Tax Reform, Revenue And Expenditure, And Fixing The Budget: It’s Simple, Controversial, But Fair

This is probably my most controversial post to date: the budget is heavily in the red, and the spending priorities of this government (and its predecessors for 30 years) have been completely out of touch with reality. The answer is simple.

Two words: welfare budget.

And I want to see what ideas people might have around the idea I raise here.

It’s very true that the present ALP government in Canberra has, proverbially, been pissing money up against a post; borrowing heavily from overseas lenders to throw money at anything it thinks may have votes attached to it, and driving the country deep into the red.

And it’s also very true that as a result of these activities and the lingering effects of the so-called “global financial crisis” the Commonwealth budget isn’t in the shape it was in five years ago.

But an insidious aspect of government spending — completely addictive where some of its recipients are concerned — has grown, blown and spiralled out of control during the past 40 years.

I talk of course of the welfare state conceived and initially implemented by the government of Gough Whitlam in the 1970s.

Whitlam’s welfare programs — noble enough in their intent — sought to provide a solid safety net under the genuinely disadvantaged members of Australian society.

The expenditure on such programs has grown to the point where today, one dollar in every three expended by the government in Canberra goes to one form of welfare payment or another.

To be fair, this situation did not markedly improve during the years of the Howard government, although that administration did begin to take steps to rein in welfare spending.

And it didn’t improve during either the Fraser years or the Hawke/Keating years: if anything, the country’s welfare bill grew exponentially during the tenure of both of those governments.

But quite clearly, it’s not acceptable that a third of government spending goes on welfare payments — especially when it’s the TAXPAYER who is funding the bill.

And we’re talking about well over $100 billion in annual welfare payments here.

Yes, some of it is old age pension payments: I would never advocate taking a pension off a pensioner.

Some of it is paid to war veterans for various reasons: again, these people should never face a reduction or cancellation in their benefits.

I’d like to look at sickness/disability payments, unemployment benefits, and single mothers’ benefits.

Let’s start with the single mums.

I understand that sometimes accidents happen, and that when they do, dads bugger off and leave the pregnant lady — quite literally — holding the baby.

I think it’s fair enough for a single mother’s pension to be paid for a single “accident:” preferably until the girl/lady in question is able to enter or re-enter the workforce, but to act as a safety net until such times as her ability to work is restored.

I do not, however, condone the payment of pension benefits to “single mothers” who have multiple children to multiple fathers, and then ask the taxpayer to foot the bill for their continued existence.

Indeed, the present federal government restricted and modified access to what had been the Howard government’s “baby bonus” by breaking it into fortnightly payments over a period of time, rather than payment of $5000 as a lump sum after the birth of a child.

And it was the present Prime Minister (in her previous ministerial role) who was at the forefront of the change; she called the baby bonus the “plasma grant” in reference to people using it to buy plasma screen TVs, but she also made the point it was an inducement for young girls to get pregnant to pocket a chunk of change.

Quite. It illustrates my point.

Obviously deserted wives with children and no recent work skills or experience, for instance, would have their eligibility protected; as would rape victims, domestic violence victims and so forth.

But, there are “single mothers” who, by a revision of the eligibility criteria, could be thrown off benefits.

(Hear me out before you start abusing me…)

Next stop is the disability/sickness benefit recipients.

There are genuinely sick/disabled/incapacitated people in receipt of state benefits; for those people, they should remain so.

Yet others, on full benefits for minor injuries or for conditions that do not preclude them from doing other types of work, are a different story.

For example, someone receiving a sickness benefit because they hurt their leg at work would be quite capable of doing other work sitting down.

And as for unemployment benefits…anyone forced to take a dole payment out of sheer necessity, because they find themselves out of work and with responsibilities to meet and bills to pay will tell you that it’s not possible to live off the dole.

Indeed, for people who really want to work, the dole is probably the single greatest incentive in the country to go and find a job.

Yet many do live on the dole: by pooling three or four dole cheques to run a communal household, it’s very feasible to live a simple life, eat cheap (and probably unhealthy) food; supplemented with other benefits such as health care cards, concessions on public transport, and so forth.

Obviously, to weed out the type of people bludging off the system — to separate them from the genuinely needy recipients — would require a radical revision of the eligibility criteria around these benefits. I don’t pretend to have the answer to that — indeed, one of the reasons for raising this subject is to see what ideas other people have.

And whilst we’re at it, the amount of foreign aid this country pays out needs a good hard re-examination; especially as immigration levels (despite the blathering debate about boats) remain historically high at roughly 200,000 people per annum, and these new arrivals are given every assistance in helping them to get established here.

I see foreign aid in those circumstances as an extravagance: when we really can’t afford to look after the people in this country properly, and when the budget is as far in the red as it is, I see no over-arching case for shelling out billions and billions of dollars in external aid payments.

I re-emphasise — and cannot do so strongly enough — that this post is in no way advocating throwing really needy people off benefits just to save money.

What I do advocate, though, is to get the leeches off the public purse — I think there are plenty of people, quite capable of working, who would suddenly see work as an attractive proposition if their ride on the gravy train were to come to an involuntary halt.

And for those who don’t — there’s family, charity, and so forth; people who simply refuse to take responsibility for themselves simply because they want someone else to give them a free ride should not be a burden on the working public.

And what of the money such a radical overhaul of, and crackdown on, welfare abuse might save?

Some of it, it will not surprise readers to say, ought to be used to strip recurrent expenditure out of the budget, pulling it much closer to being back in balance.

But some of it should be directly channelled into increasing benefit payments for those recipients genuinely needing the help.

And some should be used for tax cuts: after all, some of the benefit of lifting a weight off the public purse ought be returned to those who fund the public purse in the first place: ordinary taxpayers.

I believe there is scope to cut billions — perhaps tens of billions — out of the Commonwealth welfare and aid budgets, to better look after those in real need, and to take a little of the burden off those who pay the taxes in the first place.

This isn’t mad ideology, or a case of an attack of the “nasty Tory” gene, or a witch hunt: simply an attempt to discuss ideas on how the fiscal resources of the government could be better and more effectively targeted, and to get better outcomes from the system overall.

What do people think?

Please keep comments on-subject.

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5 thoughts on “Tax Reform, Revenue And Expenditure, And Fixing The Budget: It’s Simple, Controversial, But Fair

  1. Sorry Yale, but I have to disagree.
    For every baby born whether in or out of wedlock, there are two people responsible for the conception.
    People have to stop blaming the girls/women for this situation.
    We should not discriminate against any child’s welfare just because it’s Mother and Father may not have been eachother’s first partner.
    I truly believe that EVERY Mother should be paid the equivilant of the basic wage – with health card benefits.
    This would encourage them to stay at home and rear those children – regardless of whether they are married or not.
    Let’s face it – we desperately need to boost our baby population in this Country.
    Once those children attain school age, the Mum should then be paid a partial decent income to enable her to be at school drop off and pick up until that said child/ren turns 16.
    Both payments should be TAX Free.
    These payments would only be paid if the Mothers adhered to the employment rules and stayed at home.
    We need Mum’s to be able to nurture their children rather than having to stay in the workforce and have some child care worker bring up her child/ren.
    As paper qualified as these people may be, they quite simply are not ‘Mum’.
    The jobs that would then be made available would provide the much needed injection of a larger variety of employment opportunities for the unfortunates who do linger on unemployment benefits simply because of the types of jobs on offer or their lack of experience in many areas.
    Yes Yale I hear you , or even Dad’s who find themselves out of work for whatever reason.
    Childcare should also be classified as “Occassional Care” not “All Day and into the evening care”.
    This would allow stressed Mum’s, and yes, it is the hardest job in the world, to have some time out for a few hours if needed.
    I used ‘Occassional Care’ when my girls were little because taking 3 kiddies under the age of 4 shopping was an act of utter lunacy – and often took a week and extensive therapy to even begin to recover.
    Solutions are never easy to reign in Government spending and deciding where it should be cut – but surely the best place to start is the wastage, of where there is an exhorbitant amount of trimming that could be achieved before we start to attack needy areas.
    Yes, I know there are the people who wrought the system – we see it all too often and it is not exclusive to the welfare recipients.
    Historically Labour Governments will spend and spend all the money in the kitty and then some.
    Nothing changes, it is just that they have used the GFC to try and justify it this time.
    The only way they can obtain more is the apply the Old Robin Hood system – by using taxes to rob the rich to feed their greed.
    The only way out is to get rid of them and all Greens and fence sitting voters wake up to themselves and make a difference, the Right Difference ( pardon the pun).

  2. I’m sorry but attempt poorly to cover it it up as you might , but this is stingy Tory propaganda, thinly veiled , probably Bolt/googled researched, & factually vague. The reality is that after ten, long , hard years of Howard and some pretty ordinary to be honest ‘crackdowns’ by the Rudd Govt means much of what you whinge about is dealt with. Plus, real debt is minimal, nothing drastic needs to occur becuase of our “GREAT BIG DEBT”, like surely the introductions of the commos “GREAT BIG TAX” ‘insert new BIG tax here’ would cover any minor shortfalls anyhoo ??? World Economists rave that our debt is the envy of the G20 , relatively low debt and with great economic growth prospects, no need to punish those who don’t fit in with the conservative , by gone era view of our society. We have more then enough, and can and should take more advantage of our resource wealth to benefit the greater good through education, welfare, sustainable ecology and smart business growth for long term, sustainable economic growth and job development rather than pissing about about a handfull of single Mums

  3. Big Sis makes some excellent pionts about the responsibility of both parents and the punishing of a child for the actions of the parent. Well said.

  4. Steve, it’s not about punishing the child. It’s about people taking responsibility for their reproductive urges. Once is an accident and nobody argues with that, but once you are up to the third child by the third different dad, then there is obviously a problem.

    I personally have no problems with how many children a single mother might have, that is her choice. But if it’s her choice then raising those kids it is likewise her responsibility, not mine. Neither I not anybody else should be expected to pay for her poor choices.

    To put it another way, it’s like a bailout. I won’t support bailing out a business because they made poor choices, so why should I support bailing out a person in trouble due to their poor choices?

    Yale, as to the rest I think you’re wrong. There are some savings that could be made, that is obvious, but they need to be on a case by case basis. By encouraging expansion of our economy we can solve most problems. In a society that has underemployment there will be no unemployed, thereby reducing the cost and increasing the tax income for the gov.

    As to foreign aid, if spent wisely then this is money well spent. There are many things in this world that are killing millions each year, if we can we should move to alliviate this suffering. The best way to help other nations is to help them develop their economies.

  5. Hi Steve and John,

    I know it is easy to say that once is an accident and from then on it is deliberate – but our reproductive systems are far more complex than that simple equation.
    Sure, when you look at some of the Mum’s of multiple babies from multiple partners, you can see why people would come to that conclusion – but these are not the majority.
    But if the girls are called loose or other derogatory names, what do we call the blokes?
    Studs….and the like.
    Not fair.
    I would far prefer that my tax $ go to our Mums rather than to support the likes of the boat people jumping the queue or giving the Crims in gaol the added luxuries that the bleeding hearts insist is their human right.
    Look at what we could save with just those being axed,

    Bye for Now

    Big Sis

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