Greg Sheridan has an important piece in The Australian today setting out the case of how the Rudd-Gillard government have infected Australia with the European disease.
Europe’s present distress is our future. Everyone knows that part of Europe’s problem is excessive welfare. As Germany’s Chancellor Angela Merkel has remarked, Europe has 7 per cent of the world’s population, 25 per cent of global gross domestic product and 50 per cent of the world’s welfare payments.
He points to other policies where we’re adopting European ways too.
Our strain of Europitis, however, is particularly strong – as David Uren explains:
The poorest 20 per cent get 42 per cent of all government transfer payments, whereas the top 20 per cent get less than 4 per cent, a ratio of 12 to one.
We take this for granted: why should transfer payments go to higher income earners who don’t need them, we ask. But across the advanced world, the poorest 20 per cent get on average only twice as much in transfer payments as the top 20 per cent. In the US they get only 50 per cent more.
In most other countries, tax contains an element of social insurance. If you lose your job, you get an unemployment benefit for a period at a level based on your income. Age pensions similarly are pegged to final salary. You get some benefit back from the tax that you pay. People on higher incomes pay more tax and get more benefit.
The Australian conception of the state as a giant redistribution machine is unknown elsewhere.
Okay – let’s look first at the upside – “We spend less than the OECD average on government benefits, but our spending has a greater impact on alleviating poverty than in other countries.”
The downside is that Australian policy-makers have an obsession with welfare and redistribution. David Uren is talking in the context of superannuation. Our friends in Canberra believe that the tax-concessions associated with Super are a form of welfare for the rich. Yes – keeping more of the money you have earned is a hand-out from the government. The argument being that government could tax that money and redistribute it to people who have not worked to earn your money.