Discussion 5: The development of welfare policy

The second session of the 2025 discussion series, “Understanding Victoria”, considers the development and defining elements of welfare policy in our federated nation in the mid-20th century.

This session builds from the first in this series in 2025 which explored the effect of campaigns for wages and conditions in the late nineteenth century in creating a socio-legal and economic landscape that shaped institutions and social policy in the Federation.

This discussion is about the factors that shaped the distinguishing features of social welfare policy in Australia as it developed in the twentieth century. Much of current welfare policy was crafted and based in decisions made in the middle period of the twentieth century, where assumptions and directions were influenced by the particular circumstances in Australia and the lessons we drew from them.

Key among these was the development of conciliation and arbitration as a means of resolving industrial disputes and setting wages and conditions for workers at State and later at the Commonwealth level.¹

Today’s discussion is about the factors that shaped social welfare policy in Australia in the early to mid-twentieth century. Much of current welfare policy was crafted and based in decisions made in this period, where assumptions and directions were influenced by the specific circumstances in Australia and the lessons we drew from them.

Format

A facilitated discussion and conversation, where the facilitator will introduce the topic and call on speakers.

Three speakers will each present to the group, exploring a question in a short presentation. Following the presentation guests will be invited to participate in a facilitated discussion to further explore the topic.

Facilitator

Jon Faine AM, Vice Chancellor's Fellow at the University of Melbourne

Speakers and topics

Professor John Murphy, Emeritus Professor of Politics, The University of Melbourne: How did welfare policy in the 30s to the 60s contribute to the evolution of the welfare system?

Professor Philip Mendes, Director Social Inclusion and Social Policy Research Unit, Monash University: Who was left behind in our post-war welfare state and why?

Professor Nell Musgrove, National School of Arts and Humanities, Australian Catholic University: What are the legacies of the 'deserving poor' and Victorian-era concepts of charity?

Background information

Pre-Federation charity and foundations of the Antipodean model

Welfare or charitable support was treated as residual in the Antipodean colonies where labour was scarce, with opportunities for a ‘new life’ including better wages and conditions. Welfare was for those not employed; employment by the turn of the century was presumed to be delivering a ‘living wage’ to provide a ‘civilised’ standard of living for a family.

Welfare support for those ‘outside’ the employment system was seen in the colonies as the domain of private charity and benevolent societies, rather than a responsibility of government, through the nineteenth and early twentieth centuries.

Yet, even in the first decades in the colony in Victoria, this assumption did not prove adequate. In 1864 the Neglected and Criminal Children Act was passed to enable the state to become the guardian of children not adequately provided for by their parents. This led to a system of state- supported industrial and reform schools and orphanages which underpinned much of the ‘care’ provided to these children separated from their families. This was a regime underpinned and administered by the state directly or by proxy through charitable organisations until the first half of the twentieth century.

As the new nation was being debated, government payments and associated policy were created for circumstances in which people could not rely on employment. A model in which payments were ‘means tested’ and paid from general revenue was introduced. This began in the States, such as Victoria and NSW. The major locus for welfare support, as well as institutional care, remained with the States prior to the Second World War.

In Australia, the development of welfare policy around payments, such as pensions and allowances, followed a distinct Antipodean trajectory, diverging from the social insurance and social welfare forms of Europe and Scandinavia. The major change over the course of the twentieth century in Australia was that the responsibility for such payments shifted from State to Commonwealth.

Pensions and Allowances

Before Federation, express reliance on private benevolence and rejection of the British Poor Law regime in the Antipodes was only replaced by government payments with the introduction of old age pensions in Victoria and NSW.² After Federation the development of pension payments strongly influenced formation and delivery of social policy by the Commonwealth.

In Victoria, as Murphy (2011) comments, pensions had more restrictive eligibility, tied more closely to a ‘deserving/undeserving poor’ characterization, than to universal citizen rights or entitlement as found in NSW.³

The introduction of ‘mean-tested’ pensions at Commonwealth level in 1908. replaced the State schemes, such as those introduced in Victoria in 1900. The Commonwealth added an invalid pension for permanent incapacity, which came into effect in 1910.

Somewhat unexpectedly, a maternity allowance, a lump sum paid to a mother on the birth of each child, was introduced by the Commonwealth in 1912. It was paid to mothers irrespective of marital status.

One key and distinguishing element these first Australian schemes paid pensions and allowances from general revenue - they were not social insurance schemes based on individual contributions. And they had the form of a universal citizen entitlement, with one significant exception.

Despite some opposing parliamentary argument as these new social payments were enacted, the White Australia ‘policy’ excluded Aboriginal and Torres Strait Islander people from access to these pensions and allowances.

The Great War

The first major change to federal payments came in the wake of the First World War. As Murphy (2011) reminds us, the proportion of Australian soldiers killed or injured in that Great War was disproportionately high - with the permanently disabled estimated at 27 percent of those who went overseas.⁴ The number of pensions paid to widows and dependents of veterans and widows, as well as to the permanently disabled, exceeded the number of aged and invalid pensioners in the Commonwealth.

This parallel system of veterans’ welfare support was based on the previously developed Antipodean models, anchored in notions of the male basic or living wage and worker’s compensation for injury. It has continued as a separate system of welfare support from its establishment in 1914.

The Great Depression and World War II

During World War II, following the experience of the Great Depression of the 1930s, the Commonwealth took over responsibility for social security and enacted a series of legislative measures that set in place welfare schemes that created Australia’s modern welfare state.

Key to Commonwealth dominance was its assumption of sole responsibility for income tax in 1942 - which gave financial capacity and levers to determine policies that relied on payments disbursed from general revenue.

The wartime Labor government of Curtin, followed by Chifley led the introduction of a series of welfare initiatives. These initiatives self-consciously rejected social insurance models, determining the trajectory of welfare policy.

First, in 1941, was child endowment (which had bipartisan commitment being first proposed at Commonwealth level by the Menzies government). This was a flat-rate cash payment, not means- tested, to the mother for children beyond the first child.

This was also the first payment which explicitly included Aboriginal and Torres Strait Islander mothers and was also able to be paid for children who lived for at least six months per year on a mission station. This latter eligibility criterion underscored the problematic and continuing distinctions between our First Peoples who were deemed to be ‘nomadic’ or entirely dependent on State support and others, largely living in cities and towns.

This first allowance was followed in quick succession by the Widows’ Pension Act 1942, National Welfare Fund Act 1943 (covering health services, sickness and unemployment benefits among other social services), Funeral Benefits and Wife’s Allowance 1943, and the Unemployment and Sickness Benefits Act 1944. In 1947 a single Social Services Act, following a successful referendum to give the Commonwealth explicit constitutional power to legislate in this field, consolidated the various federal benefit payments and allowances.

Not every attempted social benefit proposed in this Curtin/Chifley period was successfully legislated. A push to include pharmaceutical benefits did not prevail - although later such benefits, and others, found their place among universal entitlements.

Importantly, the notion of benefits and allowances which were funded from general revenue rather than social insurance built on contributions was cemented into the fabric of Australian welfare policy in this period.

Conclusion

From today’s standpoint we can see an expansion of ‘universal’ schemes such as Medicare, Pharmaceutical Benefits, Family Allowance or Family Tax Benefit, Child Care Subsidy, National Disability Insurance Scheme, and the Compulsory Superannuation Guarantee. Some are means-tested or tied to our progressive income tax system, a significant number funded from general revenue, and our major and almost uniquely widespread superannuation requires contributions.

It can be argued a significant part of our contemporary social welfare system reflects elements developed over the twentieth century. Certainly, by the close of the twentieth century schemes of universal application had become the touchstone.

There remain questions to be asked about the impact of various exclusions and restrictions on eligibility, as well as stigmatising assumptions tied to race or the ‘worthiness’ of those receiving social welfare supports and benefits.

As well, the relationship between the state and ‘institutionalised’ care, particularly for children, remains one of the most challenging areas of social policy from the nineteenth century to the present day.

The enduring question for our understanding, our policy, our institutions, private and public, and our governments remains how best to ensure “to each according to [their] needs”?

Recommended readings

References

1. This replaced the wages board system for regulating wages and conditions in Victoria through the Victorian Factories and Shops Act of 1896.
2. John Murphy, A decent provision: Australian welfare policy, 1870 to 1949. Melbourne, Routledge, 2011, p. 55.
3. As above.
4. John Murphy, A decent provision: Australian welfare policy, 1870 to 1949. Melbourne, Routledge, 2011, p. 109.