For Charles Murray the underclass refers to a class of violent, unsocialised people who, if they become sufficiently numerous, will fundamentally degrade the life of society.

He says that:

Drop-out from the labour force among young adult males is an important indicator that an underclass has formed because it reflects such a clear departure from the age-old norm that young adult males work regularly and work hard—supporting wives and children, siblings or parents, or, at the very least, supporting themselves.

They have not been socialised to norms of self-control, consideration for others, and the concept that actions have consequences.

Murray adds that one of the leading reasons that they have not been so socialised is that larger and larger numbers of British children are not being raised by two mature, married adults.

social exclusion is Labor's term of an underclass. Social exclusion means more than poverty as it refers to behaviour that has created a lifestyle which is permanently dislocated from the habits and way of life of the majority.

Charles Murray places an emphasises on the behaviour of the ‘underclass’ rather than the structural labour market position.

There is often three different kinds of ‘underclass’ are, in fact, being talked about: an economic (those of working age unable to get steady work); a moral (those with deviant behavioural norms) and an educational (those lacking in cultural and social skills).

"the open markets of economic globalization have also created economic dislocation, a more unequal society, and a class of working poor that depend on the support of the social-democratic state."

For the vast majority of the long-term unemployed in the mid-1980s unemployment came as a major interruption to a working life and was not a normal condition. They were not so much members of a stable underclass as unstable members of the working class.

What sits behind the idea of underclass are some key problems: the fact of increasing social polarisation; the entrapment of the poorest and the absence of routes for upward social mobility; and the increasing concentration of the poorest, the most disadvantaged, in a residualised rented housing sector.

For the Murdoch tabloid media the underclass is seen in terms of a spreading disease (cancer) which eats away at the texture of societies.

Hence the underclass is perceived as undesirable and threatening to the two parent suburban families, and so we have the justification for tougher law and order policies.

Nan says "social exclusion is Labor's term of an underclass.

Social exclusion is a more dynamic language which encourages a focus on the processes and institutions which create and maintain disadvantage rather than ‘blaming the victim’ and their behaviour.

underclass’ now carries strong connotations of blame and it ignores the structural economic forces which are pushing more and more people into poverty.

In Australia single unmarried mothers are seen to constitute a special problem. They are associated with stigma.

Latham hasn't changed. He still favours "Aboriginal Intervention" type approaches to disadvantaged groups.

As Paul said, Latham sounds like he is stuck in his 'ladder of opportunity' mindset. 'Social mobility' however is usually based on conventional market capitalism, with mobility achieved either by freeing up the market (if you're a conservative) or by government intervening to overcome market failures (if you're a progressive). Both perspectives overlook or ignore the fact that free markets based on competition have winners and losers, and the freer the markets, the bigger the gaps tend to be between the winners and the losers.

The conservatives of course have taken a hard-headed approach: the losers are the 47% who will never vote for them and who need to be coerced into working for whatever the market will pay them. But Labor shows no real inclination either to develop a coherent response to helping casualties of the market. The conservative project to reform ideology in Australia has been comprehensively successful, and government initiatives that were regarded as commonplace public goods two generations ago are now unthinkable.

It is hard not to be bitter at "New" Labor.
They are so infatuated with the wretched ideology that they actively participate in the conservative dismemberment of alternative approaches,to the extent of even (deliberately?) sabotaging themselves, as happened with the NSW and Qld state governments and continues to occur in SA and with the Federal government.
Why?
The Social Darwinist siege red in tooth and claw dichotomy is absurd to the point of outright laughter, but for the damage it does to human lives.
Society did quite handsomely from 1945 to 1980 on a progressive model.
The only element not happy with it was Big Capital, insecure and jealous of its privileges and keen to remove any barrier humanitarian or rational and scientific, that impinged on the psychotic fantasy of profit immediately; the rationale for an authoritarian control they relished, no longer requiring of intellectual nuance or the bothersome problems of empathy and patience.
What is economic rationalism? Does it apply to a better organised societal use of human and natural resources based on need rather than greed?
Or is it exclusively about the company or corporation, what is rational for IT and a given individual or two running the show, that sees itself as outside and above the behaviours most of us welcome and abide by for the benefit of ourselves and the whole?
It seems to me it is just a corsair manifesto.
We are just obstacles in the path of modern day morons of the King Leopold in the Congo mode, utter self-ignorant and unaware barbarians eventually driven by ego alone, whose only actual function and capacity appears to be the dragging of civilised humanity down to the Dark Ages along with them.
And unfortunately, a significant number of ALP (right) politicians are now numbered amongst those of this mindset.