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.

Why not introduce a flat 26% tax rate (with one tax free threshold of 20,000 adjusted every year for inflation) and absolutly no deductions. Based on the 2003 tax statistics this would generate the same PAYE tax that is currently generated now. Funnily enough this benefits nearly everyone except a small band of people around the $35,000 mark (but not disadvantaged by a lot, only a couple of hundred a year) and the top 3% of income earners who somehow seem to pay less than 26% of their income as PAYE (I would love to know how they do it.) An extra benefit would be all the money we would save by reducing the ATO staff by 9 tenths.

Also I think politicians should be taxed on their performance. Crap job 98% tax. Good job 90% tax. I don't think this would make it through parliment though.

The central flaw to Peter's argument is that it relies on average costs and use of public services. One of the reasons we have a tax system is that only the very wealthiest of us could afford to pay for, say, the costs of open heart surgery, or the education of a severely handicapped child. Taxes are our way of contributing to a central pool so that those people unfortunate enough to need very expensive medical/educational/whatever services can access them, regardless of their financial state. It saddens me that our society is becoming so individualistic that people like Peter fail to recognise this.

The other central flaw to Peter's argument is that he has failed to realise that we do not need to be more self-reliant. We need to be more inter-dependent.

It is community and relationships that make for happiness, not self-reliance or lower taxes.

Perhaps this is why people in Sweden who pay far more tax than we do are happier.

For some real up-to-date economic ideas from London School of Economics, Economics Professor Richard Layard , rather than Peter's tired old arguments go to http://www.abc.net.au/rn/talks/bbing/

Hello Molly I listened to Radio Nationals report on happiness too. It was very enlightening. I think it is a very good point that you make about interdependence. In spite of what is said about 'survival of the fittest' to excuse a lot of very inhumane behaviour, human beings are social creatures; we do need each other to surive.

While I consider myself to be independent - I am by no means isolationist - this idea of user pays & self reliance is very divisive. I really don't mind paying higher taxes for more inclusive services for more people. I do mind, however, that the current government trend is to collect a huge surplus and not reinvest in the community.

Market forces and user pays work very well in lots of areas. Where the neo-cons trip up, however, is when they are applied to children and the sick.
In fact, it seems to me you can only argue in favour of user pays and market forces if you first provide a level playing field for our kids via childcare, health and educational opportunity. Otherwise these forces simply entrench hereditary advantages and disadvantages. We had user-pays societies for centuries and all we got out of it was a class system. For pity's sake, lets not go back there.

Peter Saunders is correct to question the assumptions of an ever-increasing, self-perpetuating, enterprise-choking welfare state.

We need more people like him. His main point is that welfare churning is a wastelful, useless and mindless exercise. We are no so much taking from the rich to support the poor, but drawing blood from one arm, spilling some, and then injecting it back into the other arm. This is folly!

But the self-righteous socialists will say, "What about the poor? What about equality of opportunity and income redistribution?" To those I pose a challenge: What degree of equality will you be happy with? How do you measure equality anyway? What rational basis do you have for deciding how much should be taken from the rich and given to the poor? Is it really socially just to penalise someone just because he has more money than somebody else? Do you have any respect for the principle of private ownership and control and creation of wealth? Do you know how damaging it is for people to be dependent on welfare, or would you rather that no one was self-reliant? Do you know the difference between compassion and compulsion? Do you realise that the compassionate choices of individuals create a caring society, but taking from the "rich" to giving to the "poor" only leads to slavery?

Sure, Molly and Ringtail, you would love to pay more taxes – if only someone would just ask. Make everyone interdependent in a non-personal sort of way of course – it’s no fun relying on personal effort, family, relatives, or the community. Your respect for both independence and interdependence, is both remarkable and simultaneous.

Mykar – you hit upon the nub and the lie of all “equality” based arguments, that we are really individuals, with individual and not common, capacities and thus capable of unequal performance.

Like dear Baroness Margaret Thatcher said “There is no such thing as Society. There are individual men and women, and there are families.”

The whole idea of “equality” is a fraud.

Place any six children on a running field and tell them to "do their best" – and within a few seconds and one hundred yards some will be ahead of the others.

I want to see the bit of socialist dogma which identifies why the faster running child should do “less than their best” so as not to discourage the slower and when someone has found it – why should they assume the world is a better place because the creatively, commercially and entrepreneurily “faster runners” are to be held back to the performance of the mediocre.

It is those who ignore the clamour for mediocrity, as it is shouted from the socialist stands, who go through life intent to achieve and express their individuality and “self reliance”, who provide the greater activity base on which the state finds the succour of taxes and opportunity to play lady bountiful to the “slower runners”.

The Australian tax system is convoluted and over complex. The first place to start is a complete review of the collection system, the elimination of the low-performance and narrow based taxes (both federal and state) and simplification of statute. If we can drop a few thousand heads from the ranks of the tax office we will be doing a social service – too much brain power wasted on how to suck blood from Peter to infuse into Paul.

Dealing with the welfare bit – start by Killing off Medicare – the money I have “levied” (taxed) for it would have been better spent directly between me and the medical insurance company of my choice, competing for my dollars against other insurers (many of which were mutual provident societies before going down the “for-profit” path).

Place 6 kids on a running field and ask them to do their best is absolutely fine and dandy as long as they all run the same length track and jump the same obstacles. But if one has to run 3 times the length, or do it without shoes over rough terrain, or another has a track strewn with broken glass, the outcome will not be about raw talent, but about a better track, about advantage. The trouble with ignoring the inevitable inequalities visited upon all of us at birth and blithely entrenching privilege is that it is a tax on all of us. When we lose talent because it was born into the wrong family, or promote the mediocre because they were born into the right one, we all pay.
This isn't socialism, it is plain common sense, and why user-pays simply doesn't work in either education or health care, particularly for kids.

Col nobody has mentioned equality or society until you did. You are not responding to the issues raised but only to your idea that the only alternative to absolute individualism is socialism.

Surely it is obvious that increased individualism and self-reliance are not producing a better society.

We have had a rolling back of the 'socialist' policies of the Labour Government. A good example of a more self-reliant state is the US. Are we better or off in any measurable way?

It is a fact that Sweden, with much higher taxes, more welfare, and really really bad weather is a happier, safer, more productive and decent collection of indivdiuals and families. How do you account for that?

There are many flaws in your assumption about individualism being the fundamental aspect of human beings. Evolutionary psychology argues quite convincingly that we are not indivdiuals first and foremost. We cannot survive on our own and have never lived that way until recently. Humans have always lived in societies.

Perhaps the best example of a completely self-reliant society was Victorian England. Is that your idea of what we should be aiming for. If not how do you think things would work differently in a good self-reliant society. That seems to be to be a utopian belief.

You are ignoring the points about who looks after children in a self-reliant soceity. It is great if all parents were equally good at being parents but they are not. So your way condems all those children unlucky enough to be born to parents who do or can not care for them to be failures also.

We have no choice.As birth rates continue to fall and the baby boomers retire,we will all have to be more self reliant."Churning" is wasteful and inefficient;it just creates more bureauocrats.
Put more money into the hands of people who earn it and the economy will grow.Taxation does not redistribute wealth,it kills incentive for people to achieve,thus slows the economy.Get more people working in private enterprise and everyone will benefit.We have become a pathetically weak society always looking for Govt to do it for us.We are consumed with notions of safety , security and individual rights,yet balk at notions of reliance and responsibility.

Molly, you are back to your arguments that the government should play mummy and daddy if mummy and daddy don't do a good a job.

I must admit, it is a good way to boost employment - the unemployed could become parents - wiping bums and noses, cooking dinner, making lunches for all those kids with bad mummies and daddies.

Then the kids will grow seeing that mummy and daddy don't have to do anything, the government will provide all your needs and some of your wants as well.

They will think when they become parents they can do the same poor job. What a society.

Welfare dependency is a problem because people expect the government to do everything.

My old neighbourhood is full of people who are second and third generation welfare families and the government continues to fund them to drink, smoke, play the pokies and feed the kids chips with sauce four nights a week.

And back to the point of the article - my wife and I pay about $300 tax a week and get $240 back (including my HECS payment). It would be simpler and mean less bureaucracy if they just took $60 in the first place. At the very least.

t.u.s

One would think that the more tax someone pays equates directly into more happiness requires a lot of provisoes, and most importantly, it requires a very democratic and well run government.

I don’t know the exact situation in Sweden, but I understand that in some European countries the governments are not greatly political, but decide a lot of issues through committees and public enquiries. Therefore the people in those governments have more of an executive or administration role rather than a ruling role, and community or collective spirit can extend right through society, from the local neighbourhood through to the corridors of government.

Unfortunately I think that our various governments (either state or federal) are not that well designed for such a system, and public enquiries for example are often a waste of time (and tax payer’s money).

So handing ones money (and indirectly ones life) over to government requires a good system of government, or the public can become readily exploited by the people in government.

Whether "churning" is inefficient surely depends on whether its purpose is justified and whether the current method is the best way of achieving it. I don't think anyone here would dispute that the overhead required for direct repayments could have been used more productively. But if that waste cannot be reduced while ensuring a suitable level of essential services, then it is not really waste it is a necessary cost. We need those services both for the economic infrastructure of the country and to improve general living standards - each leads to higher levels of productivity.

What are we left with if we remove any and all churning? Since no one gets any of their money back in the form of benefits and services, the government would be reduced to taking money away from the wealthy and giving it to the poor. Less bureaucracy but less control over how the money is used; more choice but more wastage & dependency.

Similarly, no one is going to say that welfare isn't a disincentive to achieve, or that some people won't become reliant on it. We may however say that it is in most cases a negligble disincentive (esp. for the "fast runners") or that some amount of welfare dependancy is acceptable. What we recognise is that a lot of people will be worse off if welfare and other services are reduced.

Tus so what if it is ‘my old argument’ – it is a good one! Maybe you should stop ‘rattling my chains’ or some other author might get huffy LOL.

You didn’t answer my question about how come the kids have to pay for being unlucky enough to be born into poor families though?

The fact that there are third generation welfare recipients shows that the welfare is not being provided ‘effectively’. It is being provided only to prevent the worst excesses of self-reliant societies (crime and large numbers of homeless on the streets) rather than to improve the chances of disadvantaged children.

As Timkins says (never thought I would be agreeing with you! Well done Timkins, there goes another of my prejudices), the idea is to ensure that the provision of welfare is better and more usefully directed toward the children, not that it isn’t there at all.

I agree that the sort of welfare that you describe sucks – it is the simplistic solution that this Government continues to provide because the alternative is spending more on police and more jails and walled enclaves for the ‘well brought up’ to live in?

Because if people can’t or won’t work and participate in the good life, for sure they will steal and commit more crimes. Check out the US (a more self-reliant society).

As Duec says the churned money is not totally wasted, as it must go toward someone’s wages. Who is to say that wages for bureaucrats are wasted while the wages paid to people who produce useless goods and services are valuable.

Arjay if we are such a pathetically weak society, why is the economy growing? Did you read the recent research that showed that we spent millions last year on food we didn’t eat and things we have never used?

Perhaps we have reached the stage in our evolution where more economic growth is not the priority that it was when we did need to have more things and more food? Perhaps there are other things that we need now?

It is all very well to talk about self-reliance but what about the largesse given to private health insurance corporations, private schools and farmers (to name a few)? This middle class welfare has been dramatically increased by the Coalition Government - pretty amazing considering it is the same government that craps on about hard work, self-sufficiency etc (not to mention superannuation which is simply a rort for the likes of AMP and Tower).

Saunders, of course, wouldn't view it that way but what we have been witnessing over the last few years is massive subsidisation of the wealthy by the less well-off and so making it well nigh impossible for the latter to get ahead.

Enaj is that your personal excuse or are you simply being patronising and inventing obstacles to excuse the poor performance of others?

Life is like this – (as in poker – a game of chance!) it does not matter what hand you are dealt – it is how you decide to play the hand that matters.

Mollydukes – because no one else may have mentioned something … does not disbar me from bringing it up – I assume I have the same rights as anyone else to post here – admittedly, I do try to avoid the dross which some indulge in but my view is as free to express as you would claim yours is.

You obviously have not heard of “Sunlight deficiency” syndrome – ot of Swedes spend their winter life in a light box fending off suicidal tendencies (and Scandanavia has a very high rate of suicide) – hardly the stuff which warrants suggesting they are “happier” or safer or more productive than Australians. Of course we are all individuals and I am not responsible for the levels of happiness which you enjoy in your life – but for sure – my life is an absolute hoot.... happy as a pig in mud – now all I need is a couple of good looking bikini clad lady wrestlers to join me in the mud and it will be perfect.

Parents look after children in a self reliant society – like always – and parents do such a better job than the state could ever do.

As for the bad parents - are you suggesting we should sterilise those who produce children who they cannot adequately look after – that fixes the problem – as for already produced children – I suggest bad kids can come from good homes and equally, good kids can come from bad homes – as I said to enaj – it is not the hand you are dealt, it is how you decide to play it that matters.

Col you are a hoot and I am sure that you are as happy as a pig in mud. Good luck with the lady wrestlers. You could invite your pin-up girl, Thatcher to join you.

You do liven up the forums and it is a shame that you weren't able to come up with a quote from the great woman.

Keep the faith.

But seriously, if you ever do seriously consider the game of life. Do you really believe that success is entirely due to the way you play the hand. Is there no such thing as probability and being dealt a dud hand, time after time?

There's a wonderful moment in The Aviator where Katharine Hepburn's family tell Howard Hughes that they do not think money is important. He turns and says; "That's because you've always had it." I love it when the lucky smugly claim its all their own work and tell the unlucky its all their own fault.
The basis of compassion is in understanding that much of your good fortune is blind good luck, and therefore being able to imagine what life might have been like if you hadn't been so fortunate.
I do not make personal excuses, Col, being one of the most fortunate people in the world, but I am also perfectly aware that I do not "deserve" my good fortune any more than others "deserve" their lack of it.

enjai,good fortune is not blind good luck.Someone has done the hard yards in the past for us to lasiviate in this present moment.If we don't maintain the discipline,creativity and hard work,we will become just another "Banana Republic" in the South Pacific;and the rest of the world wouldn't give two hoots.

Col Rouge, you should consider writing a book; your turn of phrase and larconic humour would sell well.

Enaj,

Feel free to give away your wealth through acts of compassion any time now. Nobody will stop you. Nobody is proposing that it should be illegal for you to feel compassion.

Regards,
Terje

Playing poker and the game of life well require skill as well as good fortune. Where do you suppose children learn the skills to play well?

They get them only if they are lucky enough to be born into a family that knows how to play well, a family that has been lucky enough not to have encountered problems that interfere with their abililty to teach these skills to their children.

Also, the rules of modern life change quite drastically and what allowed some familes to play the game reasonably well a generation or two ago, are not adequate anymore (eg manufacturing and rural workers).

Regarding Col's humour. There are heaps of books out there with this sort of humour, but it is called 'satire'. Nobody really believes that people have that simplistic a view of the world any more surely?

Why does the notion of self reliance scare so many on this sight so much?Are their bank accounts so welded to the "Public Nipple" that it is impossible to see the virtues of courage and risk involved in chancing the private enterprise way of life?You see private enterprise runs on the smell of an oily rag and provides the taxes for Govt to help the less fortunate and a lot of able people who have an aversion to hard work.If you really want to help the less fortunate,show them how to work and don't give them excuses not to achieve.
Mollydukes,of course there are no simplistic answers,but your mentality and many like you, seek to equalise everyone to mediocrity.None of us are born equal but that does not give the less able the right to do almost nothing and demand to be kept.Everyone must contribute a useful service/commodity or otherwise our economy will collapse.Stop living denial and face the reality that is fast approaching us.

Arjay: Society must demand a great degree of self reliance and no one here has denied that. No one has so much as implied that they want to "equalise everyone to mediocrity." No one has said that able people have "the right to do almost nothing and demand to be kept." Many substantial points have been raised against the article that are not being countered.

Even though society must demand it, society will hurt itself if it assumes everyone will meet that level, or will achieve enough that they will be able to provide well for both themselves and for the next generation.

Mollydukes,wages paid to beauocrats are enforced contributions about which none of us have a say.Michael Coster has admitted to having 20% too many public servants in NSW and still this Govt blames everyone else for their shortcomings.The reality of their excesses is probability 30 or 40% increase in the PS and still left wing fools think that this is the norm?The depth of tax payers generosity should not extend to the excesses of this stupidity!We are not talking about a paultry $3 billion that Bob Carr feels short changed by.This state Govt spends $40 billion p.a.
We are talking about billions of dollars wasted each year.If individuals want to waste their money on luxuries,it is none of your business or mine.You evil social engineers are too busy feathering and expanding your own little empires.

Ringtail and Molly
I also listened to that 'happiness' report :) most interesting yes ?
It seems people who believe in God are the happiest.
Hmmm....
cheers

Bllody hell Arjay I am not mediocre. I'm much better than you but I don't need to earn more money than you to prove it and I don't judge people by their pay-packets as to how worthy they are either. That would mean that Kerry Packer (such a self-reliant man) is one of the 'best' Australians. Get a life!

David, research does show that Christians are happier than other people but the research doesn't discriminate between the sort of Christian like you are (who denies homosexuals a right to be themselves etc) and the sort of Christians who do what they 'think' Jesus would have done. I am not aware of any research that attempts to show that Catholics are happier than Lutherans for example.

Furthermore, it is not only Christians who are happier than the hoi polloi, it is all people who have something to believe in, apart from the mighty dollar, and that includes Muslims (if one accounts for the type of society) and people like me!

I have said before I am pro-christian, just not pro-your type of Christianity. I know that there is much wisdom in the good book.

Unfortunately, it seems to me, you choose to focus on the bits that, to me, are the remnants of an old dysfunctional patriarchiacal society, and not God's word at all.

Pleased to hear that you found the Background Briefing article interesting.

Furthermore, Arjay self-reliance doesn’t scare me but the results of total self-reliance do. Have you ever read any Dickens? Victorian England was a totally self-reliant society.

The U S is a more self-reliant society. Do you think US society is better than ours?

One big problem I have with more self-reliance is that it will relegate the children of those who aren’t able to rely on themselves, to mediocrity or worse.

Children are not born knowing how to play the game of life. That is why they have parents, to teach them lots of things they need to know about how to work and save and think about tomorrow and the next rainy day.

If the parents don’t know these things then how do they teach their children?

So total self-reliance is fine if we are all adult and all healthy but unfortunately God didn’t see fit to do it that way and a decent society, needs to make some adjustments for this. Self-reliant societies do not provide opportunities for children to learn the skills that they need to participate in the good life, so they perpetuate the cycle of poverty.

Arjay – “Col Rouge, you should consider writing a book;” Thanks for the suggestion Arjay – maybe I will.

Mollydukes Let us get it clear, “Total Self Reliance” is not viable.

Obviously simple economic issues such as “division of labour”, “economies of scale” and “specialisation” command that “Total self reliance” will not succeed and perspectives which embrace FTA’s compound to make self-reliance even less attainable.

However we are not talking of “self reliance” in the context of a national economy or a trade agreement, we are talking about the relationship between a government and the people who it is intended to serve.

In this context “self reliance” distinguishes the authority of the state to that of servant and not master of the populous. It is the prerogative of every individual to become as complete and productive and valued an individual as they can. The ones who do not are the ones who look for a featherbed from the state the best the state can offer is a thin straw mattress. Only those who rely on their own efforts can afford featherbeds and providing thin straw mattresses for all is the best equitable solution the state can offer. Which is why presuming any reliance on the state as an alternative to developing self reliance “sucks”.