The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello


11 March 1996 - 3 December 2007

Speech of 27/06/2003




FRIDAY, 27 JUNE 2003

Since 1856 Anglicare has served as a vehicle by which the Anglican Church has provided welfare services to the community. It has provided those services to people of different faiths and to people of no faith at all.

Think what Australia was like in 1856. There was no age pension, no disability pension, no pharmaceutical benefits scheme, there was no family tax benefit to support children, there was no unemployment benefit, no rent allowance, no supported housing, no widows pension.

In 1856 if you had no work you went without: without income, housing, shelter and food.

And the agencies that stepped in, did so out of care and concern for their fellow citizens. They wanted to stop people starving from lack of food and to stop people dying from preventable diseases. First churches led the way in establishing agencies and hospitals. Afterwards came the friendly societies and the other voluntary organisations that were formed to deal with very real human need.

Of course in 1856 before the days of unemployment benefit and age pensions there was no income tax, there was no GST, and there was no stamp duty on the Sydney real estate market.

The tax base grew over the course of the 20th Century as the welfare base grew. In 2003-04, 72 per cent of Commonwealth tax revenue will be spent on health, education, social security and welfare.

Both the tax base and welfare entitlements cranked up significantly after World War 2. This was the era of the Welfare State. The State got into the business of income support on a very extensive basis.

Governments are quite good at designing systems of income support. What gives them the wherewithal to do so is the taxing power. The taxing power provides a source of revenue which can be redirected virtually to any target group in our community.

So today if you cannot find work, or are unable to work or deemed to be of an age where you shouldn't be required to work, you will be entitled to a taxpayer sponsored income. This income is modest. Unemployment benefits for a single person with no children is $190.05 per week or around $9,882.60 per year. The Age Pension and the Disability Support Pension for a single person is $220.15 per week or around $11,447.80 per year.

Together with medical care, pharmaceutical subsidies, rent assistance this income support is sufficient to provide (minimal standard) housing, clothing, utilities and food.

When the idea of the Welfare State was at its height its supporters and spruikers imagined that one day want and poverty would be abolished. It was thought that since the state was much better able to organise the response to human need the charity and voluntary associations would wither and die. After all they lacked the mechanism that gave the State its strength - the taxing power.

Not so long ago it was actually claimed that the welfare state would abolish poverty. Not far from here in 1987 the then Australian Prime Minister declared " By 1990 no Australian child will be living in poverty."

He was wrong.

What he meant to say was that household income support, if properly managed, would allow families to live above the poverty line as it then stood.

That formulation doesn't have the same ring. No doubt that is why he didn't put it that way. But if he had, he would have got in a lot less trouble.

So what is the place of the voluntary association or the charity in a modern industrial economy that operates an extensive system of income support? Do we still need them?

It occurs to me that there are a number of reasons to reaffirm the role of the charity in addressing human need.

  1. Unlike entitlement programs which are entrenched in law, charities can respond immediately and individually to need.
  2. While income support provides insulation against poverty it does not treat the cause of poverty.
  3. The voluntary associations and charities bring an extra dimension to their work to the extent they are staffed by people of strong religious or moral conviction.
  4. Giving to the voluntary association or charity enriches the giver as well as the receiver.

To the extent that it fulfils these roles the voluntary organisation or charity can do what the State cannot. But it must work at these tasks. And to fulfil these tasks there is one thing that it needs above all - trust. People will give to a charity they trust. They will give if they trust those who deliver assistance to make a difference in a way that others (including Government) do not.

Trust is a very important feature in our society. Trust is part of the social capital that our society relies on. Trust is hard won but easily lost.

The Morgan Poll has been polling public opinion on various occupations since 1976. It asks the public which occupations they rate as high or very high for ethics and honesty. Nurses and pharmacists do well, around 90 per cent. Car salesmen are rated high or very high for ethics and honesty by 3 per cent of the public. Federal MPs do not do well (16 per cent), they are only marginally in front of newspaper journalists at 9 per cent.

Since 1996 Morgan has asked the public its view on Ministers of Religion. In that time Ministers of Religion have shown the largest decline in rating for ethics and honesty from 59 per cent to 48 per cent. I have not seen poll results for 2003 but I suspect recent events will have detracted from that further.

Less than half the population rates clergymen highly for ethics and honesty. This is at a time when church leaders speak out more than ever on what they perceive to be moral issues. The church leaders had a lot to say about Australia's involvement in Iraq. When the Government was reforming the tax system I was amazed how many church leaders were, in fact, tax experts who had sized up the moral dimensions of a value added tax. Three years after the event I am amazed how few of them care about whether their predictions were right or not.

But recent events have created the suspicion that no matter how clearly the church imagines it can see the moral dimension of actions by others it did not seem to get too worked up about the moral failure of some of its own priests inside the church. And these were people who really had engaged in moral failure and in some cases criminal activity.

This suspicion that the institution of the Church may have been easier on itself than it was on others is corrosive of trust. I don't know if the moral failures we are now aware of are recent developments. But I do know that in an information society very little can now be hidden.

To a degree every institution in society is under media suspicion. Why this is the case is the topic for another day. But you can rely on the fact that if there is real cause for the attack it will be very destructive. It can be very destructive even when there are no grounds for it.

Let me sound one other note of caution.

One of the reasons why the public has lost confidence in big government is that they regard it as inefficient. They think that by the time their money is collected and handled and administered and paid out and banked and credited, too little of it arrives with the genuinely needy. The handling costs compared to the end result are too high.

There have been recent concerns in Australia that some charities are suffering from the same problem. Charities are going to have to do better if they want to keep the public trust. Inefficiency is corrosive of trust. And trust is the currency of the charitable sector.

So let me come back to the strengths of the voluntary sector. I said before that income support provides insulation against poverty but it does not treat the cause of poverty.

Let us take a visible example. A homeless man who is drug or alcohol dependent will probably be entitled to income support. Mostly it will be the disability pension. The pension should be enough to provide food and shelter. But it doesn't in his case because the money he receives is always spent on the wrong thing. And it always will be until you treat the cause of the poverty which is alcohol and drug dependence.

Let me take a less visible example. It is hard enough for a family on average wages to support one household with children. If the marriage breaks up those wages have to support two households - rent, utilities, transport etc. Things would be a whole lot better if we could treat the cause of the problem which in this case is the marriage breakdown.

To the extent that the people involved in helping others can help those others to deal with these problems they will make a very big difference. If the churches can point to lives that have been changed it will make a big difference; more than anything else it would demonstrate that faith is not a lost cause. The public would take a whole lot of notice. The churches and their agencies would recover trust.

Now a lot of people will think to themselves, that since they are already paying tax they are contributing enough to the needy in our society. And through their taxes they are. The tax burden on middle and higher income earners in Australia is quite substantial. I would like to see it lower. So why should they, in addition, make a voluntary contribution?

As I said earlier, these agencies can make more immediate and individual contact with those in need. They are run by people of religious and moral conviction willing to share their values in support of treating underlying causes of poverty. But, in addition these agencies are also targeting the giver as well as the receiver. They want you.

Involvement in a voluntary association or charity enriches the giver as well as the receiver. And in a complex web of relationships between givers, service providers and those in need, all are drawn together and benefit in different ways. This is social capital. Outside Government, people of like mind and common endeavour have come together for a common purpose. They have stepped outside their roles as taxpayers and income beneficiaries. They are not relating now through the tax file number and the bank account. They are relating as people.

One of the positives of limited government is that it allows the non-government associations to develop and prosper and deepen the social relationships in a community.

And there is one last reason to support Anglicare this year. Our economy is not without its challenges, but it is stronger than practically any other comparable country. Corporate profits are up 9.5 per cent over the last year. And donations to charitable funds are tax deductible.