The Australian welfare state

We live in a welfare state. The Australian government spent $71.6 billion in 2006/07 on income support (6.8% of GDP), and 27% of the over-15 population receive income support. Big numbers. But what got my attention in the Harmer Review of Pensions was the number of different welfare programs…

Age Pension, Disability Support Pension, Carer Payment, Bereavement Allowance, Newstart Allowance (the “dole”), Sickness Allowance, Parenting Payment, Widow Allowance, Youth Allowance, Austudy Payment, ABSTUDY, Special Benefit, Service Pension, Partner Service Pension, War Widow’s & Orphan’s Pension, Income Support Supplement, Family Tax Benefit (A), Family Tax Benefit (B), Baby Bonus, Double Orphan Pension, Maternity Immunisation Allowance, Child Care Benefit, Child Care Tax Rebate, Rent Assistance, Pharmaceutical Allowance, Remote Area Allowance, Telephone Allowance, Utilities Allowance, Seniors Concession Allowance, Pensioner Education Supplement, Education Entry Payment, Work for the Dole supplement, Language, Literacy and Numeracy Supplement, Pension Bonus Scheme, Pension Bonus Bereavement Payment, Crisis Payment, Mobility Allowance, Carer Allowance, Carer Bonus, Seniors Bonus, Pensioner Concession Card, Low-income Health Care Card, and Commonwealth Seniors Health Card.

And some people are still on discontinued programs, including Mature Age Allowance, Partner Allowance, Widow B Pension, Wife Pension (Age), and Wife Pension (Disability Support Pension). Not to mention tax expenditures.

The eligibility criteria and the phase-out of payments vary across the schemes, creating a mess of complex schemes, offsets and withdrawal rates which effectively mean that no normal human could ever be across the full welfare system, and no decent reform will ever be able to get past the entrenched interest groups.

18 thoughts on “The Australian welfare state

  1. You can avoid the rent seeking barrier to reform by simply stopping new entrants to the schemes and allowing existing recipients to continue until elligibility expires. However that does not get around the other political barriers.

  2. If some nice sociopath would use an A-bomb on Canberra, half our troubles would be over!
    I keep thinking that the only solution to expanding Governments is to not have professional politicians. Time-share government would work by giving each person who chooses citizenship a community service job for a set time of the year (perhaps a week as a patrolman of public roads), and then another week as a member of the local government. Have no cabinet positions at all, and any laws you make could be repealed by the next government. If a faction tried to prolong their stay, they would only have a small section of the militia to call on, and the other armed citizens could overwhelm them.

  3. I noticed Hazlitt’s masterpiece plugged on the right which is very relevant to this cancerous phenomenon.
    Seen/Unseen (aside from morality) is the core psychological problem here and public ‘education’ will not teach the workings of capitalism because even if they knew the truth, it makes whole chunks of parasitic, wealth cannibalizing activity, which they have an attachment to, redundant.
    Educating young people preferably before their brainwashing at uni is the only way out of this unless there’s a tax revolt.

  4. is there a simple way to explain to people that we don’t NEED the government for welfare..? people call me crazy every time i suggest it but there is soooooo much explaining to do and people are way too stuck in their ways to open their mind.

  5. Well… It’s not so much that we don’t >need the government for welfare as that we wouldn’t need it, if things were set up properly. Since they aren’t and there are all sorts of distortions, there is a need for some sort of support. The trouble is that not only does the state crowd out private remedies, e.g. charity and self sufficiency, it feeds a vicious circle through the way it provides and funds these things. This means that there really is a need for it, in the sense that just stopping would make things very bad, rather like just bringing up a diver when he has been down too long will give him the bends. The sort of thing in my Tax Review submission is aimed at doing a transition away from that, coming up slowly so to speak.

  6. Educating young people preferably before their brainwashing at uni

    I actually became libertarian at uni, without any economics courses :/

  7. OK, Steve, what’s the catch? Did you attend Uni regularly, or did you only go intermitently? Or were you an economics student who studied the subject, and realised that Adam Smith and Hayek were right?
    How can we bring other Uni Students to the same state as you?

  8. I also became a libertarian while at university. True, it was while I was studying economics. But the lecturer who started me on that path was himself a social democrat, who just happened to have “free to choose” on his reading list. 🙂

  9. I never encountered such handy labels when I was at uni. I often subscribed to the label “economic rationalist” although it was usually considered a negative term. Mostly I just knew what I wasn’t. However being always against this or that cause is never as much fun as being for something.

    Do think tanks such as the CIS and IPA deliberately market their material within universities or is it left to luck?

  10. I think Damian has a point about the lack of comprehensive defense of capitalism in our society generally, especially in government monopolized education. (Although on a technical note I don’t think the core problem of seen/unseen is psychological but rather epistemological).

    I do have what I consider an interesting psychological theory though, where I think the more welfare a society has, the more you ostrasize people and force them into the game of gun backed rationing of other’s property.
    Because instead of the trader principle of mutual benefit and the good will this develops, we have the I win at your expense principle.
    You get pensioners vs uni students for example, or single mums vs families. As the government expands welfare people must compete for the rationing of other people’s money like old dogs fighting over the last scrap of meat in a drought.

    I should say that I don’t think analysing psychological effects or causes is the only or best way to approach welfare or other political issues.
    However I think it’s ironic that welfare (which is supposed to be a sign of a compassionate society) actually results in ill feeling and distrust for others – the total opposite of the sense of community that welfare advocates desire (or at least I hope they desire this).

    We not only see these type of negative consequences all the time, we see total failures of government programs constantly – as I’m sure you guys all know. In fact, failure is expected because people do not know any better. Apparently in Soviet Russia people became so accustomed to food rationing, they could not understand there was another way. They couldn’t fathom the idea that food shortages were not a way of life. Just like our society can’t understand that ridiculous traffic jams are not a necessity.
    Politicians and intellectuals assume political action will have a positive effect when the opposite is true.
    We are told more public funding for health/education/welfare will have a host of benefits when the opposite is true. These assumptions continue to go on unchallenged over and over.
    The bad theory persists like a creationist subbornly insisting the earth is 6000 years old.

  11. Here’s a good example of what sets us aside politically from the rest of Australia.
    If the federal budget were in a position where it did need to axe some of these programs, and the public were surveyed on which they’d prefer be axed, I’d put money on single people choosing family payments; city and suburbian people choosing those specifically for rural Australia; young people thinking seniors get too much with seniors returning the favour, and so on.
    For me, my political beliefs came into shape when I realised the only ‘fair’ way to fix such a problem is to not treat any group specially at the expense of each other.
    And I don’t think I would have cared enough to look into it except I’ve grown up with adult figures virtually all dogmatically labor supporters without any concern for actual policy except where it directly benefits or punishes them. That and English teachers explaining to me such concepts as ‘dogma’.

  12. OK, Steve, what’s the catch? Did you attend Uni regularly, or did you only go intermitently? Or were you an economics student who studied the subject, and realised that Adam Smith and Hayek were right?
    How can we bring other Uni Students to the same state as you?

    Attend uni regularly, so I’m forced to put up with the socialist crap being peddled everywhere 😛 Luckily, computer science remains largely unpoliticized, so I was lucky that I don’t hear it as often as the social studies or arts students. I think I mainly arrived at my conclusions because I left a long winded left-wing rant on the LDP blog at some stage, only to have it refuted pretty completely by whoever it was 🙂

  13. So we need to direct more students to our blogs, and have their minds expanded without drugs. Hard, but not impossible!

  14. “So we need to direct more students to our blogs, and have their minds expanded without drugs. Hard, but not impossible!”

    I think piggy backing of and promoting of major publishing sites that publish news and articles daily like InfoWars (useful first step to shock people into questioning the smiley face, velvet gloved nanny state) or mises.org, is a good shortcut since they, and some others are already pretty popular and impressive with their articles and podcasts.
    This also totaly bypasses the dog and pony show quagmire of local politics. Maybe young newbies can be more objective and actually get the message if they don’t immediately suspect your just out to promote the liberals or whatever.

  15. Also, charismatic entertaining speakers like Peter Schiff, Thomas Woods or Alex Jones are valuable tools to immediately cut through the idiocy, intellectual and moral depravity of statist ideology to wake people up.

  16. The article is heading in the right direction. It is far too easy to recieve welfare and once people are on it, they have no incentive to get off it. Just look at all the different types of government assistance schemes there are. All funded by the taxpayer. People need to learn to provide for themselves. There are only two types of people who should recieve welfare.

    1. The elderly and retired. They have worked and paid taxes for most of their life so in their declining years the government owe them something.
    2. The handicapped.

    If you are an able-bodied man or women and you need money, you get up and go to work in the morning. All of this rent assistance, single parents assistance is just crap. You live with the choices you make in life so don’t expect anyone else to pay for them.

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