Offsetting the Cowgill Effect

Matt Cowgill is some bloke I hadn’t heard of until yesterday. He knows about economic policy and shit like that and he just wrote an excellent blog post about the futility of trying to solve a particularly sticky welfare payment problem. Let’s call it the Cowgill Effect.

Before you do much more here you really should go over there and read it.

My sales manager at a certain Launceston car dealership many years ago would belt me with a tyre iron for letting you go without reading my post first, but like all those tyre kickers back in 1989 “You’ll be back”, right?

Matt does a great job of describing the conundrum facing our Federal Government but he leaves us with the sad reality that "we can’t have it all". What I’d like to do is talk a little bit about how we get around that. It’s less about macro ecomonics and more about Dr Phil.

Who am I to have an opinion? Well, it turns out I worked as an Area Manager with Centrelink for a while. Even managed one of their call centres for bit. Despite successfully dodging work and making myself look busy while I figured out how to download porn through the Government’s firewall, I couldn’t help but learn a few things about how welfare delivery works.

For the fun of making broad generalisations I like to group Newstart clients into three types - Unemployed Workers, Bludgers, and the Unlucky Ones.

Unemployed Workers are skilled, self-motivated, and actively engaged in finding a job. They just don’t have one yet. These folks don’t need much from their government other than a living payment and an economic environment that will create a job vacancy for them to fill.

The Unlucky Ones have something to overcome other than (or as well as) the lack of a job vacancy. They need retraining, education, or to be cared for. They have disabilities, injuries, and other challenges to overcome or learn to live with.

The Unlucky Ones can require a great deal of assistance or just a bit more time before they’re fit for regular employment. Some of them will never be fully fit but will be able to work in some capacity.

Then there are the Bludgers. These guys are the ones targeted by most of the more controversial government policies. These are the ones who choose not to work because, for them, the value equation doesn’t stack up.

The Bludger understands the concept behind the Cowgill Effect. They realise working for a living is a sham when stacked up against sitting on the dole. If your average Bludger is banking $250 in weekly dole payments they know a job worth, say, $400 a week only earns them an additional $150 for 40 hours’ work. Given the choice, the Bludger would rather stay at home and earn cigarette money repairing old lawnmowers.

Being full-time employed costs the Bludger 40 hours’ work, $250 in dole, time away from Dr Phil, plus maybe a whole new wardrobe and regular transport. In return he gets his $400 in wages which, after tax, he values less than his time on the couch with $250 sit-down money. So that’s where he stays.

To motivate the Bludger we need to change the equation. We need the Bludger to value going to work more than they value staying at home.

We can enhance his opinion of getting a job if we show him the pathway to a $1,000 weekly wage. Alternatively, we could cut his Newstart payment so he derives less value from being unemployed. And we could make “earning” the dole increasingly difficult, irritating, and inconvenient until he gets the shits with it all and finds a job just so he doesn't have to deal with Centrelink any longer.

The challenge is to shift the balance sufficiently to motivate the Bludger off the couch without marginalising the Voting Bludger and the Voting Bleeding Heart - the torment of many a sitting government.

As Matt explains so well, we can’t be fiddling about with the levers to make one thing better without making another thing worse. This is why we need policies beyond a simple weekly payment with a sliding reduction in income support.

A government can’t reduce the Bludger’s Newstart payment without inciting civil war. The French tried that in the 1700’s and look where that got them.

No, reducing the payment is not an option.

So what can we do? Well, quite a lot, actually. We subsidise the bejeesus out of everything from bus travel to university education to give the Bludger less reason to stay at home and more hope of seeing that $1,000 job within reach. But the real opportunity is in making life on the dole hard for the Bludger.

We make them apply for a bunch of jobs every week. They have to fill in diaries and get sign-off from businesses proving they’ve applied for work. They have to attend training and counselling and sometimes even take part in work for the dole programmes. The have to attend interviews at Centrelink and their local job network provider to convince a bureaucrat they’re trying hard enough.

This makes life on the dole a cumbersome and tiring experience. But there’s more.

We make them call Centrelink all the time, and when they do, we put them on hold for an hour.

Sometimes, after spending the afternoon on the phone with the call centre, we tell them they have to go into a Centrelink office to deal with something. So we give them an “appointment” for sometime between 9.30 and 11.00 and make them wait until 12.00.

When they attend their fortnightly Centrelink interview and diary check they stand in a queue until their knees buckle.

We have other tricks too, like not paying job network agencies to travel out to regional centres for regular appointments. This means many Bludgers have to spend an entire day plus bus money getting into and out of town to show a desk jockey the resume they’ve written.

And if they fail to attend any of these compulsory interviews and other appointments we suspend their dole. If they do it again we suspend it again, this time for longer. Eventually, we take it off them entirely.

All this adds up to make life on the dole a really shitty experience. Many an Unemployed Worker, Retired Worker, Domestic Engineer and other fine welfare recipients get caught up in the same annoyances sometimes, but that’s the price of welfare, I guess.

Like it or otherwise, these policies are in place to move the Bludger out of the living room and into the crib room. This is how we overcome the Cowgill Effect, for better or worse.