NCPA - National Center for Policy Analysis

SHEDDING AUSTRALIA'S HANDOUT CULTURE

July 10, 2007

Australians are more prosperous than ever before, so the number of people needing government assistance should be falling.  Yet the welfare state keeps getting bigger. 

Economist Peter Saunders, in his new book, "The Government Giveth and the Government Taketh Away," suggests the following:

  • Australians should get a tax break of AUD $2,500 (about US $2,150) a year in exchange for opting out of Medicare and taking life-long responsibility for their own health care costs. 
  • And the Future Fund which currently holds AUD $51 billion (about US $44 billion) and is to be used to pay public sector retirement benefits, should be abandoned and instead divided equally among every Australian man, woman and child, giving them about AUD $3,000 (about US $2,600) to start an account that could cover them during sickness or periods of unemployment.

According to Saunders, social research director of the Center for Independent Studies:

  • Much of the AUD $200 billion (about US $172 billion) spent each year by state and federal governments on health, social services, income support and education, is being paid to those families who put the money in the governments' coffers in the first place.
  • In fact, Australian Bureau of Statistics figures show the average family receives AUD $501 (about US $431) in government benefits in kind each week, but pays AUD $519 (about US $447) in direct and indirect taxes.

"This churning has both an economic and a social cost," says Saunders.  "If you recognized that bureaucracies taking in money then giving it back is inherently inefficient I estimate you could strip out about between AUD $25 billion (about US $21.5 billion) and AUD $50 billion (about US $43 billion) a year and keep it in people's pockets.

"But it is more than that.  We need to restore a culture of self-reliance in this country.  The welfare state was a 20th century invention and in the 21st century we need to change it or government will just get bigger and bigger."

Source: Stephen Lunn, "Give tax breaks to opt out of Medicare," The Australian, July 9, 2007; and Peter Saunders, "The Government Giveth and the Government Taketh Away," Center for Independent Studies, July 6, 2007.

For text:

http://www.theaustralian.news.com.au/story/0,20867,22044492-2702,00.html

 

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