I thought this article very timely in view of the government’s desire or intention to reduce the welfare bill through such things as raising the retirement age. However such things were not mentioned as party policies during the last election, although they must have been thought about by the coalition government long before the last election.

This would be another aspect of a welfare state. If the public becomes too dependant upon government, then government can exploit that dependency. It can deceive the public, become corrupt, or become highly inefficient in the way it spends the tax payer’s money, but still the public is dependant or reliant upon government.

Even elections may not mean much, because a political party can make known only some of its intentions as being election policies

"it would release $85 billion which could fund spectacular tax cuts without making anyone worse off." That’s the crux of this piece and I don't believe it. We have a excellent and dynamic model for how a users pays system of this like works it's called the USA. While the US may be a good place to live if you've got a good paying job, trying having no job or a low paying job. Check out the cost of decent health insurance in the US and how you are treated if you haven't got it. I wonder if Peter has any family that are in low paid jobs or are long term unemployed? I say to Peter if your figures show the most people get back what they put in and lower income people get more then they put in, then the system is working fine in my eyes. That’s the way it should work the key principles here are everyone deserves good health care, education and basic living standards, income should not be a factor. I’m not saying there is not areas that can’t be improved but a move down the users pays root is not the way to do it.

Economic growth doubling living standards every 30 years? Come on, living standards are nebulous measures that aren't proportionally affected by economic growth. Future increased growth will not have as much affect on living standards as it has in the past. Future growth will also be more beneficial for the wealthy due to increasing economic disparity. And we shouldn't assume that our present growth will continue indefinitely.

But I would agree that we don't require a "mass" welfare system - we never did, it is just an easier and probably more efficient means of securing that standard. How do you cut the spending while still providing a good quality universal safeguard?

"Churning" in the case of education, hospitals, etc. does take away choice for those people who would be able to pay if only they weren't getting taxed their share. Those who then could not afford necessary services would still need government assistance - but a far more extensive, burdensome, invasive, (degrading) means testing regime would be required. That would not help them improve their situation and would discourage some from using the system altogether.

Since it encourages multiple systems, the coverage and quality of the service for the poor would be decreased or need to be provided at higher cost. That higher cost would cut into the amount available for people to spend on their choice.

There would also be more abuses/failures (and the economic,social costs associated with them) by those who can't be trusted to be self-reliant, are misfortunate, or are defrauded.

Do we increase the burden on the poor and the costs of the system, so that some people have a bit more choice? Or give up that choice for a relatively higher quality service for all? I suppose there is a left-right divide here; for me it is a minor freedom that I'm willing to forego.

This argument seems to be based on the rather loose definition of what is circular, and whilst some of the examples are rather clear-cut, some of them certainly are not -- like education and health.

A problem with the idea of "circularity" for these latter two is that earnings, education, and health all work on different time scales across a lifespan, and they are therefore not circular. Thus, if children want a good education, they have to rely on someone else to pay for it, since they won't have saved money from the tax they did not have to pay.

Given that no bank is going to loan a 15 year old enough money to go to a now-to-be-payed-for upper high school education and possibly university education (or pay for, say, an operation needed to fix a medical problem), they must therefore rely on somebody else. Hence the responsibility is simply shifted from the government to somebody else, who, looking at current savings rates and the governments attempts to force people to save via compulsary superannuation etc. might not have any money to give them, even if they were, say, nice parents that did indeed want to given them the money.

There is no historical precedent which points toward QUALITY private ownership and delivery of the universal 'welfare needs' of all.

This does not argue that the role of the welfare state in redistributing resources from rich to poor is efficient - actually its pathetically dysfunctional.

If what is being argued in this article is that we have direct purchase of services such as health and education, it must also address the relative disparaties by which individual earners (who do not earn the same income)have direct and universal access to the same quality service on offer. I see no evidence of an understanding this central principle of weatlh redistribution in this article.

The introduction of a universal basic wage would allow for uniformity and access to occur but again no suggestion is made along these lines.

The dog eat dog ideology lays just beneath the surface of what appears to be reasonable arguements. They are not.

Peter writes that “many Australians today earn enough over a lifetime to enable them to save, borrow or insure to cover their basic needs without government help. What stops this from happening is the big chunk taken out of their earnings in taxes”.

What rubbish. What stops this from happening is the desire for more and more material possessions in an attempt to achieve happiness. With the emphasis on ‘aspirations’ (for a bigger house, faster car, overseas holiday, private school for the kids rather than for a better and more egalitarian society) few people would use a tax break to fund their basic needs.