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.