currently underway in the governing of remote-living Aboriginal Australians. At the heart of this process, they argue, lies a shift from a focus on community to individuation that entails a profound contradiction. From one perspective the state can be interpreted as acting respon­sibly and decisively to reduce the risk posed by a section of its citizenry who represent a refusal to conform to mainstream social values. This refusal is viewed as constituting risk not just for the Australian nation, but also for Aboriginal communities and persons themselves. Yet such mainstreaming action is shown to have opposite effects. Rather than working to re-establish the kinds of social forms through which ontological security might be fostered within this distinctive section of Australian society, government policy is increasingly geared towards producing mobile, formally educated, individualised Aboriginal citizens who will embrace the values of the free market. Paradoxically, the production of this new Aboriginal subject is urged at a time when the deep contradictions of neo-liberal processes have never been more apparent. In this chapter Altman and Hinkson provide a cultural and analytical perspective on the issue of risk. They trace policy shifts to the present and then focus on the NT Intervention and consider the rationale for this unprecedented action. They ask whether what we observe represents unintended consequence or creative destruction of Indigenous institutions. In the final section they briefly explore some of the aspirational common ground shared by remote-living Aboriginal people and the state and sketch out an alternative vision for a policy approach that could go some way to meet the risk-mini­mising needs of both.

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Chapter 11: Risk Management and the Human Services: A Case Study of Risk Transfer as Risk Management
Catherine McDonald

In this chapter, Catherine McDonald examines one contem­porary Australian state government’s attempt to manage a form of risk: the reputational (and hence political) risk of failure in Victoria’s child protection system. She does so by drawing upon a sociocultural perspective on risk: ‘an attempt to marry the anthropological, risk society and governmentality arguments in order to produce a concerted synthesis to understanding risk as a societal phenomenon’. McDonald’s focus is on the relationship between non-profit human service organisations and the state because that relationship consti­tutes the site of risk management in child protection. Several academic disciplines have exhibited sustained interest in this rela­tionship. It is of interest to three in particular: political science, public administration and the now well established genre of non-profit or third sector studies. Written some time ago, there are several works within the latter oeuvre which are germane to the issue discussed here. These works rise above the general clamour about the delete­rious effects of state funding on the autonomy, vitality, and assumed virtue of non-profit organisations. They also provide an alternative theoretical platform to the ubiquitous public choice and agency theory for understanding why states fund non-state organisations, and potentially, the effects of this funding. In doing so, they shift the focus of attention away from notions of efficiency and effectiveness as drivers of administrative policy. Instead, these accounts draw attention to the often understated politics of public administration.

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Chapter 12: Policy Design Issues for Risk Management: Adverse Selection and Moral Hazard in the Context of Income Contingent Loans
Bruce Chapman

Bruce Chapman examines a potentially very useful government financial risk manage­ment instrument called an income contingent loan (ICL). ICLs potentially come in quite different forms and might be used to address problems associated with a disparate range of activities. They exist in both practice and in theory, and in this chapter Chapman considers examples of both. ICLS allow the possibility for public policy to deal with a range of market failures and in the process offer citizens’ or businesses the possibly very important features of protection against default and of consumption smoothing. The benefits of ICL are the subject of section two. The relatively successful his­tory of HECS, and the adoption of ICLs of similar forms for higher education financing reform in New Zealand, the UK and Hungary, among others, is practical testimony as to their direct policy appeal. Section three is a description of four separate possible ICL interven­tions: HECS, The Austudy Loan Scheme, low level criminal fines and paid parental leave. Through reference to the four case studies it becomes clear that there are two significant challenges for the design of ICL: adverse selection and moral hazard. Chapman argues that these concerns are fundamental to the usefulness of ICL as public sector interventions. Chapman’s position is that even if ICLs seem to be conceptually attractive for a subset of economic prob­lems, grants based policy approaches would seem to remain appropriate in traditional areas of social security or health, such as with respect to unemployment benefits, income redistribu­tion policies or in addressing basic medical services financing. He suggests that attention to the finer points of the architecture of schemes would be time well spent.

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Chapter 13: New Social and Economic Risks
Brian Howe

Changes in the Australian economy and society over the past thirty years have introduced a greater sense of risk. In understanding these changes and possible policy responses to them it is important to rec­ognise the distinctive character of the ‘wage earners welfare state’ dependent as it was on a living wage for working men and the unpaid contribution of female carers to sustain so called ‘full employment’. The sharp decline in the utility of this established model reflected the greater pressure on employers in a more open information and service economy together with an increased demand on the part of women for greater equality in access to paid jobs and greater recogni­tion of their unpaid caring. Brian Howe argues that together these factors demand a more modern concept of ‘full employment’ designed to help people manage life course risks. The way time is distributed is now a con­tested issue as people seek to balance various demands on their time not least of which is caring time. In emphasising transitions as time both of risk and opportunity it is important to avoid placing too much emphasis on individual agency. Howe points to the importance of ‘transitional labour markets’ which are ‘institutional bridges’, designed to help people positively manage potentially risky transitions. People feel under enormous pressure in managing time as working hours for many continue to rise. Howe mentions time banking and learning accounts as examples of policies that might facilitate greater ‘time sovereignty’ for people.

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Chapter 14: Working it Out: How Young People are Adapting to New Risks in the Labour Market
Suzette Fox

Young workers form a unique sector to be analysed within the Australian labour market. The age group commonly called ‘Gen Y’ in popular culture includes young people born between 1982 and 1995. They have been described as the best educated of any generation, highly technological and with a global world view. In Australia they comprise approximately five million people and will account for 40 per cent of the Australian labour market within a decade. However the workforce they inherit is increasingly characterised by casualisa­tion, a consequence of global trends which have been linked to a proliferation in poor working conditions. Young people already inhabit this new world of work and their decisions have long term implications, for themselves and their com­munity, for industry and governments. In this chapter Suzette Fox focuses on how declining confidence in the predictability and security of peoples’ future at work influences the life/work meanings young people are forming. Young people are often not taken seri­ously because their poorly paid and short term jobs are considered a phase young people go thorough on the way to getting a real job. Previous research has also, tended to favour labour market participation and employment outcomes, targeting outcomes for disadvantaged groups. Although Fox believes this is a worthy agenda, she contends that information is also needed about the effects of social change on the broader youth population and not only those who are marginal­ised and at-risk. It is important therefore that policy makers, employers, educators and those who work with young people become more aware of how the uncertainty and unpredictability of modern life impacts on them. Positioning young people as pioneers in these new economic arrangements, Fox explores the subjective responses of young people to changing economic conditions and how it influences the way they “do life”: the choices they are making about work and lifestyle, relationships and fertility, as well as the long-term implications of these decisions.

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Contributors