Entrepreneurship and the Welfare State
interest in welfare reform comes from 35 years of experience with public
housing estates, first as a resident and now as a Member of Parliament.
I represent several broadacre public housing areas in
main purpose in public life is to do something about this problem.
I visit the estates as often as possible and try to learn as much
as I can from the people who live and work there.
This has given me a different attitude to poverty from most people
in politics. My conclusion is
that we should forget about the grand theories of sociology and the
ideologies of the old politics and pursue an evidence-based approach to
welfare reform. Poor
communities have more to teach us than we have to teach them.
of the problems of modern politics is its disconnection from the poor.
The people who work in the political system lead a lifestyle
totally removed from the experiences of disadvantaged suburbs.
Machine politicians – the spin doctors, opinion pollsters and
party bosses who dominate the system – have no interest in public
housing estates as these suburbs are not within marginal seats.
Politicians of this kind are more comfortable talking about
poll-driven subjects, such as so-called family values.
recent decades, Left-wing politics has become associated with an abstract
rights agenda. This has been a
middle class movement, with affluent people making laws and running
programs on behalf of the poor. In
disadvantaged areas, however, social responsibilities are regarded as more
important than legal rights.
other side of politics is just as bad.
The libertarian Right is obsessed with individual freedom.
Yet for people outside the main centres of economic and political
power in our society, all they have is the freedom to be poor.
The rhetoric of a free society rings hollow in the poorest parts of
disconnection of the political system is also evident in the work of its
opinion makers: the media, the academy and the bureaucracy.
Journalists, academics and senior public servants do not live in
public housing estates and rarely have cause to visit them.
I have never read a newspaper editorial or journal article about
the welfare system based on the author’s first-hand experience with
this background, it is not surprising that
a result, welfare has become an exercise in political mythology. It
gives people on the Left a warm inner glow, even though they have little
understanding of how the system works in practice.
It gives people on the Right something to demonise, even though
they have no understanding of what might take its place.
welfare state is good at mythology but not so good at ending the problems
of poverty. To do this we need
to take different approach: to learn from the poor, to ground all aspects
of welfare policy in the experiences of poor communities.
Inevitably, this is an uncomfortable process: it challenges our
preconceived political views; it by-passes the elitism of modern politics.
objective today is to make you feel uncomfortable.
I want to outline the evidence from my electorate and to puncture
the many myths of the welfare state. But
most of all, I want to talk about the things which work in practice –
the evidence-based policies by which we can end the human tragedy of
The Myth of Government Spending
welfare debate in
makers now face the dilemma of overloaded government: so many funding
demands on the welfare state, yet so few funding sources in the globalised
economy. Footloose capital has
forced governments to bid against each other for jobs and investment.
Whereas companies used to pay money to governments, the reverse is
the next Federal election, for instance, Labor is committed to spending
less and taxing less than the Howard Government. (1) We
accept the realities of an open economy and the limits this places on
government budgeting. At the
bottom line, Labor stands for a smaller public sector.
who believes in the likelihood of huge increases in welfare spending is
off with the pixies. Alternative
strategies need to be found. Government
alone cannot solve the problems of poverty.
Increasingly, welfare reformers need to look beyond the limits of
the welfare state. Society’s
most entrenched problems require a cross-sectoral approach – harnessing
the creativity and resources of the public, social and business sectors.
social partnerships are the best way of creating successful communities.
They adopt a policy of “all shoulders to the wheel” –
governments, corporations, community organisations and welfare recipients,
all doing more to end the curse of social exclusion.
Werriwa’s public housing estates this is seen as a commonsense strategy.
Contrary to the rhetoric of Left-wing politics, poor people have
little faith in the role of government.
They already live in the equivalent of socialist suburbs, with 90
percent of the income and assets owned by government.
Yet unhappily, this is a sign of their poverty rather than a
solution to it. The hatred of
the bureaucratic failings of the Department of Housing, Social Security
and the Child Support Agency is palpable.
organisations with the greatest public support lie outside the public
agencies such as St Vincent de Paul and Anglicare are well respected for
their pastoral role. Based on
the evidence, we need to mobilise more resources of this kind.
Government-first welfare strategies are a recipe for failure.
Myth of Government Intervention
if governments had more money to spend on welfare, this is not necessarily
a good starting point for poverty alleviation.
The debate between Left and Right has overlooked the social or
moral dimension of poverty.
my experience, the chief demand in public housing estates is not for more
government intervention or more market forces.
It is to normalise the neighbourhood – to give people a stronger
sense of community and cooperation in their relationship with others.
People want to feel safe and secure on the streets; they want to be
able to trust their neighbours and work together with a feeling of common
social foundations are vital to the success of the public sector.
All the evidence shows that when people have a high level of trust
and self-esteem they are more likely to make good use of government
support, such as training programs and welfare payments. (2)
There is a thing called society. And
without it, there can be no end to the poverty cycle.
skeptics, of course, will say that the first priority for poor people is
employment. While jobs are
crucial, it is also true that the first step towards labour market success
is a normal social environment. When
I grew up in the
emergence of long term and inter-generational unemployment in the 1980s,
however, has had a crippling social impact.
My most depressing experience in public life has been to hear the
principals of disadvantaged schools report on their career counseling
sessions. When asked about
their career aspirations, some students say: “I’m going to do what my
dad and grand-dad do – go on the dole.”
the loss of the regular habits and dignity of work, society’s norms and
standards have fragmented. This
phenomenon has eroded self-esteem and given people a perverse sense of
their own interests. It is not
possible to get people back into work without first fixing the social
insight exposes the problem with traditional welfare strategies.
Governments usually think of exclusion in terms of financial
capital, through finely calibrated measures such as the
key step in dealing with poverty, however, involves the creation of strong
lines and relationships between people.
We need to put the social back into social justice.
Unfortunately, this task is beyond the reach of government
agencies. While the state is
skilled in the redistribution of financial resources, its community
development projects are rarely successful.
I am yet to come across a bureaucracy that is capable of creating
some respects, this is hardly surprising.
Bureaucracies rely on standardised structures and procedures.
Communities rely on a diffuse set of social relationships.
It is impossible to standardise trust and self-esteem.
Whenever bureaucracies intervene in community life they tend to
smother the essential sparks of social capital and creativity.
has produced a crippling paradox within the politics of the Left.
Its flagship welfare policies, such as transfer payments and
training programs, are directed at individuals rather than communities.
No less than the libertarian Right, it has eroded the collective
bonds of civil society.
many in the welfare sector, this is bound to be an uncomfortable
conclusion. The evidence,
however, demonstrates the need for a new approach to welfare support.
This is not a question of abandoning the welfare state but rather,
redefining its strategic role. The
public sector still needs to provide basic services and support, but in a
different sequence to the traditional approach.
needs to act as a junior partner to communities, intervening with special
programs and resources only once the foundations of social capital have
been laid. In the past,
government expected civil society to fit the bureaucratic mould of the
welfare state. Its new role is
to identify and nurture successful community projects.
This is what we call the enabling state.
The Myth of “Pity the Poor”
these assumptions have created a culture of paternalism within the welfare
state. It operates under the
suspicion that the poor are hopeless.
It gives little credence to the idea that the poor actually have
the capacity to help themselves. It
positions the poor as the problem and government as the only solution.
practice, however, this “pity the poor” attitude is the real problem.
It under-rates the capacity of poor communities to fight back from
adversity. It under-estimates
the ability of poor people to develop their talents and creativity.
In the public housing estates in my electorate, the communities are
always trying to fight back. Setbacks
are invariably followed by a burst of energy and effort, a collective
desire to improve the neighbourhood. There
is no shortage of leadership and bold plans in these suburbs.
the public sector is not very good at identifying and supporting this
process. It lacks an antenna
for bursts of innovation at a local level.
Very often it treats the people involved as nuisances or
troublemakers – residents who are unwilling to follow the bureaucratic
mould and do things the conventional way. As
a result, the sparks of creativity in poor suburbs tend to be smothered by
the government-first agenda.
is one of the reasons why inequality and social exclusion have become so
entrenched in our society, despite high levels of welfare spending.
The welfare state has been built around bureaucratic structures
instead of the capacities of people. It
has placed a dead hand on innovation and self-help in disadvantaged
paternalism of welfare policy needs to end.
We need to back people, not structures.
We need to work on the assumption that, in each poor area, the
answers to poverty lie within the community itself.
In most cases, the things that are wrong with poor people can be
fixed by the things that are right and promising in their lives.
The Myth of Static Poverty
is also important to appreciate the dynamic nature of disadvantaged
welfare policy has taken a snapshot view of poverty, measuring the number
of people below the poverty line at a particular point in time.
Governments have concentrated on the recurrent payment of income
support as a way of responding to this problem.
static analysis, however, takes no account of variations in economic and
social circumstances over time. For
most people, poverty is not a permanent condition.
It is estimated that 30 percent of society experiences occasional
bouts of exclusion – falling in and out of the workforce, struggling
with workplace restructuring, adjusting to changes in family and community
life and so forth.
recent study in the
of the trends in our society, especially the emergence of a new economy,
point to greater fluctuations in life’s circumstances.
We now live in an era of relentless insecurity.
Whereas the post-war welfare state was designed to give people
economic security and greater peace of mind, this objective seems
to the relative certainty of the 1950s and 60s, an average working family
is now 50 percent more likely to experience an unexpected decline in its
This reflects the pace of economic and social restructuring, with the rise
of job insecurity and family and community fragmentation.
It also presents a more realistic view of economic exclusion, with
people moving above and below the poverty line on a regular basis.
people in these circumstances, the welfare state is inadequate.
Recurrent transfer payments were never designed to deal with
continuous variations in life’s conditions and the insecurity this
brings. The benefits system
was developed at a time when society was more stable and predictable.
We need to find new ways of ensuring that people at-risk of poverty
can cope with the inevitability of change.
New welfare strategies are needed to give society a stronger sense
The Myth of
of the consequences of rapid economic and social change has been a new
geography of poverty. As
people move up and down the income ladder they more readily change their
place of residence. Society
has become more mobile and communities less stable.
process has generated a significant level of population churning, with
people moving in and out of poor suburbs as their economic circumstances
dictate. It has also produced
something of a paradox: even though a limited proportion of society is
permanently trapped below the poverty line, a large and growing number of
neighbourhoods display the characteristics of permanent poverty.
short, the incidence of poverty has become more geographically
concentrated. The social atlas
Research has shown that the problems of disadvantaged neighbourhoods are much greater than the personal characteristics of their residents. (5) Networks of social exclusion feed off each other and compound the problems of poor areas. Significantly, the new geography of poverty has a multiplier effect.
evidence indicates that welfare policies need to be place-specific.
This explains the growing interest in the concept of place
management – an attempt by policy makers to focus the work of government
agencies on particular locations. While
this work is still at an early stage of development, it nonetheless
recognises the need for new responses to poverty. (6)
the public sector has been organised like a series of silos or
stove-pipes. Departments have
been structured around functional responsibilities – such as transport,
education, health and family services – rather than the needs of
locations. What we call
“public administration” has not been very public at all.
It has been disconnected from the way in which people lead their
lives, especially in poor areas.
for disadvantaged people and places, their problems do not easily fall
into each segment of government. A
poor education, unemployment, health issues, domestic violence and other
social problems invariably overlap and reinforce each other.
Poverty needs to be understood as a process, rather than a series
of segmented events.
welfare state has struggled to respond to this reality.
It does not have a “Department of Poverty” or other mechanisms
by which its programs can be closely coordinated at a local level.
The public housing estates in my electorate, for instance, feature
17 different government agencies providing 23 different programs and
support schemes. (7)
each agency is significant in its own right, no one has responsibility for
the neighbourhood as a whole. This
produces a high level of buck-passing and frustration within the agencies
themselves. There can be few
things worse in the public sector than working in poor areas but not
having the power to solve poverty. Overcoming
this deficiency is one of the key tasks for welfare reform.
The Myth of Abstract Rights
I visit the disadvantaged schools in my electorate, I always put the
following question to the school principals:
if you could change one thing about the school what would it be?
Significantly, they never nominate the need for more recurrent
funding or better buildings. What
they really want is to “get the parents more involved in the things we
do, to have education appreciated in the home as well as at school.”
This verifies one of the basic principles of disadvantaged areas:
socially responsible behaviour is valued ahead of social rights.
the many myths of the welfare state, this is the most pervasive.
While millionaire media commentators such as Phillip Adams and
trendy Left politicians such as Natasha Stott Despoja focus solely on the
rights agenda, the people who live and work in poor areas have a different
set of priorities. They know
that there can be no end to the poverty cycle without effort and
rights and freedoms can only be exercised in the context of a mutually
responsible society. People
can be well off financially, yet they will not be free if they cannot walk
the streets with a sense of safety. People
can benefit from a strong social safety net, but they will not be free to
achieve in society unless they are willing to seek new skills and work
opportunities. And as the
principals in Werriwa understand, children can spend a lot of time at
school, but they will not be free to realise their potential in life
unless work and education are valued in the home by their parents.
alone are not enough. They need to be matched by responsibilities.
This is the central failing of contemporary Left-wing politics.
It has dished out a plethora of rights without demanding a
corresponding set of social responsibilities.
It continues to talk about a good society but without any reference
to the relationships and morality between people.
Notions of community and shared obligation are external to its
in practice, this is all the poor themselves want to talk about.
The core demand in disadvantaged areas does not involve the
extension of social rights. It
is to make the neighbourhood normal – to ensure that people act
responsibly and respect each other’s interests.
decades I have been involved with these areas and not once have I seen
people embrace the rights agenda. Not
once, whether in the form of feminist, environmental, ethnic or welfare
rights. Poor communities have
little time for abstract politics. They
are too busy trying to get the basics right: protecting their property,
making ends meet and fighting back against poverty.
is a fallacy to believe that poor people are opposed to the mutual
responsibility agenda. In
fact, more than any other part of society, they appreciate its benefits.
This does not have to be a top-down process.
Instead of imposing programs like Work For The Dole in an
authoritarian fashion, the Federal Government should ask poor neighbours
to develop their own programs of mutual responsibility.
This act of empowerment would not only achieve significant results;
it would help to expose the myth of abstract rights.
the myths of the welfare state have been dealt with, the pressing need for
policy reform is evident. The
welfare strategies developed in the post-war decades are not suited to the
modern challenges of poverty. If
we could start a fresh, if the welfare state was being created today, it
would need to respond to a vastly different set of economic and social
circumstances. Based on the
evidence, it would need to:
issues sit outside the boundaries of the old politics.
In the second half of the 20th Century, the welfare
debate involved a struggle between government-first and market-first
policies. It is now clear that
both strategies are flawed. We
need to look beyond the old Left and the new Right for welfare solutions.
is the advantage of an evidence-based approach.
It uses the skills of observation and logic to identify relevant
welfare policies. Solutions to
poverty are available, once we lift our eyes and ideas beyond the old
most people in politics, I started out with a fairly doctrinaire approach
to welfare policy. I believed
in the capacity of state intervention to remake people’s lives and clear
away the problems of poverty. The
seat of Werriwa, however, has shown me that this is a delusion.
The bureaucratic machinery of government is poorly suited to the
complex and diverse nature of poor communities.
the only sustainable progress in tackling the problems of disadvantage in
my electorate has come from outside the bureaucracy.
We have been fortunate to benefit from a special group of people
and projects: two of which have improved the public housing areas and
another which has developed an innovative model of child care and
education for intellectually disabled children. (Details are provided at
striking aspect of the three projects is that they fit the description of
what the welfare reform movement in
evidence suggests that social entrepreneurs have a unique capacity for
bridging this divide. In the
process, they have been highly successful in dealing with the new
challenges of poverty. They
have found fresh solutions to social exclusion, solutions that appear to
be beyond the capacity of the welfare and business sectors operating in
who are these special individuals and why have they been successful?
Social entrepreneurs come from a range of backgrounds, such as
churches, welfare agencies and community organisations.
They can also emerge from the public sector – middle managers
that have been liberated from the bureaucratic rules and methods of
entrepreneurs combine the best of social practice, forging new connections
and support between people, with the best of business practice,
encouraging risk-taking and creativity in poor neighbourhoods.
They play the role of community brokers: helping communities to
fight back; nurturing small bursts of effort and achievement; linking
these projects to new partnerships and alliances; thereby creating a wider
span of community success and social capital.
are also capable of creating something out of nothing.
Social entrepreneurs are good at taking disused public assets (such
as old buildings and land) and turning them into community achievements.
This is not just a matter of physical change; it also involves
social change, creating new networks of self-esteem and cooperation.
At their formative stage, the projects involve a community hand-up
instead of a government hand-out.
is a critical distinction. Social
entrepreneurs are different to other parts of the social sector.
Whereas social workers rely on government grants and social
enterprises rely on start-up capital, social entrepreneurs start out with
nothing. Their only resources
are within the community itself, namely under-utilised people and
buildings. As the British
author Charlie Leadbeater puts it, they are capable of “living on thin
entrepreneurs are also likely to live and work within the communities they
serve. Whereas most social
welfare organisations operate out of CBD offices, social entrepreneurship
has a neighourhood focus. Its
projects are based on a high proportion of local employment and local
support. This is not the type
of community work in which the workers come from outside the community.
summary, social entrepreneurs are more interested in developing people
than structures. They place a
premium on relationships of collaboration and partnership.
Importantly, they see the corporate sector as an ally in this task.
the past, community projects have been managed on either a top-down or
bottom-up basis. Through the
work of social entrepreneurs, however, communities tend to grow
inside-out. From small
beginnings, networks of trust and cooperation are developed over time.
This is the best way of generating social capital and normalising
this social platform in place, the financial, employment and training
programs of government are likely to achieve their best results.
Indeed, the social entrepreneurs themselves are only willing to
seek government support once the local community is ready for it.
They know that there is little point in pouring large amounts of
public money into dysfunctional neighbourhoods.
The machinery of the state needs to be built on sound social
is nothing to be gained from doubting this approach.
The social entrepreneurs in my electorate and elsewhere are getting
results. Forget about the
textbooks and grand theories of sociology.
Throw away the scores of government reports on social exclusion.
When it comes to eliminating poverty, what matters is what works.
one level, it is not difficult to understand the success of social
entrepreneurship. It meets
most of the criteria for modern welfare reform.
It relies on partnership formation rather than government spending.
It focuses on the social dimension of poverty instead of government
intervention. It believes in
backing the talents of local communities rather than pitying the poor.
It concentrates on the development of people and places ahead of
the silos of public administration.
is the big idea in welfare reform. The
big challenge, of course, is to work out an effective role for public
policy. It is not easy to
reconcile the contrasting cultures of the state and social entrepreneurs.
To a large extent, social entrepreneurs aim to bypass the
traditional machinery of government.
They avoid bureaucracy like the plague.
Likewise, the public sector is not comfortable with an independent approach to community development. Its politicians prefer a “big bang” style of project implementation, with the visible gains of new buildings and services. The work of social entrepreneurs, however, is incremental and mostly invisible to the political system
officials also have concerns about the accountability of these projects.
The risk-taking ethos of social entrepreneurs rubs up against the
conventions of public sector management.
The bureaucracy is uncomfortable with unpredictable processes,
especially those that are hard to quantify in financial terms.
Concepts such as social capital are difficult to measure and
incorporate into the budget bottom line.
recently, I thought that it might be possible to change the way in which
government agencies function to more effectively match the social
entrepreneurial approach. This
is why I have been advancing ideas like place management and public sector
flexibility. On reflection,
however, this is an unrealistic goal.
entrepreneurs are the ultimate networkers, operating within flat, devolved
and connected organisations. The
machinery of government, by contrast, is an insoluble hierarchy.
It is organised such that power and information are concentrated at
the top of stand-alone institutions.
the world of nature, we know how hard it is to make elephants move like
tigers. So too, in the world
of governance, we should not delude ourselves into believing that
bureaucracies can behave like social entrepreneurs.
They are poles apart.
than reshaping the bureaucratic mould, we need to create an alternative
mechanism by which public sector resources can be used to support social
entrepreneurship. Just as the
social entrepreneurs themselves seek to bypass bureaucracy, public policy
needs to bypass the traditional methods of government.
In effect, we need to create an alternative welfare state – one
that harnesses the values and ethos of social entrepreneurship in its
early April Brian Murnane, one of the social entrepreneurs in my
electorate, spoke to the Social Policy Committee of the Federal Labor
Caucus. He set out the
Claymore story: how the worst suburb in
this point Murnane said something unique.
He said that “we don’t want a hand-out from government to do
this, we want a low-interest loan, we want venture capital.”
I have never heard anyone from the social sector talk this way in
demonstrates the distinctive nature of social entrepreneurship.
Having normalised the neighbourhood, Murnane now wants to get the
community into business, to reconnect Claymore with the real economy and
to develop a culture of enterprise. In
their hunger for success, social entrepreneurs straddle the corporate and
social sectors. They think
like businesspeople, yet they also practice the values of compassion and
a consequence, these projects rarely comply with the silo structure of
public administration. No
level of government – Federal, State or local – currently provides
venture capital of this kind. Unfortunately,
Claymore’s success is in danger of stalling as it tries to progress to
its next stage of development. The
creation of social capital needs to be followed by improved access to
requires the establishment of social venture capital.
Governments need to replicate the success of the private sector in
making long-term equity investment available to entrepreneurs.
This approach bypasses the bureaucracy; it matches the ideals of
social entrepreneurship. It
forms the basis of an alternative welfare state: Social Venture Capital
Funds directly resourcing innovative projects at a local level.
the past, governments have provided a huge amount of money to community
development projects but with little success.
These programs have followed a familiar pattern of failure: the
formation of local
entrepreneurs turn this process around.
They operate on the basis of increasing returns to investment,
accumulating additional partners and social capital as their projects
develop. Social venture
capital would aim to back this kind of success.
It would allow social entrepreneurs to move poor communities back
into the real economy.
year the Federal Government spends approximately $500 million on community
development and other location-specific projects.
A similar amount of funding is provided under various State and
local government programs. (11) It should be possible,
therefore, to redirect at least $1 billion of public money into social
is also important to mobilise private sector contributions.
Last year, as part of the Prime Minister’s so-called social
coalition, the Howard Government provided an additional $71 million per
annum in tax concessions for corporate philanthropy.
Unfortunately, this program perpetuates the worst aspects of
passive charity. It encourages
corporate executives to write their cheques on the 25th floor
and then wipe their hands of any direct contact with the poor.
It promotes a hand-out instead of a hands-on approach to poverty.
Indeed, it is difficult to understand how a social coalition can be
formed without the development of social relationships. (12)
tax concessions should be redirected to the facilitation of social venture
capital. It should be possible
to leverage $1 billion of private sector investment, bringing the total
amount of start-up capital to $2 billion.
Tax concessions of this kind are doubly beneficial: not only do
they increase the resources available to social entrepreneurs, they also
encourage firms to take a hands-on role.
Once companies invest in social venture capital they have a clear
interest and reason to dedicate staff resources and know-how to the
success of the projects. In
this fashion, social venture capital has the potential to close the social
and economic gap between our richest and poorest citizens.
envisage a network of ten Social Venture Capital Funds, each carrying
capital of $200 million. As
with most venture capitalists, the funds
be small-scale units. Experts
in social entrepreneurship and business investment would staff them.
They would also need to develop good contacts and information for
the identification of suitable projects.
The newly formed Social Entrepreneurs Network (SEN) should be able
to assist this task. (13)
SVCFs would compete against each other, aiming to deliver a healthy rate
of return to their public and private investors.
The most successful funds would undoubtedly attract further
corporate contributions. I
would also expect the funds to develop a range of specialties.
Social entrepreneurial projects tend to be quite diverse, depending
on their geography and purpose. The
identification of successful projects, therefore, requires a high level of
expertise. Some funds, for
instance, would carry a high proportion of Aboriginal projects in their
portfolios, while others would concentrate on inner city, outer suburban
and rural projects.
on the experience in my electorate, I would anticipate two to three
hundred projects nationwide. Social
entrepreneurship, of course, cannot be manufactured or franchised.
It lies within the skills of community leaders.
I have no doubt, however, that this type of leadership is available
across the nation. In many
cases, it has been lying dormant, under-utilised by the welfare state.
Social venture capital would overcome this deficiency.
is a new way of thinking about public policy: actively bypassing the
formal institutions of government. Traditionally,
welfare has only been of use to people as long as they remain poor.
Social venture capital aims to tap into the wealth that lies beyond
the welfare state. Welfare
policy needs to provide more than just compensation; it needs to reconnect
disadvantaged people and places with the real economy.
This approach has several advantages:
entrepreneurs can also help to resolve the question of mutual
responsibility. As mentioned
earlier, poor communities recognise the importance of socially responsible
behaviour. Only within the
political class is there an ongoing debate about this principle.
who grew up in comfortable middle class homes find it easy to talk about
human rights. Having only
known poverty as an abstract concept, they see the world in terms of
abstract rights. This allows
them to clear their consciences without necessarily changing the way in
which people live.
practice, however, rights are nowhere near as important as outcomes.
In my electorate, people want to achieve better results by
improving the way in which mutual responsibility works.
Participants in the Work For The Dole scheme, for instance, cannot
understand why they need to be put on buses and sent to projects 10 to 20
kilometres away when there is so much work to be done in their own patch.
The first and most important obligation of welfare recipients is to
their own communities. The
creation of social capital starts at home.
the Federal Government should devolve the authority for mutual
responsibility to a local level. Social
entrepreneurs should be empowered to determine these arrangements, in
consultation with local residents. This
would add substantially to the social and economic resources available to
Aboriginal activist, Noel Pearson, has given an example of this approach
policy combines the best features of government support, Aboriginal
self-determination and personal responsibility.
It highlights the benefits of a devolutionary approach to welfare
policy. Incredibly, both sides
of Federal politics have been reluctant to move down this path.
would expect other social entrepreneurs to devise equally innovative
proposals. This is the best
way of broadening the coverage and success of mutual responsibility.
This issue is still in its formative stage in
some parts of the
there can be no excuse for the poor management of health and lifestyle
issues. The huge public costs
of health care are a consequence of personal irresponsibility – in
dietary, drinking, smoking and exercise habits.
Some doctors are now making expensive medical treatments
conditional on changes to personal behaviour.
Public policy should not be afraid to assist this process.
this model of mutual responsibility would also act as an alternative to
the Federal Government’s Job Network.
Currently the network suffers from the problems of monopsony –
where the government acts as a single buyer of employment services.
This has led to a series of anomalies in the pricing and quality of
a policy of devolution, social entrepreneurs would play a role in the
provision of labour market programs and the application of mutual
responsibility. Social venture
capital would serve as an alternative source of funding, allowing social
entrepreneurial projects to buy-in a range of employment services, in
competition with the Job Network. This
confirms the benefits of an alternative welfare state: it breaks up the
government monopsony and creates greater competition for the
cost-effective use of public funds.
reformed welfare state must also respond to the growth of social and
economic insecurity. People
who oscillate in and out of poverty need to be able to smooth out their
income fluctuations, drawing on a range of assets during periods of
disadvantage. We need to move
from a system of recurrent income transfers to one based on asset
approach is known as asset-based welfare reform. (17)
Internationally, both sides of politics have embraced this policy, from
the Bush Administration in the
policies aim to move with the tide of economic change.
The new economy is placing a premium on asset accumulation.
This is a new benchmark against which the notion of social
inclusion needs to be measured. A
good society has each of its citizens actively participating in the
benefits of financial, human and social capital.
The purpose of a modernised welfare state should be to assist this
the old system, governments tried to redistribute economic resources
through tax and spend strategies. As
noted earlier, there are now clear limits to this approach.
In any case, transfer payments are not a good way of generating
economic and social participation. Instead
of fostering self-reliance and security, they force people to rely on the
benevolence and fiscal capacity of governments.
need a tangible stake in society and the new economy; in effect, they need
to be freed from the vagaries of the welfare state.
For those facing insecurity, assets are an essential buffer against
the contingencies of change. They
allow people to smooth out their income capacity and economic
circumstances. In particular,
they allow workers to bounce back from the impact of restructuring,
thereby avoiding bouts of poverty.
accumulation is also vital for the long term poor.
One of the mistakes of the welfare state has been to under-estimate
the capacity of disadvantaged people to save.
Programs overseas, for instance, have shown that the poor can save
and invest, once they receive the right kind of incentives. (18)
This process, in turn, creates spin-off benefits in terms of self-esteem,
health care and career prospects.
only way to leave poverty on a permanent basis is to save and accumulate
assets, whether in the form of financial, education or social resources.
Incredibly, the welfare state has emphasised recurrent income
transfers rather than assets. Rich
people, of course, have no problem with the question of asset
inheritances pass on the benefits of financial capital and a good
education from one generation to the next.
The welfare state needs to provide a similar set of opportunities
for the poor.
the past, public policy has encouraged a limited range of financial
assets, such as home ownership and superannuation.
These schemes, however, have been available to everyone bar the
poor. It seems surreal that
the Left has tolerated such a massive inequity.
It has been happy to pay income support to the underclass and asset
support to the middle class. Indeed,
means tested payments have actively discouraged asset accumulation: if
welfare recipients save more than a small amount they become ineligible
for income support.
surprisingly, these arrangements have made the poor welfare dependant and
the rich asset dependant. Inequality
has been institutionalised in our society.
The true Left-wing policy is to give low-income earners equal
access to asset support. The
best type of welfare safety net is a trampoline.
new role for government is to facilitate asset accumulation among the
victims of poverty and economic insecurity.
It needs to develop a stakeholder welfare state, in which all
citizens have access to various forms of capital.
Each of its welfare programs needs to include an assets strategy
for the disadvantaged. In
summary, stakeholder welfare aims to:
NSW Premier, Bob Carr, often expresses the pessimistic view that there are
no new ideas in politics, no new answers to the social problems of our
time. (22) If one’s search for new ideas is limited to
the traditional sources of political information – such as parliamentary
debates, bureaucratic recommendations and university research – then
Carr is right. The well of
innovative thinking has run dry.
is why welfare reformers need to look beyond the conventional wisdom.
They need to examine the evidence, learning from the work of social
practitioners. The new
frontier of progressive politics is being forged within disadvantaged
communities. Places like
these settings, politics is full of new ideas.
The challenge for policy makers is to hook into these networks of
innovation and practical reform. Politicians
need to break their addiction to machine politics and rediscover poor
need to get out of their CBD offices and start talking to social
entrepreneurs. In both cases,
they need to take an evidence-based approach to welfare policy.
myths of the welfare state are based on old ideological ways of thinking.
In reality, the world has moved on.
The Information Age is demanding cross-sectoral and
multi-disciplinary solutions. It
is rewarding organisations that place a premium on collaboration and
networking. We have entered an
era of boundary crossing.
is not some new theory or abstract piece of social engineering.
It is grounded in social practice.
People do not live their lives in neat ideological boxes.
They do not sit around trying to wind back the growth of the
welfare state; nor do they spend their time working out new ways of
regulating the economy.
they adopt a problem-solving approach.
This means taking the best of both sides of politics – the values
of the Left as well as the Right – and applying them to our toughest
social issues. The old
ideologies are insufficient to deal with the modern challenges of poverty.
A new synthesis is required.
concept of social entrepreneurship, for instance, draws on the best of
Left-wing politics – the ideals of cooperation and compassion – plus
the best of Right-wing politics – an ethos of enterprise and
risk-taking. Likewise, social
venture capital crosses traditional political boundaries, mobilising
additional resources for poor areas while also embracing the realities of
private sector investment.
other proposals in this paper rely on a similar process.
In the past, the Left has stressed the importance of mutuality and
social cohesion while the Right has emphasised the values of social
responsibility brings these two ideals together.
So too, the Right has argued for savings and asset accumulation
while the Left has pursued the redistribution of economic resources.
Asset-based welfare bridges these two concepts.
the evidence, the things that I have seen and learned in my electorate,
these reforms are all-important. They
offer society its best chance of winning the war against poverty.
They demonstrate the means by which we can make welfare work.
one level, however, this is what makes Australian politics so frustrating.
The know-how is available to solve our worst social problems.
But the political system is only interested in ideological
boundaries and the point scoring this evokes.
It is the equivalent of play-acting, as each side makes its
set-piece criticisms of the other. In
its final form, this is how the myths of the welfare state are
perpetuated. It is more about
the comfort of the political system than addressing the discomfort of the
I: Social Entrepreneurial
Brian Murnane and
the Claymore Miracle
miracles do happen. Six years
street was full of vandalism, family disputes and despair.
Things were so bad that the State Government could not pay people
to move into the public housing. The
low ebb came in late 1995 when two tragic fires turned the townhouses into
infernos, killing five people.
no longer live in fear in their homes, wondering if their next-door
neighbour has been doing the break-ins.
Instead, they share a community life with some important projects
underway. There is now a 12
month waiting list for new residents.
This has been the Claymore miracle, a wonderful example of social
reconstruction. How did it
happen and what are the lessons for policy makers?
first lesson comes from the decision of the NSW Department of Housing to
leave the area. In 1996 it
handed over part of Claymore to the Argyle Community Housing Association,
a division of St Vincent de Paul. The
residents had grown distrustful of the Department.
It was seen as distant, cold and bureaucratic - more interested in
making rules than helping people.
contrast, Argyle established its office in
started with small things, such as a community barbecue and clean-up days,
and then moved on to bigger projects, such as a Neighbourhood Watch
scheme. This burst of energy
and effort created an enthusiasm for doing things together.
As Murnane describes it “everytime someone said let's do
something, we backed them.”
particular, the Pacific Islander residents led the development of a
thriving community garden on a large slab of disused public land.
This became a focal point of achievement, as the residents crossed
their different cultural boundaries and learnt from each other.
normalised the social environment, Murnane then moved on to the
development of skills and economic activity.
He set up a small business to meet Claymore’s housing maintenance
and lawn moving needs. A
low-interest loan scheme was also established, managed by the residents
themselves. This has been an
important source of financial education and participation.
It has functioned like a micro-credit scheme, with a default rate
of just one per cent.
These enterprises have established new skills and employment opportunities in Claymore. Murnane now wants to take another step forward. He wants to take over the run-down neighbourhood shopping centre for the development of business ventures, cooperatives and training programs. This is where social venture capital has a role to play, exposing the capital markets to new investment opportunities in poor neighbourhoods.
Murnane has fulfilled the role of a community broker - building new
partnerships between people, while also giving them the confidence to
develop their skills and to take risks.
This is such an important lesson.
People do not live their lives through committee meetings and
minutes. They want to get
things done in practical ways, creating new relationships of trust and
is why social capital is so vital. It
is a community’s immune system against social breakdown.
No amount of government money or market economics can reproduce
these relationships. They rely
on the work of people like Brian Murnane and the development of community
years ago, I doubted that anything could ever be done to improve the
situation in Claymore. Thankfully,
this wonderful example of social entrepreneurship has proved me wrong.
Helen White and the Minto Hill Project
entrepreneurs often emerge in unexpected ways and places.
Following the success of the Claymore project, the NSW Department
of Housing decided to try something similar in a section of the Minto
estate (known as “the hill”). In
October 1998 it appointed one of its middle managers, Helen White, to run
a new program called “intensive tenancy management.”
Like Brian Murnane, she was located on-site and expected to work
closely with the local community.
took White several months to break down the residents’ suspicion of
someone from the Department. Thereafter
she moved down the social entrepreneurial path: organising street BBQs and
clean-ups; employing a handyman to fix the small but significant things
around the estate; and most of all, enabling people to do things for
themselves. The community now
runs its own neighbourhood watch scheme, soup kitchen, vegetable gardens
and arts and crafts program.
the greatest success, however, has been the establishment of a new
business called Concept Cooperative. In
late 1999 five women decided to establish an enterprise that matched the
skills of the local residents against the needs of the local area.
It now provides a range of house cleaning and renovating, gardening
and rubbish removal services. It
also hopes to establish a youth employment and training program.
White sees it, “the community here is like a treasure chest.
We have uncovered valuable people previously hidden behind fences.
Basically, they want what everyone else wants.
They want a happy home, a safe place for their children and they
want to be proud. The way the
system was, people here had lost their self-esteem, but we’re trying to
bring it back.”
a result, Minto is an improved place.
Public spaces that had been dominated by graffiti and crime are now
being used constructively. Relationships
of isolation and fear have been converted into a spirit of community and
cooperation. For the Housing
Department, the numbers look good. Rental
arrears are down by 47 percent while vacancy rates have fallen by 50
are two important lessons from this project.
The first concerns the significance of people skills.
Helen White is a strikingly enthusiastic and inspirational person.
When I first met her in 1999 she said that she “couldn’t sleep
at night for thinking about new ideas for Minto.”
runs a people business. Her
sole asset is social capital. She
has a distinctive way of bringing out the best in others.
Without the right kind of character and commitment, there can be no
such thing as social entrepreneurship.
second lesson concerns the limitations of public administration.
While, to be certain, social entrepreneurs are available within the
ranks of government, they are not necessarily suited to the methods of
government. White has not had
the same freedom and success as Brian Murnane in crossing institutional
boundaries. At the end of the
day, she is a government employee, somewhat restricted by the departmental
has limited the capacity of the Hill Project to form partnerships.
It is still part of the housing silo, disconnected from education
and health services and most importantly, new sources of corporate
investment. Other than the
Concept Cooperative enterprise, it has not been possible to generate new
employment and training opportunities.
its current management structure, it is difficult to see how the project
can convert its social capital gains into financial capital.
It needs an alternative source of funding to create a wider range
of business ventures. It would
benefit substantially from access to social venture capital.
If social entrepreneurs are to succeed within the public sector,
they require a high level of risk-taking autonomy, both in their social
work and economic partnerships.
Minto experience has convinced me that this is not likely.
While the project has made some important gains, it remains a
second-best model. The best
and most enduring solution to poverty lies in the creation of an
alternative welfare state.
Vicki Meadows and Families in Partnership
greatest challenge for any parent is to raise a developmentally delayed
child. A group of working
class parents in Campbelltown has met this challenge with an inspiring
program of social entrepreneurship. Not
content with placing their children in institutionalised care, they have
tried to build the provision of services around the needs of their
families. Through a powerful
combination of innovation, social capital and sheer tenacity, they have
achieved a remarkable amount of progress.
Families in Partnership story starts in 1994 when two parents, Vicki
Meadows and Mandy Shepherd, decided to do something positive about the
needs of their developmentally delayed infants.
They wanted their children to stay in a normal family network,
rather than experience the isolation of child care.
It was important for the children to keep developing and learning
from regular contact with their brothers and sisters.
of doing things the conventional way, by turning instinctively to a
government department, Vicky and Mandy took their own initiative.
They joined a new group called Families First, organised by the
Kindergarten Union and experts at
Families First was located in an old shed at the rear of an existing
childcare centre in Campbelltown. It
made good use of a disused community asset.
By 1995, however, it had become so successful that it qualified for
Federal funding to construct a purpose-built facility.
This was opened in 1997, further increasing the size and scope of
the service. The results for
the children have been outstanding, with an improved level of development
and regular family contact.
success of Families First gave Vicki Meadows the confidence to play an
even stronger leadership role. In
1998 she established a new group called Families in Partnership.
It took on an ambitious agenda for families with disabilities,
mobilising resources from across the health, university and community
sectors. It achievements
the children have grown older, Families in Partnership has shifted its
focus towards school-related issues. The
parents have grown disillusioned with the structure of special education.
In particular, they want a higher level of innovation and service
integration than the government school system is willing to provide.
As one parent (the mother of eight year old Jimmy, who has a
moderate intellectual delay) puts it:
On one occasion I found out about a new literacy workshop and paid for one of the teachers to attend it after-hours. When the principal found out about it he summoned me to the school and castigated me for my ‘unethical behaviour’. Am I meant to apologise for trying to get a decent education for my child? … Jimmy’s programs are delivered in professional boxes. For example, I would take Jimmy to occupational therapy (OT) and speech therapy (ST) at private providers external to the school. He would then return to the school where the teachers had no knowledge of what he had learned at OT and ST. The result is that the development of my boy suffers. Why can’t we put all the services in the one place?
in Partnership is not willing to tolerate the failings of the education
bureaucracy. It has applied to
the NSW Government for the establishment of a community or charter school.
Instead of running special education out of a large department in
the centre of
Internationally, the evidence shows that schools achieve their strongest results when they maximise the involvement of parents. (23) This approach is doubly beneficial in special education. It allows the integration of school and home-based programs across a number of disciplines. The community school plans to provide a range of education, health and family services, with funding bundled together from three State departments. The school will also draw on the expertise of the early childhood teaching and research programs at UWS. It has the potential to be a national centre of excellence in special education.
small beginnings, Families in Partnership has grown into a dynamic leader
in the disabilities sector. The
parents are acting on their well-formed and innovative views about the
needs of their children. Most
of all, they want to be treated as equals in their contact with health
professionals, academics and bureaucrats.
They are not interested in the language of consultation – they
want real and lasting partnerships. When
social entrepreneurship empowers parents in this fashion, it is an
incredibly impressive force for social justice.
Peter Botsman has written, “there are no tougher problems than the ones
these families face. Already
they have achieved things that an army of bureaucrats, governments and
professionals would not have even contemplated.
Vicki Meadows and her network inspire people to work for them to
build something better out of one-off payments, uncoordinated area
spending and paternalistic expert advice.
Partnership and direct involvement in the funding, management and
delivery of services for their children and families is the lesson they
give us.” (24)
Shadow Treasurer Simon Crean in The Australian,
Amitai Etzioni, The
Third Way to a Good Society, (Demos,
A. de Haan and S. Maxwell, “Poverty and Social Exclusion in
North and South”, IDS Bulletin, No.1, 1998, pages 1-9.
Similar results have been recorded in other European countries: see
Anthony Giddens, “Social Change in
Will Hutton, “High-risk Strategy is not Paying Off”, The
Boyd Hunter, “Is There an Australian Underclass?” Urban
Futures, No.18, 1995, page 20.
See, for instance, Mark Latham, Civilising Global Capital,
(Allen and Unwin, Sydney, 1998), pages 214-20.
by Craig Knowles, NSW Minister for Planning and Urban
Affairs, at a WSROC local government conference, Merrylands,
For an outline of
social entrepreneurial projects in
Charles Leadbeater, Living on Thin Air, (Viking, London,
Paul Brickell, People Before Structures, (Demos,
by the Federal Parliamentary Library Research Service.
For a critique of
this program, see Mark Latham, “PM’s charity model a step
back in time”, Australia Financial Review,
Based on the
successful Community Action Network in
The ACTU and other social movements are advancing this agenda.
See Sharon Burrow, “Whispers Outside the Boardroom Door”,
Speech to The Sydney Institute, 29 August 2000; and Sean Kidney,
“Super’s slide into social responsibility”, The Australian
Financial Review, 25 August 2000.
For a more detailed explanation of Parents as Educator programs,
Latham, What Did You Learn Today, (Allen and Unwin,
The seminal text on asset-based welfare is Michael Sherraden,
Sherraden and Robert Friedman, “Asset-based policy in the
Mark Latham, “Stakeholder Welfare”, Quadrant, March 2001
Social entrepreneurs could play a role in the resourcing and
management of the accounts. In
Mark Latham, What Did You Learn Today, pages 28-32.
It is proposed to finance the accounts through government seed
funding (to encourage participation by low-income groups), early
superannuation access, enterprise bargaining, existing welfare payments
and private contributions.
See Lyndall Crisp, “Dull campaign? I’ve been non-stop for six
Mark Latham, What Did You Learn Today, pages 86-100.
Botsman and Mark Latham (eds.), The Enabling State, (Pluto Press,
Sydney, 2001), pages 96-7.