Sunday, March 6. 2011Why Are There 'Poor' People In Australia......John Linton ......65 years after the Australian version of the "welfare" state was created? This thought entered my mind because over half a weekend I received three very thoughtfully worded emails requesting cut price internet to three different groups of financially disadvantaged people (one from a retirement home, one from an Aboriginal youth group and one from an unmarried mother's support group) - all in Sydney - one of the world's wealthier locations. Obviously bad luck in life can deal one or more severely cruel blows to almost everyone who lives past the age of 18 (before 18 most teens seem to think life is one long cruel blow directed at them personally) but it appears that Australians have more bad luck than most Western societies when I whiled away some time actually looking at various statistics on the web. I just typed in "number of people on pensions in Australia and selected the sixth suggestion Google provided and was treated to a succinct summary of some extraordinary figures here: The first astonishing statement that I found was this one: "Around 2.7 million working-age Australians are on income support — over There are several other horrific statements in this short summary but I couldn't get over the fact that 20% of adult Australians need Federal Government payments to be able to stay alive.....and that horrific percentage is increasing. If you want to see where these trends may well lead you just need to look at the most 'socialised' nation on the planet, Sweden, to see where 'pensions' can end up. If you have the time look at: http://ideas.repec.org/h/nbr/nberch/7256.html ....very dry and long but an appalling case study. So; what does it mean? Part of what it means is that the creation of welfare dependency has no end and only increases year on year for the nicest of 'humanitarian' reasons but at the cost not merely of money to the nation's tax payers but at the far more 'expensive' cost of the destruction of the very basic human ethos of its recipients. In 'humanitarian' terms 'welfare' can only be seen, in the short term, as a 'good' thing - feed the starving, clothe the naked, shelter the homeless and every other inarguable catch phrase applicable to charitable intentions and actions. No-one, no matter how stupid could ever argue against those concepts. But as Sweden has found out for well over three decades now - all social services have a finite end - the ability to pay for them by an ever diminishing amount of tax payer dollars that can only come from people who are not receiving welfare (I refuse to use the stupid cover up phrase "income support"). There are several things that can be used to prop up the welfare budgets in the shorter term. Sweden like Australia has a disproportionately high military budget - despite the fact that Sweden hasn't been involved in an armed conflict since Admiral Horatio Nelson demonstrated the stupidity of making bad alliances almost two hundred years ago and Australia hasn't had any sort of military threat for the past 65 years nor is ever likely to have one. Perhaps both countries should wind down their military expenditures (and let's never forget how that money is spent on total nonsense - Krudd's 12 Australian built submarines spring to mind) to give some taxation breathing space to carefully look at welfare spending. I know it will never happen but there actually is absolutely no reason for either of those countries to waste money on armaments and the people trained to use them just as there is no real reason to expend so much of their GDP (over 25% in Sweden) on an ever growing number of welfare programs. But my original point is why are there any poor people in a country such as Australia where there is a continuing shortage of labour and there is no barrier to any person who actually wanted to earn their own living being able to do so - bar those unfortunate persons who physically cannot do that? I can only think of one but as I am personally, apparently paying for 20% of another Australian's living expenses already I don't feel that I should have to work even harder to allow Exetel to add to the payments to people I am already giving 40% of my personal income to. Perhaps I am just uncharitable. Copyright © Exetel Pty Ltd 2011 Trackbacks
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I expect that the coming global depression plus the aging population will restore the notion that all humans with even modest physical and intellectual capacities can make some useful contribution to society.
Comment (1)
Perhaps that will do it.
Balancing 'safety net socialism' with the vote winning proclivities of the slime bucket 'people' called politicians or "major political party strategists" will, all evidence suggests for the past 65 years, continue to side with vote winning. Comments (4)
The simple answer is that there are votes in it.
The more complex answer is that a government will continue to do it while there are votes in it and the consequences don't kill the economy. If the number of workers decreases and the social security class grows, then the world economies will be competing for labour and won't be able to afford to tax their workers too much. Some solutions exist such as raising the retirement age or increasing migration - each with their own problems. What might be even more interesting is all those boomers retiring expecting to realise profits on their investments only to find nobody is left who is willing to pay the prices they expect. Comments (2)
No doubt about it.
But the Swedish situation has, for the past thirty years, illustrated that there is an end point at which there aren't enough people working to pay for welfare. Like all financial models - it gives indications that have to be addressed before they become unaddressable. 20% of working age people not working maybe close to that tipping point. Comments (4)
As you
Claim your Family Tax Benefit Part A, Collect your government-guaranteed interest from your personal bank account Dodge the stamp duty when upgrading your family home Pay the 1/4 cost of your doctor's appointment or hospital visit Receive your children's free or enormously subsidised education Observe the young bright graduates you're employing (many of whom would have had no tertiary education at all without the "welfare cheques" the Federal government give them in the form of youth allowance and low interest HECS/FEE-HELP), you might consider that maybe it's not the poor who are consuming the enormous bulk of our welfare budget. As you get on a bit, you might also test your weight to the $4billion Medicare safety net. Australia's welfare problem isn't one of bottom-of-the-heap welfare dependency (that's a tiny problem in the scale of things), it's upper class welfare dependency that is hurting us - Even those who could comfortably provide for most of their needs whilst giving a hand to those who can't are addicted to the free bonuses, government handouts and boondoggles that were progressively handed to them over the last decade or so. If we could end that, we can leave the dropouts, students and the disabled to their loafing and spend more time worrying about how to enrich our own lives. Comment (1)
It's a long time since I've 'heard' "class used in any sort of discussion.
For the record: 1) I paid for each of my children's education. 2)I have always paid for health insurance for myself and then for my family. 3) I've always paid my taxes since starting working in Australia when I was 17. 4) I have no idea what you are talking about in terms of avoiding taxes/duty on houses I have bought, last purchase almost 20 years ago seemed to include an enormous amount of duties and other charges. 5) Not sure what government hand outs I have become dependent upon - I didn't know I got any. Overall my comments in this blog were purely about the huge percentage of people of 'working age' who don't work....nothing to do with how various governments provide welfare and to whom. The subsidiary comment was about how welfare payments quickly morph into welfare dependency and the initial blog was caused by the stated requests for free internet to diverse askers. The 'class struggle' (in the event there ever was one)ended several decades ago when the last dope realised that living in the USA/UK/Australia etc was SO much better than living in a worker's paradise like the USSR, East Germany or Cuba et alia. Comments (4)
Joe, I think you miss the point and your argument is erroneous. Those things you quote are either government provided services - paid for by tax over one's lifetime - or wealth redistribution. They are not welfare. Paying people less than they are taxed is not welfare. Investing in someone's education is usually paid back in income tax of their productive employment. As for medical costs, workers pay a Medicare levy.
The number John quotes - the 20% - is the proportion of people of working age that are not gainfully employed (mostly at least) and on unemployment, disability or single parent welfare payments. It is not talking about Family Tax Benefits. It is also not talking about age pensions. The trend for this is upward and that is a concern. Comments (2)
Competition is creating losers. Not in a derogatory sense but in a financial sense. People - for various reasons - are able to compete and accrue wealth with varying degrees of success. I'd assert that while most of this wealth is genuine wealth creation there's also plenty of redistribution. i.e. The rich get richer and the poor get poorer.
If you accept the above then you're always going to have a growing underclass which we (society) chose to abandon or increasingly support. Australia clearly chooses the latter option which makes perfect sense in the short term but is unsustainable long term - no matter whether the government frees up defense spending or not and as the Swedish scenario demonstrates. The only other options I can see are brutally cutting or capping welfare (the abandon them scenario) which seems unpalatable. Alternately apply a tax policy that removes pretty much all incentive to earn more than a certain amount. The problem with this being that it would crush entrepreneurship and would likely need to be set fairly low (i.e. well within the middle-class band). Not very likely either. So we're left with the last and most likely option. Those who can earn try and earn more than the government can take and the poor try to take more than the government is wanting to give. And we'll end up with a three class state - the poor, the rich and the cash-cow middle class. Comment (1)
can i suggest, John, that your age and my age.... grew up differently.
we did not have support for children in the form of the generous parenting benefits, nor significant payments for actually producing a child. to0 many people have no life skills. there are many places to point the finger about that one......but i would start with the parents .however....... many of whom have no parenting skills because they were not parented themselves. this creates the generational problem that seems to have no end. housing dept homes being able to be handed down to the next generation in some cases!!!. that was to be changed, but i dont know the outcome.i can't bear to know the reality of it having spent too many years paying my own mortage. one issue is the lack of requirement for people to participate in the work force. that is compounded by little appropriate targeting of strategies to assist people with disabilities to participate in appropriate (for them) ways. long term unemployed are another huge issue......young people and older ones. for sole parents on benefits to be able to NOT work seems to me to be hugely unfair when the married woman, stuck in the middle class, is back to work after the birth of kids. it seems to me that it is the rich and the poor who can afford to stay home nowdays and nurture their kids. that is my experience personally and as a volunteer who has seen to much. OTW Comment (1)
"housing dept homes being able to be handed down to the next generation in some cases!!!."
If that is true then we live in some sort of Orwellian nightmare.....a country with a permanent non-working under class....unbelievable. To 'fix' such a country it needs to end military spending and use that tax money to lift the education of children and to build 'gulags' in the Simpson Desert as the only form of welfare to people without physical or mental disability....oh, and sterilisation for all Simpson Desert welfare recipients would be mandatory. Comments (4)
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