Rae Dufty

1. Governing locationally (in)flexible subjectsThe pursuit of labour market flexibility through housing assistance reforms in Australia (2005) Rae Dufty

2. Context • Workfare Welfare reform is also about reregulating the labour market. While debates around welfare reform typically focus on ‘internal’ and supply-side factors, such as the (excessive) costs of the system or the (perverse) habits of recipients, in most cases it is clear also that the ‘external’ and demand-side factors, such as the state of the labour market, are playing an important if often unstated role (Peck, 2001, Workfare States, p.35)

3. Context cont. • Structuralist understandings of the changing role of the state: • Neoliberalism = end of the welfare state = end of distributional politics? • Or does it? O’Neill’s (1996; 1997) qualitative state begins this challenge as does Gibson-Graham’s (1996) work on a distributional politics providing alternative understandings • This paper argues that the distributional politics of neoliberalism represents a new paradigm of redistribution > away from redistributing fiscal resources across space to redistributing labour resources across space.

4. 1) Discourses of locational inflexibility • Locationally inflexible impediments to regional adjustment/development: • Locational inflexibility in the costs of labour • Immobility/locational inflexibility of labour • Housing assistance: • Housing inhibits mobility • Homeownership • Public housing • Housing assistance produces problematic patterns of mobility

5. Locationally inflexible wages • Australia’s existing wage fixing arrangements limit the scope for wage flexibility which constrain the adjustment options available to regions with consequent adverse effects on employment opportunities. (Bureau of Industry Economics, 1994, p.82) • The social security system provides necessary financial assistance to unemployed people in accord with our society’s notions of fairness. But it can have unintended side-effects on regional labour mobility. There is evidence that, on balance, people have been moving from relatively low to high unemployment areas. The uniformity and duration of unemployment benefits are seen as contributing to people migrating to, and remaining in, regions with lower costs of living and lifestyle advantages. This is both an understandable and indeed rational response for the individual. However, where job prospects are low in such are, it can exacerbate regional adjustment problems. (Industry Commission, 1993a, p.xix)

6. Locationally inflexible labour • Survey results show that a large proportion of respondents consider that the offer of a suitable job would not entice them to change their place of residence… (Clare, 1991a, pp.33-4) • Net migration, however, tend to be dominated by those not employed … particular those over 30, and with children [moving] from places of low unemployment to place of higher unemployment… The (smaller) net movements of the 15-30 group and of the employed are still towards the capital cities, seeking better employment and consumption opportunities, and often in the opposite direction to the movements of those not in the labour force and of the unemployed. (Flood et al., 1991, Executive Summary) • The official data, the BIE studies and information gleaned during the Commission’s regional visits suggest that in Australia workers (especially the less skilled) are not particularly mobile across geographic labour markets, at least not for employment reasons alone. (Industry Commission, 1993a, p.58)

7. Housing and locational inflexibility: (certain types of) housing (tenure and assistance) inhibits mobility • Homeownership impedes mobility • The predominance of owner-occupation in the Australian housing system may restrict the mobility of the labour force by providing a disincentive for homeowners in areas where employment levels decline to move to higher-employment areas. (National Housing Strategy, 1991, p.18) • Public housing impedes mobility • These mobility effects can be compounded by the concentration of public housing in regions with high unemployment. Its availability and low cost can make it financially disadvantageous for inhabitants to move to another location. (Industry Commission, 1993a, p.xix) • The mobility of labour is adversely affected by a number of impediments including, … the use of public housing in a manner which ties disadvantaged groups to particular locations … (Bureau of Industry Economics, 1994, p.83)

8. Housing and locational inflexibility: (certain types of) housing assistance produce problematic patterns of mobility • Net moves in total are occurring from places of low unemployment to places of higher unemployment, contradicting classical employment-driven models of migration. (Flood et al, 1991, Executive Summary) • Net migration patterns suggest many households leave capital cities in search of both lower housing costs and a rural lifestyle. This paper is concerned particularly to establish the extent to which housing decisions people make in specific metropolitan and non-metropolitan environments, meet their needs in terms of access to services at different stages of their lives, and the extent to which those decisions may conflict with the needs of future generations. (National Housing Strategy, 1992a, p.65) • High concentrations and ready availability of public housing in non-metropolitan regions also have the effect of placing people, who typically are dependent on social security, in locations far removed from job opportunities in major metropolitan areas. (Industry Commission, 1993a, p.71)

9. Impediments to mobility may hinder microeconomic reform … While mobility increases economic efficiency many of the things valued by individuals are impediments to mobility. These include forming relations, providing a stable environment for children and being a member of a community. Accordingly, a high value is placed on security of tenure – where security of tenure means not having a move unless you wish to. (Box 5.1, in Industry Commission, 1993b, p.56)

10. 2) Mobility as a solution to spatial inequalities • … the flexibility of resources that Australia has achieved in the past should be strongly supported, partly because it helps prevent the emergence of chronic regional imbalances which mar the performance of other countries, and partly because it reduces the need for governments to reallocate resources between regions to achieve equitable outcomes. (Bureau of Industry Economics, 1994, p.xiv) • From a national point of view, relocation is of most benefit when an excess demand for labour exists in some regions simultaneously with an over supply in other regions. As a result, the movement of labour will act to ease the pressure on both labour markets. In periods of generally high unemployment across almost all regions, increased mobility is unlikely to achieve an increase in total employment or in national output. (Bureau of Industry Economics, 1985, p.177) • The more mobile the population, the less likely is the persistence of large regional disparities in economic performance, since people will tend to move from disadvantaged to the more advantaged regions. (Clare, 1991a, p.32) • A common feature of all adjustment is that there is some reallocation of the uses or location of workers, capital and land. (Industry Commission, 1993a, p.29)

11. 3) Housing assistance solutions to locationally inflexible labour… • Housing assistance as a technology of government • Housing assistance > facilitating choice • Facilitating ‘locational’ choice.

12. Housing assistance as a technology of government • There is a need to explore housing policies which can facilitate rather than detract from labour market flexibility. (National Housing Strategy, 1991, p.18) • Housing policy is also integrally related to other commonwealth policy concerned such as income security, taxation, labour market and wages policy. (Commonwealth Department of Health, Housing and Community Services, 1992, p.9) • Housing reforms will greatly improve the opportunities of many Australians, especially those on lower incomes, by not only providing better housing which meets their family needs, but also providing them with better access to jobs, education, training and service. (Keating, 1995, p.2)

13. Housing assistance as facilitating (locational) choice • The advantage most commonly given for private renting was the ability to choose location of the residence. (Industry Commission, 1993b, p.52) • In a dynamic and mobile society the [private rental] sector is important in providing, both on a transitory and longer term basis, housing with the capacity to relocate easily, and to respond to labour market and other exigencies without the commitment of capital which many households lack, or which they may prefer to invest in other ways. … growth of the ‘rational renter’ who decides to rent rather than purchase because of a preference to make investments in areas other than housing, and the implications of higher demands for employment and hence locational flexibility. (Department of Social Security, 1996, pp.51-2) • … it would appear that the biggest advantage of the new arrangements … is that they will allow greater choice for tenants. Public housing tenants now on lengthy waiting lists may be able to rent in the private sector using their rent assistance payment, and they will have the option of being more mobile (for example, moving interstate) and following the geographical locations that offer the best employment prospects. (McIntosh, 1997, pp.14-5)

14. Conclusions… • Distributional politics still present in how governments pursue welfare. • ‘Distributional paradigm’ of welfare provision has shifted: away from a spatial equity objective of reallocating fiscal resources towards reallocating labour (people) resources • Locational flexibility/geographic mobility is a key component of a more ‘flexible’ labour force (particularly low-income workers) • The changes to how housing assistance is provided exemplifies this new paradigm of distribution. • Will this produce socially just outcomes???

15. In the early nineties, the National Housing Strategy recognised that some people choose to spend more than 30 per cent of their income on rent: Decisions by households to spend more than 25 or 30 per cent of their income on housing should be matters of choice and preference rather than circumstance and hardship. The Committee recognises that there is some basis for this argument: some low income renters prefer to spend a higher proportion of their income in rent in order to live in a more desirable locality close to a range of services and save on transport and other costs. It is not for the taxpayer to compensate for the consequences of that choice. (Senate Community Affairs References Committee, 1997, p.44)