EDITORIAL : THE AUSTRALIAN, AUSTRALIA

Endorsing tough-love reforms

An illustration by Jon Kudelka. Source: The Australian

SOME disability pensioners are more disabled than others.

Tony Abbott is right. Allowing many of Australia's 800,000 disability pensioners to stay on welfare at a cost of $13 billion a year when there is work they can reasonably do is misguided compassion that eventually breaks down the social fabric. Every 14 workers are supporting one disability benefit recipient, a situation that is not only unfair to taxpayers but which short-changes productivity and the national interest. Mr Abbott is to be commended for drafting policy alternatives for reform, but the challenge of implementing a new, temporary benefit for people whose disabilities are treatable will be politically difficult in some marginal seats.

As Mr Abbott wrote in these pages yesterday, almost 60 per cent of disability pension recipients suffer from conditions that do not necessarily preclude them from returning to work after treatment. There is no reason that many people with mental health conditions, including stress, or muscular-skeletal conditions, or those suffering the after-effects of drug abuse should remain on welfare indefinitely. Like Britain, Australia needs to distinguish those who are too frail or ill to support themselves from people needing temporary support.

Most taxpayers will welcome Mr Abbott's proposals, which would extend a bipartisan tradition that began under the Hawke-Keating governments, which introduced the assets test for pensions and extended job searches for the unemployed. The social democratic Blair and Clinton governments emulated such measures and went further, with the former US president campaigning in 1992 "to end welfare as we know it". Tony Blair's "third way", John Howard's "mutual obligation" and former Labor leader Mark Latham's "reciprocal responsibility" concepts were endorsed across all sides of politics, although implementation has been frustratingly slow.

A big spender on family welfare, the Howard government did well with its work-for-the-dole scheme and welfare-to-work reforms for single parents whose children had reached school age. The number of families dependent on benefits fell by 120,000, or 20 per cent, after job-search requirements were imposed in 2006. But as analysis by former Labor senator John Black showed, the move cost the Howard government dearly at the 2007 election in marginal seats in NSW and Queensland with high percentages of single mothers.

This should not deter Mr Abbott or the Gillard government from pursuing further reforms. In 2011 there is no longer any political kudos to be gained in disguising the real unemployment figure by classifying many of the long-term unemployed as disability pensioners. An ageing workforce, the need for productivity improvements, skills shortages and the recognition that the best form of welfare is a job make it imperative for governments to redress under-employment.

"Tough love" not only has economic benefits but social benefits for welfare recipients themselves and their children, helping to break inter-generational cycles of disadvantage. The Greens and the Australian Council of Social Services are wrong to claim Mr Abbott is "demonising" and "denigrating" the unemployed. Nobody is suggesting that the sick, the frail and the disabled who are unable to support themselves should lose support. To the contrary, a better targeted system would enable governments to do more for disabled people in need.

The master coach returns north

THE Brisbane Broncos have missed Wayne Bennett.

In a big week in sport with the appointment of Michael Clarke as Australian cricket captain, Broncos supporters are cheering the fact that St George Illawarra coach Wayne Bennett appears set to return to Brisbane next year. Bennett's no-nonsense coaching took the Dragons to last year's NRL Premiership -- their first in 31 years -- a feat the Broncos achieved six times under his 21-year stewardship. As Queensland State of Origin coach, Bennett won five series out of seven and as Australian coach notched up 11 wins and a draw from 15 Tests. In NSW, his inspirational leadership made a strong impact both within and outside league.

Unlike many in professional sport, the poker-faced Bennett, who is reticent about personal publicity, is motivated by more than money or ego. He reportedly refused $1.1 million to stay with the Dragons for another season. Returning north would also mean passing up a lucrative chance to coach Newcastle and possibly become the first NRL coach to win premierships with three different clubs. Family has always been a priority for Bennett, who entitled his autobiography The Man in the Mirror, in reference to one of his favourite poems about being king for a day then going to the mirror to "see what that man has to say". His move will help keep interest in league strong.

Fair-dinkum tax summit would give WA a fair go

WESTERN Australia deserves a hearing on its taxation gripes.

Historically, Western Australia was reticent about the Australian federation project and has harboured secessionist murmurings ever since. West Australians, to use a topical term, are our federation sceptics. Yet now they are being asked to pay a high price for their membership of the aptly named commonwealth. With the resources boom in the north of the state delivering prosperity for the whole nation it is only natural that Premier Colin Barnett would question whether the proceeds are being shared fairly. We welcome Julia Gillard's willingness to examine the issue through a review.

The improbably named concept of horizontal fiscal equalisation has often been described as the glue that holds the federation together. In reality it is a national governance version of the Australian idea of a fair go. It ensures that, to some degree, our common wealth is distributed fairly, so that all states have the opportunity to deliver similar levels of services.

Since the advent of the GST, the states have been locked in to the full proceeds of a growth tax but they still must await the annual considerations of the Commonwealth Grants Commission to see how the total take will be divided between them. Mr Barnett is concerned about projections showing that within a few years WA could receive less than half the GST dollars raised within its borders.

The Australian recognises that this debate is as old as the federation itself but it requires constant attention and regular reform. The rapid growth in the WA economy imposes heavy demands on the state's infrastructure spending, so it must be allowed to keep some of the spoils of its success in order to cope with the strains and build for continued growth. Perhaps just as importantly, the Prime Minister has recognised that the so-called mendicant states of South Australia and Tasmania must be given an incentive for economic development and reform. Part of the genius of the federation rests in its inbuilt competitive tension, so living from the tax windfall of other states should not be an easy option.

Politics, no doubt, is playing its part in all of this, with the government desperate to recover some standing in the west. But the cold, hard reality is that every dollar returned to one state is a dollar less doled out in another.

Over 110 years our federal/state tensions have generally led to a reasonable financial balance. The extraordinary circumstances of a resources boom largely concentrated in WA and Queensland justify another examination, so long as the national interest is always paramount.

The most obvious flaw in Ms Gillard's posturing is that her own economic reform agenda is so thin. Labor's compromised mining tax is an undisguised attempt to share the proceeds of the mining boom more widely, yet it has been considered in isolation. A tax summit is planned for later this year, after the mining tax is legislated, and with the GST specifically excluded from consideration. And now we will have the troika of John Brumby, Nick Greiner and Bruce Carter carrying out a separate examination of state funding issues.

The government of a mature federation, intent on pushing economic reform, would consider all these matters together in a substantial national taxation summit.