Shadow Treasurer Joe Hockey deserves congratulations for his speech on the age of entitlements even if it seems rather odd that he chose to make it to one of my contact points in the UK, the Institute of Economic Affairs in London. Of course, Australia is far from being the worst offender, as the OECD analysis shows: public social spending by the UK (reportedly now back in recession) is well over 20% and France has over 30%. The political difficulty faced by Sarkozy (and other “conservative” leaders in Europe) in advocating small government illustrates why it is important that Australia avoid going down that track.
But if it is to do so the Opposition needs to explain before the election what it has in mind. If it doesn’t, the government will run the scare track and it will not have a mandate. An explanation doesn’t need to go into detail (that can be left to the Audit Commission already announced). But it needs to make clear that the focus of savings will be on upper income groups and will be spread over time.
Des Moore
Entitlement exaggeration
letter published in The Australian, 26 April 2012
[Square brackets sections deleted by Ed]
Opposition Treasury spokesman Joe Hockey’s recent speech suggesting the age of entitlement is over has provoked exaggerated political responses [from government leaders.] Treasurer Wayne Swan has [, in a letter to The Age,] repeated earlier suggestions by Julia Gillard that it would involve “massive cuts to spending on the social safety net.”
This provides an opportunity for the Coalition to provide[, not details of what might be done in regard to each particular entitlement, but] the rationale for a scaling back of middle class welfare.
That rationale is, first, the increase in real per capita incomes of over 80 per cent in the last 30 years, which provides scope for a gradual reversal in social expenditure of the increase from 10 to over 15 per cent of GDP shown in OECD indicators of social policy over that period.
Second, analysis of recipients[, as in my 2005 report on government spending for ACCI,] shows that an estimated 30 per cent of social security, education and health benefits were then being paid to households with incomes in the top two quintiles.
The economic and social case for addressing this issue is unanswerable.
Des Moore, South Yarra Vic