ACTU likely to change tack to follow the Europeans
The Age
Tuesday June 9, 2009
Unions throw their beanies into the parental leave ring, writes Anthony O'Donnell. LAST Tuesday ACTU president Sharan Burrow said at the council's congress that transforming social protection and social insurance was now "at the top of the union agenda".Many will see this as a fresh departure for the trade union movement. Unions have been traditionally concerned with fair wages and conditions for those in work, rather than alleviating the hardship of those who find themselves without work.That isn't the whole story, of course. The accord the ACTU brokered with the Hawke government in the 1980s saw wages growth traded off for social policy advances: the introduction of Medicare, a revamped family allowance system and the bedding down of compulsory superannuation.Nevertheless, Australia differs from many European countries where trade unions, along with employers, play a substantial role in the governance and administration of social insurance schemes and employment services.Two decades ago, political scientist Frank Castles characterised working-class strategy in Australia as wage security for the worker rather than social security for the citizen. In the early decades of the 20th century, trade unions got things like a fair and reasonable family wage and sick leave inserted into awards. Castles argued that the early success in establishing centralised wage fixing determined the future strategy of working-class politics. There was little political pressure for the subsequent expansion of the level and generosity of income-transfer benefits.So Australia's welfare state for much of the 20th century remained distinctly residual in character, based on means-tested, flat-rate benefits financed out of general tax revenue.As long as our social security system operated in conjunction with a commitment to full employment, centralised wage fixing, award coverage and widespread home ownership, it amounted to what was, by world standards, a comprehensive system of social protection.But, as Professor Ronald Henderson discovered in the early 1970s, it was a system of protection that excluded the usual suspects: Aborigines, newly arrived migrants, the aged, single mothers - all those who couldn't rely on the labour market or intra-family transfers.In the past two decades, the social security system has extended its coverage, removed some, but not all, of the moralism that informed certain eligibility rules, and improved benefit levels, tested against more rigorous notions of need and adequacy. Over the same period, other pillars of the postwar social settlement - a buoyant labour market and centralised wage fixing, the nuclear family, and lately home ownership - have taken a battering.From today's perspective, the full array of income maintenance and welfare schemes in Australia exhibits a greater diversity than Castles' model suggests. State-based systems of workers' compensation, which were among Australia's earliest income maintenance schemes, follow a social insurance model, based on contributory financing and offering earnings replacement rather than flat-rate benefits. Medicare follows an insurance model, based on a hypothecated tax. Both superannuation and the Higher Education Contribution Scheme follow a compulsory savings model, the first prospective, the second retrospective.In this light it is useful to consider the most recent innovation: the paid parental leave scheme proposed by the Rudd Government.At first glance, it seems to confirm Castles' characterisation of the Australian model of welfare: a flat-rate payment, financed out of consolidated revenue. What sets it apart is the level of payment, at a rate equal to the minimum wage.As social policy commentator Julia Perry has pointed out, as a tax-financed transfer scheme, the paid parental leave scheme introduces serious anomalies into our transfer payment system. If we compare it, for example, with the assistance for people who cannot work because of serious illness or disability (and who are not entitled to paid sick leave or workers' compensation), it looks unjustifiably inequitable. An even more telling comparison, she points out, is with the carer payment, where those also carrying out socially beneficial unpaid caring work get about half the minimum wage.Perry favours a social insurance model for paid parental leave. It would result in new parents being paid an income based on earnings replacement, and would be financed at least in part by a levy imposed on all employers. This would ensure that the cost of employing women who became pregnant was shared across employers.Given how long it has taken for Australia to fall into line with other developed economies in adopting any scheme for paid parental leave, Burrow was probably right to welcome the proposal as "historic". But it may fall short of what she called for on Tuesday: a "new deal" for income protection in Australia.
© 2009 The Age