Brotherhood Comment November 2009

Brotherhood Of St Laurence

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ISSN 1320 8632A regul Ar upd Ate from the r ese Arch And policy centreNovember 2009Opening the door to housing tax reformIn a recent speech Treasury She also finds that individual geared property investors in the Secretary Ken Henry, the head property investors benefit top income quintile are getting on of the government’s review panel significantly from being able to average $4500 from tax benefits on taxation, highlighted the fact combine tax deductibility of debt in relation to their investment that the majority of Australians’ interest (or negative gearing) and a properties. However, people from household wealth is invested in 50 per cent discount on tax paid on the poorest households who receive property, with 44 per cent of the capital gains. These tax concessions the top rate of Commonwealth total invested in their own home provide an overall benefit of Rent Assistance gain an average and 16 per cent in other property around $5.4 billion each year. subsidy of just $2420 a year.(Henry 2009). He also commented that this enormous amount of And when the distributional benefit The housing assistance is also wealth is either not taxed at all of this assistance is considered, unevenly distributed across (in the case of owner-occupied the findings are quite stark. For age groups, with older outright housing), or moderately taxed households in the top 20 per cent owners benefitting the most, at the (in the case of other property). of incomes, the average ...

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• Publié par: Saum
• Nombre de lectures: 31
• Langue: English

Extrait

A r e gul A r u p d Ate f rom the r ese A rch A nd p olicy centre

Opening the door to housing tax reform

In a recent speech Treasury Secretary Ken Henry, the head of the government’s review panel on taxation, highlighted the fact that the majority of Australians’ household wealth is invested in property, with 44 per cent of the total invested in their own home and 16 per cent in other property (Henry 2009). He also commented that this enormous amount of wealth is either not taxed at all (in the case of owner-occupied housing), or moderately taxed (in the case of other property). Henry’s message concentrated on efficient investment and savings decisions: he was concerned that current tax arrangements seem to be distorting these choices and thus impacting on economic efficiency. But what Henry did not mention is that they can also be very inequitable. The Brotherhood of St Laurence recently commissioned Associate Professor Judith Yates from the University of Sydney and the Australian Housing and Urban Research Institute (AHURI) to examine who benefits the most from the current tax arrangements for housing in Australia. Housing winners In the report, Tax expenditures and housing , Yates finds that owner- occupiers benefit enormously from the favourable tax treatment of their homes. She estimates the value of this assistance to be approximately $45 billion per year, of which $30 billion is due to the capital gains tax exemption of owner-occupied homes.

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ISSN 1320 8632 November 2009

She also finds that individual geared property investors in the property investors benefit top income quintile are getting on significantly from being able to average $4500 from tax benefits combine tax deductibility of debt in relation to their investment interest (or negative gearing) and a properties. However, people from 50 per cent discount on tax paid on the poorest households who receive capital gains. These tax concessions the top rate of Commonwealth provide an overall benefit of Rent Assistance gain an average around $5.4 billion each year. subsidy of just $2420 a year. And when the distributional benefit The housing assistance is also of this assistance is considered, unevenly distributed across the findings are quite stark. For age groups, with older outright households in the top 20 per cent owners benefitting the most, at the of incomes, the average annual expense of younger renters and benefit from the largest of the tax home purchasers—who arguably concessions alone (exemption of the need the assistance the most. family home from the capital gains tax) is over $8000. This is almost These findings are all the more seven times the average annual disturbing when the evidence benefit of $1200 for households in suggests that the very generous the lowest 20 per cent of incomes. tax treatment of both owner- occupied and investment housing Each year the government foregoes in Australia is a contributor to more revenue in tax breaks to housing affordability problems wealthy property investors than (see for example, Senate is provided to disadvantaged Select Committee on Housing Australians through rent Affordability in Australia 2008). assistance. Wealthy, negatively Continued page 2 Contents Social inclusion and the politics of recognition 4–5 One year on from the crisis: economic and social policy challenges for Australia 6 The cost of a ‘free education’: the financial burden of schooling for low-income households 7 The HIPPY team goes to Alice Springs: practical and cultural research considerations 8–9 Youth ‘underclass’: a critical analysis of social divisions 10–11 Individual placement and support: a new approach to assistance for disadvantaged job seekers 12 Homelessness and older people with cognitive impairment 13 Neighbourhood Justice Centre evaluation update 14 Recent acquisitions of the Brotherhood Library 15 Recent submissions 16

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Policy recommendations In light of these findings, and previous research (for example, see Freebairn & Scutella 2008), the Brotherhood of St Laurence believes that a number of tax policy reforms are required in order to address the inequities associated with current tax arrangements on housing. We are urging the Henry Review Panel to move to a more neutral tax treatment of the various investment and savings options, including owner-occupied housing. At the very least, this means that real capital gains on owner-occupied housing of more than $1.1 million should be subject to tax. In addition, state governments should consider removing the exemption from land tax for very expensive owner-occupied dwellings, while at the same time removing or reducing stamp duty on lower-priced homes. We also recommend the removal of the concessional half-tax rate on capital gains from investment assets, and the quarantining of negative debt interest deductions to the income earned on the investments it funds. Any resulting revenue gain should be used to fund measures to make housing more affordable for those in need, including providing more public and non-profit housing and more generous support for those on rent assistance.

Note The report Tax expenditures and housing can be downloaded from the Brotherhood of St Laurence  website <www.bsl.org.au> and the AHURI website <www.ahuri.edu.au>. Rosanna Scutella [phone] [e-mail] References Freebairn, J & Scutella, R 2008, The case for change: a snapshot analysis of the Australian tax system , Brotherhood of St Laurence, viewed 20 August 2008,   <http://www.bsl.org.au/pdfs/  _ ax_case_for_chang _ BSL t e Freebairn&Scutella 2008 final.pdf>. _ _ Henry, K 2009, Towards a better taxation of savings , address to Australian Conference of Economists Business Symposium, 1 October, viewed 5 October 2009, <http://taxreview.treasury.gov.au/content/  Content.aspx?doc=html/speeches/09.htm> Senate Select Committee on Housing Affordability in Australia 2008, A good   house is hard to find: housing affordability in Australia , viewed 1 June 2008,   <http://www.aph.gov.au/Senate/ committee/hsaf_ctte/report/report.pdf>. Yates, J 2009, Tax expenditures and housing , prepared for the Brotherhood of St Laurence, AHURI, Melbourne.

News

Community Arts Development Scheme evaluation Brotherhood researchers contributed to the evaluation of the Community Arts Development Scheme (CADS) which has now been published. CADS, established by VicHealth in 2005, provided 3-year support for three arts organisations that offer people from marginalised or otherwise disadvantaged groups opportunities for personal and community development through the arts: The Torch Project, which addresses Indigenous issues; Somebody’s Daughter, which works with women in prison; and the Women’s Circus, which involves women survivors of sexual abuse. CADS aimed to improve the community-based organisations’ capacity to foster social inclusion, civic engagement and the valuing of diversity to prevent discrimination and violence. VicHealth funded the evaluation to document the impact of this activity on individual and community mental health and wellbeing. The report is available on the VicHealth website <www.vichealth.vic.gov.au>.

Brotherhood Comment is published three times a year by the Research and Policy Centre of the Brotherhood of St Laurence. The Brotherhood of St Laurence works not just to alleviate but to prevent poverty, focusing  on people at the greatest risk at key life transitions. It is a national voice on matters of disadvantage, understanding that poverty’s remedy lies in integrating social and economic policy so as to strengthen the capacities of individuals and communities. Its research, service development and delivery, and advocacy aim to address unmet needs and translate the learning into new policies, programs and practices for implementation by governments and others.

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Published in November 2009 by Brotherhood of St Laurence 67 Brunswick Street Fitzroy, Victoria 3065, Australia ABN 24 603 467 024 Telephone: [phone] Facsimile: [phone] Email: [e-mail]

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From the General Manager

The 2009 Sambell Oration by Prime Minister Kevin Rudd was perfectly timed. The definite easing of the global financial crisis proved an ideal opportunity for him to set out the Australian Government’s longer term scenario for social policy. For some 300 guests it became apparent just what the Prime Minister’s overall vision of a transition from neoliberals to social democracy might mean for welfare. No longer will we see the sacrifice of fairness in the name of economic necessity, but rather the strong economy and the fair society will go hand in hand. (See extracts from the Sambell Oration, p.6) With this fundamental reorientation, the challenge for the Brotherhood is to help remake the ‘fair go’ agenda. A social democratic agenda cannot be restricted to the neoliberals’ safety net for the so-called underclass. Rather our public services and income support need to become the pillars of an inclusive society for all Australians across their life course. In this issue, we touch on several key themes. Zoë Morrison writes about an approach to fairness or social justice which is not just about redistributing material resources from rich to poor but also ensuring that all members of society receive equal recognition. This was the theme of her new subject for the University of Melbourne’s Master of Social Policy course and will be the topic of an international conference we are organising for 2010. Sonia Martin addresses the theme of agency, stressing that to be fair to people on welfare we have to balance a proper emphasis on individual agency (‘mutual obligation’) with due regard for the structural constraints which can limit the resources necessary for the exercise of agency.

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In the lead-up to the report from the Henry Review of the tax and transfers system, Rosanna Scutella writes that there is considerable scope to find resources for the justice agenda by removing obvious inequities in the existing system. The results of research we recently commissioned from the Australian Housing and Urban Research Institute AHURI into the tax treatment of housing clearly demonstrate the need for changes to address the disproportionate benefits to high-income home owners and private investors compared with low-income renters. Further work is proceeding on asset-building for low-income groups and on the impact of high effective marginal tax rates on unemployed people’s decisions about returning to paid employment. Through the life course In relation to the early years, HIPPY research team members Fatou Roost, Jody Hughes and Tony Barnett report from their visits to Alice Springs on the process of designing questionnaires and interviewing parents in a non-metropolitan Indigenous community. Data collection from 13 sites is well under way for the national evaluation of this program to equip parents to be the first teachers of their preschool children. Addressing the transition through school to work, Sharon Bond and Michael Horn have undertaken a small-scale survey of education costs for parents of government school students, showing that such costs pose a real barrier to households which depend on government income support. Their findings were presented to a successful forum convened by the Education Equity Alliance of which the Brotherhood of St Laurence  is a member. It is hoped that such evidence will help to build a case for policy changes to improve school

funding and relieve unreasonable burdens on low-income parents. In terms of the working years, Dina Bowman signals some lessons from the trial of an Individual Placement Support model of assistance. These will help us to contribute to the development of employment services that deliver better outcomes for disadvantaged job seekers. Research into retirement and ageing is represented in this issue by Lauren Siegmann’s findings about homelessness, cognitive impairment and older people, which will inform the production of a practice guide for housing workers. Community engagement We are pleased to see the outcomes of two major studies related to community engagement and capacity building in which Brotherhood researchers have collaborated in multidisciplinary teams. The evaluation of the Community Arts Development Scheme has been published by VicHealth (see p.2) and the evaluation of the pioneering Neighbourhood Justice Centre in Collingwood is approaching completion (see Nadine Cameron’s update on p.13). New projects We see a continuing stream of emerging research opportunities. The Brotherhood is pleased to be a partner in an Australian Research Council funded project ‘Balancing trust and control in the provision of employment services’ with colleagues at the Australian National University and University of Tasmania. Paul Smyth (03) 9483 1 177   [e-mail]

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Social inclusion and the politics of recognition

The Brotherhood’s Dr Zoë Morrison has this year developed and taught an intensive Master’s course on the ‘Social Inclusion and the Politics of Recognition’ at the University of Melbourne. Here she explains the importance of this idea to an Australian social inclusion agenda. What do we mean by a politics policy and programs that provide of recognition? And how does minimal economic safeguarding this relate to contemporary are not enough. A range of debates about social inclusion? social movements—feminism, multiculturalism, Indigenous Concepts of social justice rights—all draw attention to are dominated by the idea of the political significance of the redistribution. This focuses on the experience of social and cultural possession of material goods and disrespect. As a result, we have social positions, particularly paid come to acknowledge that the work, and is concerned with the recognition of the dignity of right distribution of benefits and individuals and groups forms burdens to society’s members. Public a vital part of our concept of discussions about redistribution social justice, and that the moral revolve around inequalities of quality of social relationships wealth and income, and the extent cannot be measured only in to which the state can or should terms of how fairly we distribute mitigate, through payments and material goods. Individuals and concessions, the suffering of the groups have to be accepted and poor. A redistributive perspective respected in their differences. views injustice as ultimately rooted in economic inequality. Charles Taylor (1994) argues that due recognition is not just a Any ideas about an inclusive society courtesy, but a vital human need. must address the fair distribution He argues that non-recognition of wealth and prosperity—this is or misrecognition is a form of fundamental to our wellbeing and oppression because it imprisons understandings of an ethical society. someone in a false, distorted or But many argue that it is a mistake reduced mode of being. People to focus only on redistribution. who belong to stigmatised groups A sole focus on redistribution, in society, and who experience for example, can ignore the social that stigmatisation repeatedly, structures, institutional contexts internalise negative self-images. and cultural underpinnings that When they are repeatedly shape redistributive patterns insulted and degraded, they are in the first place. Iris Marion denied recognition and their Young (1990, 2000) argues that understandings of themselves are focusing only on possessions impaired (Fraser & Honneth 2003). tends to preclude thinking about what people are doing, according A politics of recognition aims to to what institutional rules, and repair these internal dislocations how their doings and havings by challenging dominant and are structured by social relations demeaning pictures of oppressed and processes, and the recursive groups. Members of misrecognised effects of these on people’s lives. groups might create new self- representations, for example, Dignity and respect which affirm their own cultures, Axel Honneth (Fraser & Honneth and which, if successful, gain the 2003) argues that the recognition respect and esteem of society at of human dignity is central to any large. The result is recognition: an principle of social justice, and that undistorted relation to oneself.

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Nancy Fraser (2000) challenges ideas about recognition that focus only at the level of the individual psyche or identity of a group. She argues that to be misrecognised is not only to be thought ill of, looked down upon, or devalued in other people’s attitudes, beliefs or representation, and to internalise these negative ideas about yourself. It is also to be denied the status of a full partner in social interaction, as a consequence of institutionalised patterns of cultural value. Fraser argues that what is important is not so much to recognise a group’s identity, but to recognise people’s standing as full partners in social interaction, able to participate as peers in social life: That aspiration is fundamental to justice and cannot be satisfied by the politics of redistribution alone (Dahl, Stolz & Willig 2004, p.377). Applying recognition to social inclusion In recent years the concept of recognition has been a focus of comprehensive debate in political and social philosophy. However, there has been far less attention in mainstream welfare research; indeed some say the ‘recognition turn’ has gone virtually unnoticed ( Asia Sociologica 2004). Yet when key ideas in the social inclusion paradigm are considered, I would argue they can be better understood, if not re-examined entirely, from the vantage point of the politics of recognition. Let us look briefly at two key ideas in this light: social and political participation, and workforce participation. Participation is a foundational concept within social inclusion thinking—political and social participation within the community,

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The moral quality of social relationships cannot be measured only in terms of how fairly we distribute material goods. Individuals and groups have to be accepted and respected in their differences.

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and particaption in the workforce. Yet many point out the ‘care gap’ Zoë Morrison Ruth Lister (2007) points to the this has left, and as Lewis observes [phone] relevance of recognition to people (in Lister 2007), care work still [e-mail] with experience of poverty having needs to be done—the question is a say in decision-making that by whom and on what terms. Those References ‘ affects their lives. In her research, providing care in our society earn Acta Sociologica 2004, Special issue ‘lack of respect was identified as some of the lowest wages, if any at j o u n s   t r i e c c e: o  e g d n i i t ti o o ri n a ,  l r   e c d o i m str m i e b n u t t s i ’ o ,  n A a c n ta d     the main barrier to participation in all. Research finds that ‘the lack of Sociologica ,   no.47, pp.323–24. decision-making and the ultimate  i fi s  n s a o n   c v i it a a l  l  r t e o c   o c g hi n l i d ti r o e n n’   s f   o d r e   v w e o l r o k p  t m h e a n t t     Dahl, H, Stoltz, P, & Willig, R 2004, disrespect was seen as “being ‘Reco ribution and involved in phoney participation, is experienced as demoralising’ repres g e n n i t t a i t o i n o , n  r  i e n d   i c s a t pitalist global society:  by people who don’t listen, when (in Lister 2007, p.168). Feminist an interview with Nancy Fraser’, Acta things don’t change”’ (p.169). commentators have pointed out that Sociologica , no.47, pp.374–82. the lack of recognition of the value Fraser, N 2000, ‘Rethinking recognition’, Lister explains that when of paid care work in the market New Left Review , no.3, pp.107–20. recognition is not extended to and public sectors is closely linked Fraser, N & Honneth, A 2003, another person, he or she is not to its association with the unpaid Redistribution or recognition? a political- seen as a full human being whose care work done mainly by women philosophical exchange , Verso, London. presence matters. For many people in the private domestic sphere. Gillard, J & Wong, P 2007, An Australian living in poverty, respect is linked social inclusion agenda , viewed 13 October to being listened to or ‘voice, Clearly, revaluing care work will 2009, <http://www.labor.com.au/download/ now/071122 social inclusion xx. which is typical of recognition require both redistribution and _ _ _ pdf>. struggles, which are in many ways recognition. And doing so would Lister, R 2007, ‘(Mis)recognition, social about struggles for political voice’. have positive ramifications not inequality and social justice: a critical o social policy perspective’, in T Lovell As Moerane Roberts, ne of the only for the care gap in our society, (ed.), (Mis)recognition, social inequality research participants, explains: ‘No but also for how we envisage and social justice: Nancy Fraser and one asks our views … We are the citizenship overall. Fraser argues Pierre Bourdieu , Routledge, Oxford. real rts aspir e a x ti p o e ns … of     W ou e  r c  o an w   n c   o h n o tr p i e b s  u a t n  i d f     f c o it r i   z a e  ‘ n u s n h i i v p e ,  rs w a h l  i c c a h r  v e a g l iv u e e r s ’     b m ot o h d   e p l  a o i f d     Taylor, C 1994, Multiculturalism: prepared to give up a li e l work and caring work, and where  examining the politics of recognition , you are tt e Princeton University Press. p p o ar w t e n r e   r t s o     i a n l   l o o u w r     u o s w  t n o     f p u a t r u t r i e c ’ i   p ( a L t i e s   t a e s r  e th v i e s r   y m o o n d e  e i l s ,     i c n a v r o e l   v w e o d r  i k n  i   s c   a s r e i e n n g   . a  I s  n  Young, IM 1990, Justice and the politics   of difference , Princeton University Press. 2007, p.169). This highlights the an important responsibility and a importance of respectful, genuine resource for citizenship, rather than —— 2000, Inclusion and democracy , models of participatory policy just a barrier to paid work equality. Oxford University Press. making and practice for the social Men embrace a more feminine life inclusion agenda in Australia. course. Nordic countries provide examples of how this might work Revaluing care work in policy, including significant When it comes to workforce paid parental leave with some time participation, Lister (2007), along earmarked for fathers, working with others, argues that it has been time policies, and public education ‘elevated to the primary citizenship programs. As Lister points out, obligation’ (p.158). Certainly, it is a genuinely progressive universal central to ideas of social inclusion in care-giver model ‘would have to Australia (Gillard & Wong 2007). be combined with an adequate Lister argues that this model of social infrastructure’ (p.159). citizenship (what Fraser calls the ‘universal breadwinner’ model of In conclusion, a politics of citizenship, or what Jane Lewis recognition could make an calls the ‘adult worker model’) is important contribution to one which offers women equal our thinking about social opportunities with men on men’s inclusion, and to policy and terms, and that it has replaced practice on the ground. the ‘male breadwinner’ model.

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A politics of recognition aims to repair these internal dislocations by challenging dominant and demeaning pictures of oppressed groups.

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One year on from the crisis Economic and social policy challenges for Australia Prime Minister Kevin Rudd In the long term, the goals of claims that the only good state is a delivered this year’s Sambell building a stronger economy and non-existent state (except of course Oration. Key extracts are a fairer society are not in conflict. when the state is called upon to reproduced here. We should not have to choose rescue capitalism from itself). between faster growth and a When this global financial crisis  fairer society, because unless the  No, the challenge of the responsible spread across the world, the  economic reform that underpins  reforming centre of Australian Government knew Australia would  growth delivers benefits to the  politics is to harness personal not be immune. The Government  whole society, it won’t have society’s  responsibility with the support knew we had a responsibility to  support and the momentum for  of the enabling state. To equip protect working Australians and  reform will fall away. Equally, unless  disadvantaged Australians with their families. The Government knew  we make a priority of tackling  the capacity over time to take we had to act—and to act quickly.  entrenched social disadvantage,  responsibility for their own lives, our economy will be weaker,  and to do so with programs which … In the short term, the Government  not stronger, because inequality  harness the combined resources stimulated the economy with  and disadvantage contribute  and commitment of governments rapid cash stimulus to families,  to poorer educational results,  working wherever possible in creative pensioners and low income earners,  l o o u w tc e o r  m pr e o s, d  s u h ct o i r v t i e t r y   ,  w w o o r r k s i e n   g h   e li a v l e t s h     and s p e a c r t t o n r e   r a s n h d i   p t   h w e i   t p h r   i t v h a e t   e c  s o e m ct m or u . nity  as well as a boost for first home buyers and an investment tax  lower workforce participation.  None of this is easy. If it was, break for small businesses. Over  That’s why the Government’s  it would all have been done the medium term, the Government  agenda for building a stronger  long before now. The truth is began investing in nation-building  hand in hand   economic infrastructure—creating  e w c it o h n   o b m ui y l   d g i o n e g s  a fairer society. it w ’ h s  y h  i a t r ’s d  w — o v r e t r h y     d h o a i r n d g .  — Bu b t e  t c h a a u t s ’ e s     jobs today for people in every  the results are worthwhile. town and every suburb across the  Lifting the quality of education … country while also creating the  in our most disadvantaged  In confronting this challe infrastructure our country needs  schools, mandatory school testing,  theGnment has adop n t g e e d ,     a  for tomorrow. And over the longer  transparent reporting of school  over term, nation-building infrastructure  results, lifting teacher quality—all  set of guiding Social Inclusion investments in rail, roads, ports,  delivering the long-run payoff of  Principles with the aim of: hospitals, universities, research  higher school retention rates, leading  • civic institutes, clean energy projects and  to higher productivity and workforce  i e n c c o r n e o as m i i n c g     p s a o r c t i i a c l i , p   ation and  a national broadband network.  participation in the long term. • giving individuals a These are the three core pillars of  Likewise, advancing the preventative  greater voice, and our economic intervention strategy:  health agenda and tack  • r stabilising our financial system;  ling chronic  giving individuals greate supporting real jobs in the real  d w i o s r e k a f s o e  rc w e i   l t l  h b a u t i   l w d i   l a l    s h t e a a y l   t a h c i t e i r v   ely  responsibility.  economy through our infrastructure  participating in work for longer.  These principles are now helping stimulus strategy; and further, a  shape policy development and policy local skills, training and employment  As many in this room know  implementation across government. strategy to support those who have  from firsthand experience, it is  … lost their jobs or who have been unable to enter the workforce.  not easy tackling the complex  To paraphrase author Paul Kelly, I c n h d a i l g le e n n g o e u s s     o d f i   s cl a o d s v i a n n g  t t a h g e e, g   a h p a   l o vi n n   g  beyond being a nation of ‘hard  … heads’  and ‘soft hearts’—what we homelessness, or supporting A few weeks ago, in discussing  d buildin more resilient  most need now is ‘capable hands’. recent Australian economic history  families an g  To renew the great Australian communities where there’s been at Paul Kelly’s book launch,  years of multiple disadvantage.  commitment to the fair go. A fair I said that I do not believe that  go for all. A fair go for the 21st in Australia you can successfully  These reforms are not a simple  century. A stronger and fairer advance an economic reform  replication of classical Left demands  Australia for the 21st century. agenda without a complementary  f N o o r  r i   n a fi re n   i t t h e e ly y     g a r b eat u e t  r  n p e u o b -l l i i b c  e s r p a e l  nding.  The full text of the Prime Minister’s speech agenda for social reform.  o is available on the Brotherhood’s website.

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The Government’s agenda for building a stronger economy goes hand in hand with building a fairer society.

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