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Are low-income earners better off or worse off after 12 years of Labor Government?

MONICA ATTARD: The battle for the hearts, minds, and most importantly the votes of Australia's low-income earners, is well and truly being fought out in the Federal Parliament. So tonight, PM decided to ask whether Australia's battlers are better or worse off after 12 years of Labor. David Pembroke spoke to Professor Ann Harding who's the Director of the National Centre for Social and Economic Modelling at the University of Canberra.

DAVID PEMBROKE: Ann Harding, are low-income families worse off since the Hawke and Keating Labor Governments - as is alleged by the Coalition?

ANN HARDING: I think that very low-income families with children are probably better off now than they were back in the early 1980s.

DAVID PEMBROKE: What do you base that on?

ANN HARDING: Well, there have been very substantial real increases in government payments to low-income people, so very sharp increases in family assistance and also in pensions and allowances.

DAVID PEMBROKE: But the Coalition says that two-income families are $23 a week worse off after rebates and family payments, and single-income households are also worse off.

ANN HARDING: I think that they weren't specifically referring to low-income families there though. It's not clear what income level they are looking at and, I think, the picture has probably varied for different types of families and at different income levels.

DAVID PEMBROKE: So it's quite a legitimate claim that the Government makes when they say that under the Accord framework, measures have been taken to trade off money wages for the social wage?

ANN HARDING: This is the wild card in the income distribution debate. So it's absolutely clear that there have been trade-offs and the social wage has increased dramatically over the term of the Labor Government. And the million-dollar question is how progressive or how pro-poor those social wage outlays have been and we still don't know that yet, but we will within the next six months or so.

DAVID PEMBROKE: Why will we know in the next six months?

ANN HARDING: There are two landmark studies due to be delivered - one, by the Australian Bureau of Statistics and another by two Melbourne research institutes which has been commissioned by the Government.

DAVID PEMBROKE: So at that point, we will be able to make a meaningful comparison, and this question of whether or not low-income earners are better or worse off under the Labor Government will be able to be settled quite conclusively?

ANN HARDING: We should have a comprehensive picture of incomes of different types of families at different income levels after taking full account of the social wage.

DAVID PEMBROKE: Just how significant is the social wage?

ANN HARDING: It's very important. For most families, it's far more important than the cash payments they receive from government which get all the attention from income distribution analysts. So, for example, for a couple with two children, a recent NATSEM study suggested they receive almost $200 a week from using health, education, childcare and housing services provided by government.

DAVID PEMBROKE: So is what you are saying that the Coalition are in fact misleading people when they quote these statistics?

ANN HARDING: Well, no, they are looking at cash income and that's what we've all traditionally looked at when we've measured how people are doing. But recent research by NATSEM is showing how important it is to look at the non-cash benefits received by families and that's through things like their use of Medicare or public education or childcare. So in other words they are using government services, and those services have a value, and if they weren't being provided by the Government those families would have to pay for them.

DAVID PEMBROKE: But then again that is misleading though if they do only quote the cash figures?

ANN HARDING: Well, what we are seeing is it's inadequate. What we're learning now in income distribution is that you should, if you can, take account of the social wage services. The reason that hadn't been done comprehensively in the past is it is very difficult to measure. You have to know all about families' usage of these different government services and then give them a value.

DAVID PEMBROKE: How difficult a task will it be to assess those government services and the value of those government services?

ANN HARDING: It's a very complicated task. It is being undertaken in large projects by the two organisations I mentioned earlier.

DAVID PEMBROKE: Now those organisations that you mentioned - is there the possibility that they could be tarred with the brush of political expediency given that it's the Government who has asked them to look at these measures?

ANN HARDING: Well, the Australian Bureau of Statistics, I think, are renowned for doing very independent analysis and their results will let us compare 1994 back with 1984 - so a fairly good picture. And I am sure the academics would not want to put their reputations on the line. I think the results should be interesting and good.

MONICA ATTARD: Professor Ann Harding of the University of Canberra.