Peter Saunders' views on welfare have had a long and inglorious gestation. I would refer readers to a contribution by Don Arthur,on Margo Kingston's WEB DIARY of March 23,2001 viz."OPRAH WINFREY AND THE THIRD WAY" http://www.smh.com.au/articles/2003/11/21/1069027321380.html

Mr. Saunders champions the Lawrence Mead model, and indeed seems to be the Australian franchisee by his continued obsession with this.

He continues to perpetuate the myth of welfare dependence and would claim some authority as to the "needs" of long term unemployed. The notion for instance, that Work for the Dole be doubled is his idea, and can only appeal to those who think of unemployment in the third person. Others who lobby for a reduction in the minimum wage, likewise bathe in the vainglory of "Arbeit macht frei"

I'll take Peter Saunders over Don Arthur and Margo Kingston any day!

Welfare dependence is not a myth - it is a well established fact. Welfare has NEVER, EVER, anywhere in history brought 'the poor' out of their predicament. It has only ever increased their numbers.

I supect that the author understates the "lefts" opposition to improving the tax deal for payee tax payers. We are an easy target for tax collection to fund the left's priorities.

In regard to the PM's comments refered to in the article
"The Government likes to claim the tax-free threshold is “really” much higher than $6,000 because families with children can claim tax back in the form of the family tax benefit (FTB)."

As a payer C$A "client" (doing shared care) that is not the case for me. I get very little FTB (the ex gets most of that) and spend (between what I spend on the child and what I pay in C$A payments) far more than the estimated cost of raising a 7 year old. Add to that the impact of the C$A formula and I am being taxed at a lot higher than the top marginal rate

What clink doesn't like is that the majority of Australians agree with Peter Saunders.If we doubled the welfare budget tomorrow we would soon have double the number of recipients.

The problem with Clink and the likes of Margo Kingston is that they have no grasp of what makes an economy function.They are locked into their ideologies like religious fundamentalists and no amount of logic will change their views.

Interesting article, but not enough exposure given to a flat rate tax. Derik Smith put forward the basis of a flat rate tax in his proposal "Two Percent Tax", the basis of which was that instead of income tax and GST, and all the other taxes, everyone paid 2% on any purchase. This, he argued, would collect enough to buty back Australia.
The downside of this proposal was that with such a tax, there would be very many fewer jobs needed in the public sector, a sector which has seemed to be growing at an exponential rate, and at great cost. The redundancies resulting, he argued, would better be employed in the production rater than the unproductive sector.
I tend to agree with him.

Why should the adults without children get tax benefits for not contributing to the replacing of them selves? They have to rely on those that have made the investment in to children for their retirement.
In reality, people with out children have a much larger personal disposable income , and in their latter years expect to be able to access at no cost those children, now the work force, to allow them to exist.

The extra disposable income from this group should belong to the communities that bear the child raising costs.

As the cost of raising children seems to be borne by a much smaller section of the community these days, the cost that this group incurs, on behalf of all Australians should not be subject to any means testing, and reflect a reasonable % of the cost’s incurred.

The so called” progressive” tax rates we have, in my opinion only serve to drive up the top end “total taxable” income, putting the cost back on to the business sector, with higher prices as a result, penalizing the lower income sector.

An added bonus is the ability to claim a tax deduction on a loss against your income, with the prospect of greater capital gain in the future.

Govt loses tax revenue, for personal gain for the higher income bracket, with no benefit for the lower income group.

Lower tax rates, with fewer deductions would be a much fairer and simpler system.

What must be remembered also is that over time we have moved from a person providing all their “needs” from their taxable income, to a situation where only a portion of their needs is provided from their taxable income. This effectively raises the tax rate, but if the benefit the “social wage” provides is added to their income, it would dramatically lower the tax “rate”

I.e.

Past taxable income (A)

$100 per week ----- tax $20 ------ no social wage

Today’s taxable income (B) $100 /week-------tax $40-------$100 social wage
Net results-----

A

tax rate 20%

B

tax rate

20%, not 40% as people think they are paying.

Peter Saunders asks : "Besides, why should people earning $80,000 give up nearly 50 cents in every additional dollar they earn to the government?"

It's a method to rectify the way that wealth that has not been fairly distributed this economic system. It is not a perfect method, but it is the only method we have.

People on six or seven figure salaries rarely contribute anywhere near as much to society as their salary figures would suggest. For example (if I can be permitted to allude to a slightly off-topic issue in which I have taken some interest) what has Ziggy Switkowski and the current Telstra board contributed to society in return for the tens of millions paid into their pockets by taxpayers and Telstra customers? They have run down our copper telecommunications network. They have destroyed the livelihoods of tens of thousands of Australians and contributed to rural decline, and they have held back the roll-out of broadband fibre-optic networks, whilst squandering billions of our dollars on failed overseas dotcom empire building adventures. (See also http://www.citizensagainstsellingtelstra.com)

Even if each of the boards members had, instead, been doing an excellent job could Peter Saunders please substantiate (other than by alluding to the circular argument that their salaries must be justified if the market says so) why each of these people's contribution to our society should be worth in the order of 20 to 100 times that contributed by someone on the basic wage? I think the same point still stands even in regard to many others earning closer to the $80,000 mark, especially for those who produce no tangible wealth whatsoever : real estate agents, property speculators, mortgage brokers, libel lawyers, advertising professionals, insurance brokers, neo-liberal economists and sociologists etc, etc.

Given that our current economic system has encouraged so much unequal distribution of wealth and so much economic activity in areas which are of little benefit to society as a whole, we would be better off to persist with the graduated tax system for the time being.

daggett,

I am guessing that the individuals you refered to are on a bit more that $80k. To be fair try describing why someone on $80K or less should contribute such a large proportion of their income especially as the current tax structure does not take into account how much they had to work to get the income.

I have suggested in another thread that tax rates might be fairer if based on an time rather than actual income. That shares the responsibility more evenly.

Extra effort should not mean higher tax, higher pay rate per hour should, less effort should not reduce the burden but a low hourly rate should. Some area's I have not worked out (investment income etc) but it is a start.

I agree that in many cases the top end of town is over paid and under performs (sometimes that might not be the case).

Robert said:

“Agree that in many cases the top end of town is over paid and under performs (sometimes that might not be the case).”

I would say that most people agree with that comment.

Their wages also increase at a much faster rate than bottom end wages.

Maybe, just maybe we should look at the reason WHY this happens.

Change the whole debate as the gap would be much lower; meaning the argument for higher tax rates for the top earners would be greatly weakened.

The upside of Derik Smith's 2% tax is that many multi-nationals would then have to pay tax for the first time.You see a 2% flat tax with no imput tax credits compounds at each sale.It grows expodentially.{This would encourage vertical intergration;Something that would need to be countered.}The idea however has a lot of merit since at a retail level it is not worth your while to give cash discount for a 1% drop in price.

Govt won't go for it since it is too radical and the multi-nationals just have too much power.Not to mention all the tax accountants and as Hugh said, public servants who will lose their jobs.

The ATO could just look at the turn over of a business and say you pay 2% of that amount.There would be no need for 20 000 ATO employees or thousands of accountants.Allow each business owner and employees $50,000 per person income tax free and the rest is taxable.There would be no need for all this regulation and red tape.
We have tied ourselves in so many knots under this present system, that there seems no way out of the mire.

The concept is so simple, that it is scary.We could reach Nervana in an earthly existence!

I just heard you, Peter Saunders, run away, on Radio National's "Life Matters", from a confrontation with one of those in whose interest you claim to be acting by promoting so-called "welfare reform". How convenient it was for you that had to go to some other appointment at 9:30AM? At least you were forced to concede that there is "still an issue" to be dealt with in that the tax-free threshold for the lowest paid were not raised. Another "issue" which had not been dealt with were the lack of suitable childcare places for the single mothers whom you would force back to work. I won't hold my breath waiting to hear any more from you about this one.

Of course, we can expect to hear a lot more from you about "labour market reform" which you claim will create all the extra jobs necessary to accomodate the would-be pension recipients who will now be forced to look for work. Do you have any idea of how little unskilled workers are already paid? Well let me tell you as a university educated IT professional now forced to work in casual unskilled occupations as a result of the current oversupply of IT professionals. My last casual occupation paid me 15.38 an hour.

That hourly rate is to compensate me for sick pay, annual leave, long service leave and other benefits that full time employees get. If I was full time, I would be getting closer to $13.00. (And even that is not the lowest that casual workere are paid these days. A company which conducts traffic survey pays its casual workers as little as $10.00 per hour in Sydney, when I last enquired last year.) During the last week I worked there, I worked a number of days lasting 9.5 hours (excluding lunch). I got no overtime for those days, because overtime rates are now only paid when the total hours worked (even on weekends) exceeds 38 hours in any one week. The last day on which I worked, I was sent home after only four hours. (to be continued).

(continued from previous post)

I would have thought that anyone with a shred of compassion and decency would have appreciated that these sort of pay rates and working conditions are already inadequate for even single people let alone those with families to support, yet somehow you think that work conditions need to be even more 'flexible'. Your proposed so-called 'reforms' to the labor market are, in fact, only a prescription to increase working poverty to suit the needs of Austalia's elite.

When all else fails you always fall back on how 'unfair' it is that poor working Australians must pay taxes in order to support supposed malingerers on pensions. In reality, much of this welfare budget goes into the pockets of landlords, property speculators and others who derive income from Australia's property so-called 'industry'. In 1996, the Howard Government decided to spend money subsidising rent payments, rather than to put equivalent funding into public housing. This only helped to fuel Australia's runaway housing inflation.

Had they seriously pursued the former course, we could, instead, have a situation where the cost of housing would be much less of a strain on the Government's, and, in fact, everybody's budget. Indeed, the Housing Trust of South Australia, set up by Hugh Stretton never cost South Australia's taxpayers a cent.

Much of the money that is not wasted on private housing costs is wasted on the inefficient semi-privatised job network and on the petty harassement of welfare recipients that is required by our current system.

There is a lot more that I could say about yourself and your much ballyhooed book "Australia's Welfare Habit". For now, I will only add that if the true value of everyone's work was properly valued, that single mother you ran away from this morning would be paid, in your place, to write far more honestly and usefully about social welfare, and you would be forced to sweat in order to subsist as I now have to.

Dagget,get qualified or experienced in something.I pay sub-contractors who are skilled $42.00 per hr and they don't have to quote or chase money.Stop finding excuses for not doing things.It just takes determination and a long term plan.

(Dear administrators, the restrictions are insane. I don't see why it is worth my effort to contribute further.)

Arjay, instead of challenging my arguments you have chosen to attack me personally.

I have not had the good fortune to have a resume overflowing with qualifications and achievements. The resume I have would have been sufficiently good to get me work easily ten years ago, but in today's highly competitive globalised IT job market, the employment agencies won't take a second look.

My last job, which was a research programmer at a University. The job lasted for two years, and was meant to lead on to a PhD scholarship, however, only at the end, I learnt that I wasn't considered sufficiently good.

In that time I had worked very hard to solve very difficult problems largely on my own in a far from ideal work environment. For months on end I was at work every day of the week, often working late into the night. Almost as soon as one bug was solved, another was encountered. I never gave up and I persisted until all of the problems were fixed and the whole software package was documented and made available for release.

There were no suitable alternative jobs I could apply for, because of this Government's penny pinching, so all I had achieved in two years was experience in a specialised area of computer science, the value of which was not obvious to many prospective employers.

Just possibly I could have clawed my way back into the industry by now with more grit and determination, but unless you have been in the situation, where you have put your heart and soul into something, to the exclusion of almost everything else, for two years, and got nothing for it, and had this happen not once, but several times in your life, you might be in a position to judge.

In any case, why do you presume that I am not doing anything?

I think I deserve better and certainly a lot better than I would get if Peter Saunders had his way.

Only two years and you have given up.
I have had far more problems than what you talk about, and over many more years, and I am not asking for the govt (taxpayer) to subsidise my existence.

Move sideways, there a million opportunities out there.

Don’t blame other people for things not going right in your life, but then that is very much an Australian urban way as i see it.
my income comes from selling product to the factory workers in third world countries.

Dagget,it was meant as helpful advice.You complained about working for $13.00 per hour so I thought you should consider other options.
Good workers are highly sought after,and are paid above award wages.
With all your qualifications,have you considered the Public Service or even teaching?It pays a lot better than private enterprise could ever afford.

Arjay, my apologies that I misinterpreted you. I thank you for your concern.

The main point was not actually about myself. The people earning those rates of pay are rarely in a position to challenge those, such as Peter Saunders, who would reduce their already meagre earnings. I was in a postion to do so, so I have taken that opportunity. However ...

Others have also said what you have told me and will do so when I see the opportunities arise.

Still, I get profoundly depressed every time I try to write a job application and have to go through the selection criteria, trying to to shoehorn my work experience and qualifcations into the selection criteria. It was put to me by a senior public servant, recently, that the human resources sections have got out of control and that she doubted if she, herself, would be able to get a job these days if she had to apply from outside.

Still, I haven't given up, as another has alleged, but in the meantime I see no choice but to accept that kind of work.

Dunart, you wrote : "I have had far more problems than what you talk about ..."

... and did you have to live in a shoebox, a hundred and fifty of you in the middle of the road? Or did you live in a lake and have to rise at six o'clock in the morning, clean the lake, eat a handful of hot gravel, work twenty hour a day at the mill for tuppence a month?

Clearly, if you had your way there would be no social welfare budget as nobody would be deemed worthy by your standards.

I have been in the paid work force since 1978 and paid far more taxes than I have ever got back from the Government and, in general, I have given far more to others than I have ever got back. If I happen, at this moment, to be a welfare recipient, I make no apologies for it.

I have a challenge for the Federal ALP politicians and all others who think that they will benefit unreasonably from the tax cuts announced in the Federal Budget.

1/ Put on record what tax rates and thresholds you do support.
2/ Set up a trust fund and pay into that fund each time you pay tax the difference between the tax you are required to pay and the level you support as appropriate for your income.
3/ Do not claim the above as a tax deduction (by registering as a charity etc), or if you do pay the benefit from the deduction into the fund.
4/ Get an independant body to pay that money to individuals who would pay less tax under your proposal. Maybe a lottery to select them, the only selection criteria to be that under your proposal they would pay less tax. Ensure that you have no control over the allocation of this money other than the reciepients meeting the tax criteria. This is not for special hard luck cases but for a random selection of those who would pay less tax under your tax policy.
5/ Continue this arrangement until you are able to change the tax rates and thresholds as the government.
6/ Do not claim any tax deductions or use perks not generally available to the public. I pay tax on the money I use to buy my train ticket to go to work, if you get a commonwealth car provided then pay extra into the fund to make up for the perk.

Make the whole thing as close to paying tax as you can without making the funds available to things your policies don't support.

I'm sure you should have no problems getting this administered and audited for free.

You will not solve the problems of the poor in Australia, you might make a difference in some lives and you will have made a symbolic statement which holding up tax cuts for the rest of us could never come near.

daggett comments suggest that I had done it easy, or reached a situation where it was easy?.

If I had to answer yes or no to the idea that life was “easy” for me and my industry, I would have to answer no.

I have no problem with a “welfare system”, but the attitude is that it should provide you with more than some of us in the work force, is blatantly unfair.
Where I live, access to the welfare system is extremely limited

This means we have to use” after tax” income to make up the difference.

I don’t see why I should offer working conditions and wages based on a protected standard when my industry has to base this on the world market situation, such as having an income that is derived from selling to the Chinese factory workers.

It seems you are saying that you deserve more, regardless, as your comment about getting more back from the welfare than you pay in taxes implies

Questions;

How will the govt survive if we all had that attitude?

Who pays for it?

Should we have differing standards for Australian citizens?
?

Yes, it can be different trying to get a job as you get older, and I am much older that you and did not have the benefit of an 80% govt subsidised tertiary education.

Another benefit not available to me, but to you.

Maybe this is the problem with our tax system; huge sections of the community are getting protection from the world market, as well as other benefits by regulation.
The cost of this has to be payed for, and as you cannot subsidise yourself, it has to be those that don’t get the benefits.

In summery, I have no problem with a welfare system, and “breaks’ for the lower income and disadvantaged people in our community, “as long as it is the same for to all of us”

Quote;
“"Trying to tax or regulate ourselves into prosperity, is like standing in a bucket and trying to lift yourself off the ground"

dunart,

No, I was not suggesting that you had done it easy. What I wrote seems to have gone completely over your head. I chose to relay a small part of my own life experience in order to make a point about what Peter Saunders wants to do to the poorest people in our community. Instead of addressing the points I made, you chose to ridicule me personally, without even having properly understood what I had written.

For example I wrote: "unless you have been in the situation, where you have put your heart and soul into something, to the exclusion of almost everything else, for two years, and got nothing for it, and had this happen not once, but several times in your life ..." How you could have read that and concluded that I had given up after 'only two years' escapes me. Possibly you have had it worse than me, but how you can know that is also a mystery.

In any case, that is beside the point. Of course there will almost always be people worse off in the world, but I don't see why that should be used to justify injustice being inflicted against people in this country.

When Australia was first deregulated in the 1980's all the neo-liberal economists dismissed the commonsense concerns that this would threaten the living standards of ordinary workers, saying that this would leave to untold prosperity and wealth for everybody.

Now we learn that what was told to us was the rubbish we always suspected it was. Ordinary Australian workers cannot possibly compete with workers earning only a few dollars a day, so much of our manufacturing industry has been exported to China.

There is no simple answer to this problem, but it is obscene that those already on multi-million dollar incomes, which are many times that received by the lowest paid in Australia, wish to throw those workers on the scrap heap by exploiting even more poorly paid workers in third world countries.

(Out of space again #@!!@#. Will have to use personal pages in future.)

I agree with Peter that getting people off welfare and into work is fairer on the claimants themselves - I have been a claimant in my recent pass. The budget helps single parents to plan for the future.

I applaud Costello's efforts to encourage single parents to maintain employability. His consideration to timing with school age (6 years) is a very compassionate initiative. When I was a single parent I could only benefit from government help and training support to continue my career. After all my child will leave home one day and I will be better prepared vocationally to enter the workforce full time.

A friend of mine, a single parent, has just experienced a huge drop in her welfare income because both her children recently left home. As a result she could no longer afford to pay the rent and was forced into a tent. She is in her mid 40s and suffered health problems due to her homeless status. I agreed to help her out with accommodation until she can rent her own. This crisis pushed her to focus hard on her job search. If the government had encouraged her to prepare for the inevitable maturation of her children she would not be suffering now. She would have maintained some earlier skills and workplace experience.

It's a very sensible and compassionate initiative.

silversurfer,

Whilst deprivation of income can be the spur for some to lift themselves up by their bootstraps, it doesn't always work that way. Besides, many others may not be so lucky as to have a friend with a spare room, and, instead, become homeless, because they can't afford rents which have been artificially inflated to suit the needs of property speculators.

The fact is that unemployment statistics lie because anyone who works for more than one hour is deemed to be employed, so there are not enough jobs to go around, and even many of those on offer are demeaning, lowly paid, insecure, often extremely physically strenuous, and often not even socially productive. Examples include telemarketing, junk mail delivery, standing in the streets wearing billboards, fruit picking and various casual unskilled occupations where you are regularly paid for well under 8 hours work at a time.

The measures being enacted by Peter Costello will only cause even greater hardship for the majority and serve to drive more and more people to accept sub-standard working conditions.

I suggest you read Barbara Ehrenreich's "Nickel and Dimed" (http://www.nickelanddimed.net). This describes how life changed in the US after similarly "sensible and compassionate" measures were enacted by Bill Clinton. Just one of many examples was that domestic cleaners would often continue working even after having sustained injuries at work, so desperate were they to hold on their jobs. Those workers often could not afford their own accommodation, and lived in their cars.

Instead, the Government should be using the budget surplus to meet the urgent environmental and infrastructure needs of this country. This is what President Franklin Roosevelt did in the 1930's when he employed millions of previously unemployed Americans, although with funds raised through loans under the "New Deal" program. Peter Saunders' co-thinkers of the time no doubt loudly objected that it cost the taxpayers too much, however few would argue that the US economy was not massively improved as a result, and even Colin Powell and the late Ronald Reagan were grateful to Roosevelt for having lifted their fathers out of poverty.

Daggett,a lot of poverty in the US is a direct result of the trillions of dollars they spend on weapons due to the arms race.They have kept the world free of a major conflict for 60 yrs.We on the other hand can spend our surplus on social security instead of developing a massive defence system.
No one is removing social security,we just ask that those who take it contribute something back to the slaves who support them.

Arjay,

There's a grain of truth in what you wrote. If the United States had not dropped more bombs on Indo-China than were dropped in WW2 and similarly devastated Korea around 15 years earlier, had not funded death squad regimes in Latin America throughout the 70's and 80's and had not started the recent war in Iraq, there may well have been more money to spend on worthwhile projects at home that would have helped its poor. However, it is debatable whether this has kept the world free of a major conflict.

On the one hand you object to paying taxes to support those who are now on welfare, but have nothing to say about all the other inefficiencies in our economy that I mentioned. For, example do you seriously think that we don't all ultimately bear the cost of advertising, including telemarketing and junk mail?

And what about the windfall gains given to property speculators, which have caused an essential commodity, shelter, which used to be affordable by ordinary families on single incomes to go beyond the reach of even double income middle-class families today? The whole community has paid the cost of this.

As I implied earlier, Roosevelt proved that it is possible for the Govenment to give unemployed people dignified occupations that would be of benefit to the whole of society.

It may mean that today's high income earners would have to pay a little more tax, but all of us, and our children, would get so much more back in return.

If this were done, and if our Government were prepared to do what the private sector has shown itself to be incapable of doing, that is to set up a program to gainfully employ people with disabilities, then the numbers of welfare recipients would be vastly reduced.

What is wrong with that?

There is at least one "solution" to the tax problem that removes all inequities and will save the government at least 10 billion in administrative costs. It can have various "tuning" features that enables us to experiment with different incentives.

Here are the principles.

1. A basic income for everyone in society with no questions asked and given weekly and for which there is no tax.

2. Every dollar of income is taxed.

3. Income is taxed the moment it is earned. A bit like the GST.

4. When you pay someone some income then it is taxed and you can claim that tax back as in the GST.

5. If you want to claim income given to others then it must be paid to a registered income account.

6. The tax system be an "optin" system. That is you can continue to use the existing system or you and your family can optin to the new system.

What does this do? It eliminates most social security transfers. It makes it possible for anyone to employ someone else and still get a tax benefit instead of having to employ people through companies and other such devices. It removes all poverty traps.

If we now incorporate a regime where we do not get taxed on income that we put into savings then we eliminate the need for superannuation, we encourage savings and we give everyone the same incentive to work.

We can still have special payments for some people - such as extra income from old people and disabled. We can if we wish still have a graduated tax scale. What we do is to make the tax act about one page long and we eliminate an army of accountants, lawyers and public servants and we stop blatant bribery from all politicians at election time. Of course these are the reasons why it is unlikely to happen until "the people revolt".

The whole neo-liberal agenda of small government - cuts to Government service and welfare, cuts to employment in the government sector, outsourcing, deregulation, privatisation, low taxes, "competition policy", - rests largely on their assertion that the economic crisis of the 1970's was caused by Keynesian policies of Government intervention in the economy (e.g. p158 of "Australia's Welfare Habit"). In fact the crisis was caused largely by the sudden surge in oil prices following the Yom Kippur war, which Peter Saunders failed to mention. I wrote more about this here: http://forum.onlineopinion.com.au/thread.asp?article=3556.

To those of you who are adamant that higher taxes on the rich would result in the likes of PS packing their bags and going off to greener, lower taxing pastures, thereby ruining our economy, I suggest you read James Cumes' excellent article "John Howard's bottom line", also on onlinopinion, at http://www.onlineopinion.com.au/view.asp?article=3602

This shows that, with higher taxes on the rich and greater government intervention, our economy performed very well in the 1960's compared to any period since then. I would add that the average growth rate from 1960 to 1974 of 5.2% exceeds anything that has since been achieved since the commencement of the neo-liberal economic experiment since 1983.