Recent social policy literature asserts that welfare states across the world are experiencing significant challenges to their structure and role as a result of changes to the global market economy and the demography of their citizens. Given that the accelerated aging of national populations is a worldwide phenomenon, states have been seeking new cost-effective solutions to supplement, or even provide alternatives to the pension time bomb. This essay intends to examine the utility of asset-based arrangements of welfare, in which governments encourage home ownership to offset the rising costs of social insurance. That this practise is indicative of welfare retrenchment, in the sense that the ‘new modernised welfare state,’ shifts the responsibilities of social provision onto its citizens, will also be explored. First, there will first be an outlining of the rationale behind the research project, including a conceptual and literature review of Castle’s trade off hypothesis and the role of the enabling state in welfare regimes. After an explanation and justification of this essay’s methodology, attention will directed towards the relationship between governance, homeownership and retirement savings in the United Kingdom (UK), Australia and Singapore. Finally, a comment will be made upon whether the trade off is worth the restructuring from income to asset-based welfare, with a summary of the key policy recommendations that researchers in the field have suggested thus far.
The rationale for this research project was inspired by Conley and Gifford’s (2006) comparative investigation of homeownership and social insurance across 20 OECD countries. Housing is no longer being marginalized as a wobbly pillar (Torgensen, 1987) of comparative literature, but is cited as having everything to do with the sustainability of existing public pension provision arrangements in a global market economy (Conley and Gifford 2006, p.58). Castles (1998, p.8) emphasized the unique part that housing had to play in mitigating dependency on the state at the later stages of the life course, as home ownership enables individuals to save on the outgoings of rent and thus get by on smaller pensions. This was confirmed by the fact that OECED countries with high levels of home ownership tended to spend less on pensions (Fahey et. al., p.160). However, the notion of a trade off or the substitution effect of home ownership as an alternative social insurance mechanism is quite controversial in social policy field. Not only are there concerns about capacity of housing wealth to provide equivalent coverage to the public pension (Esping-Andersen 1996, p.26), but some analysts suggest that housing is unlikely to become a robust or long term cornerstone of the welfare state because of the way its market value remains contingent upon the uncertainties of consumer and macro-economic behaviour (Malpass 2008, p.17)(Fahey et al. 2004). Thus there is a need to evaluate the effects of the trade off upon the elderly, particularly across several countries, to ensure an accurate overview is attained.
Asset Based Welfare
The second reason to investigate asset based welfare is the implications of the asset-based welfare approach for the role of the state. Conley and Gifford (2006, p.59) argue that as a corollary to people supplementing their future retirement incomes with the home purchases, is minimal state intervention in the creation of equitable social outcomes – a kind of welfare retrenchment or withdrawal (Conley and Gifford 2006, p.58). From the foregoing it seems that the characteristics of the enabling state are more congruent with liberal or residual welfare state regimes, as these place greater emphasis on the guiding hand of the free market and the individualistic freedoms of their citizens (Wood 2010, p.10).
Garland (1996) confirms how governments which try to do less for people, leaving the latter to do more for themselves, is a reflection of the post-Beveridge neoliberal ethos of ‘responsibilisation’. In the enabling state, home ownership is a much more central imperative because governments are attempting to lay the foundation for a wider base of security, well being and independence, rather than addressing poverty reduction or the needs of low income households (Groves, Murie ; Watson 2007, p.184). While Malpass (2008, p.2) cautions against the premature reclassifying of the welfare state as post-industrial or post-Fordist, even he agrees that a restructuring of the welfare state is occurring. By examining the political processes and policies that linked housing to a consumption good and investment (Conley and Gifford 2006, p.58), this essay will also determine, albeit using a very small sample, if the phenomenon of an enabling state is more real than apparent in liberal welfare regimes.
As defined above, the research project is primarily concerned with liberal welfare regimes (Esping-Andersen 1999, p.74) that have promoted home ownership to offset rising pension costs. Case studies were chosen on the basis of having a high degree of embeddeness of asset-based social security provision. While Kemeny (2005, pp.66) argued that there is little to be gained from looking at countries that already have high rates of homeownership, it is harder to study the effects of those countries who have just begun to transition towards a asset based approach. Consequently, Australia, the UK and Singapore were selected as they have all been actively encouraging home ownership since the post-war period. Compared to the OECD average, Australia retains a particularly high level of owner occupied housing among the elderly (65+) at 80% and the same could be said of UK during the 1980s but to a lesser extent now (Doling and Roland 2010, p.170). While Singapore is not recognized nor does it wish to be categorized itself as a European-style welfare state, structurally its housing sector is comparable to other liberal regimes and its inclusion makes for interesting comparative analysis given that it has the highest home ownership rate in the world (Phang 2007).
The incorporation of another East Asian nation other than that of OECED member Japan was also taken in response to criticisms that the field of comparative analysis is heavily ethnocentric and analytically neglects Tiger economies (Walter and Wong 2004, p.116). In terms of evaluation, the enabling state phenomenon will be addressed first by analysing top down changes in policy and political rhetoric, before a conclusion is reached about the policy effectiveness of the property ownership strategy based on how well it fulfils affordability and economic well-being outcomes for the elderly in retirement.