More featuring Max Newton»

Maxwell Newton, “It’s the poor that lose the game,”
The Weekend Australian, June 7-8, 1980, p. 6.

During the 1980-81 financial year the total of Government handouts to pensioners of all kinds will almost certainly exceed $12 billion. Governments will be handing out almost a quarter of a billion dollars a week to the two and a half million Australians now getting a government cheque each fortnight. These are stunning figures.

The proportion of household income derived from Government handouts of all kinds has risen sharply in recent years as the canker of the welfare cheque has spread to the point where today every second household in the land gets a government cheque, on average.

Back in 1974-75, when Malcolm Fraser was plotting to become Prime Minister and to save Australia from a socialist takeover, total government handouts of all kinds (“Transfers from General Government” in the national income statistics) represented 14.3 per cent of total wages and salaries income. By 1978-79 the total of government handouts had doubled — to $10.2 billion — and the proportion these handouts represented to wages and salary earnings had risen to 18.4 per cent.

In the first four years of Malcolm Fraser, in other words, government handouts doubled while total wages and salary earnings rose by only 55 per cent.

In the current financial year, total government handouts, in national income terms, are running about $11 billion a year.

Next year there will be a rise to something like $12 billion, of which the Commonwealth Government will provide something like $10 billion in straight out good old Reserve Bank cheques. This is a disastrous trend.

It is very doubtful whether it has done much to alleviate the chronic poverty which dogs the lives of about half a million Australian households. Professor Ronald F Henderson’s path-breaking work on Australian poverty revealed that in the middle years of the 1970s something like 10-12 per cent of Australian households enjoyed incomes at or below what he defined as the “poverty line.”

It is very doubtful whether this proportion has changed in the last four or five years, despite a torrent of money being thrown at eager recipients of government handouts.

This is because the money which has been thrown about has been for the most distributed to all-comers, with little serious attempt to narrow the distribution down to those who are truly needy and who are truly suffering from impoverished living standards.

Nor is there much prospect that it will be politically feasible to change the handout apparatus to accommodate the needs of the truly disadvantaged in our society.

First, any such major change would have to be at the expense of handouts to all and sundry. There would have to be a vast and deeply disruptive change in the administration criteria for government handouts. There is simply no money to make further general increases in the size of handouts sufficient to make a big dent in the situation of the truly impoverished without drastically reducing the scale of the existing handouts.

Secondly, the financing of government handouts comes from a taxation system which, as I stated last week, is more and more dependent on the contributions of the employed middle class. Because the handout system is financed from the contributions of the ordinary income earners in the community — and not from some mythical elite of “rich” people — then all and sundry feel “entitled” to get a government cheque.

Being Australians and very conscious of their “rights” and of the need to “get in on a lurk,” there is a mass requirement for getting a government cheque.

As the task of administering the system is totally out of control, the possibilities for fiddling the system are immense and in my view the fraud is also immense.

So in the last ten years, the total of civilian pensioners of all kinds (excluding for the moment the truly fairy-tale proportions of the handouts to the half a million war veteran pensioners) has doubled from 1.1 million to 2.2 million souls. Of these, probably no more than half a million at the outside would qualify for Professor Henderson’s “poverty line.”

Excluding veterans pensions, currently running about $1 billion a year, there would be about $10-11 billion left in 1980-81 to really look after say half a million “poverty line” families in Australia.

Thus, if we really started to look after only the impoverished and stopped the revolting rush to the government trough by a couple of million able-bodied welfare recipients, we would be able to give the truly impoverished an annual handout income of something like $20,000 a year, after tax.

That is a nasty way of pointing up the terrifying proportions of waste and irrelevance in the handout apparatus which has grown up.

There is another vicious aspect to this escalation of the handout society.

Because the proportion of household income provided by government handouts has increased so alarmingly in recent years, it has been possible for the unions to operate with increasing immunity from the competitive pressure of young unemployed and older workers.

Union demands for higher and higher money wages have driven up the cost of labour, making labour at all times a very expensive resource.

Seeking to economise on the use of this very expensive (and, because of the union strike programs, increasing unreliable) resource, managements have had to avoid the use of labour which is not completely up to standard.

Hence, young, inexperienced labour — notably that of school leavers with little specific training — has had to be dispensed with wherever possible. (In certain cases, the disadvantages of such young labor have been overcome by imaginative management programs such as the celebrated McDonald’s restaurant program for use of such labour on a part-time basis.)

Pressure on young workers to compete for jobs against adult workers would ordinarily build up strongly, as young workers in their thousands are presumably wandering the streets looking for work.

Of course, nothing of the sort occurs. Young unemployed have most of the pain of unemployment alleviated by the existence of a generous dole system which is so loosely administered that it’s avoidance is laughably easy. Part-time work combined with the dole cheque has drained away any threat from young unemployed to the jobs and to the wages demands of adult workers.

Similarly, in the case of older workers, the existence of easily obtained aged pensions, supplemented by part-time work (under the cuff) has meant that it has been possible for thousands and thousands of older workers to be “let go” without these workers coming to represent any threat to the militant ambitions of the employed able-bodied adults.

Of great interest, in this context, is the explosive growth in the last few years of “invalid pensions and allowances.” In the two years ended 1979-80, the value of these “invalid” pensions has risen from $600 million a year to $800 million and seems set fair to reach the $1 billion a year mark in the next year or two. This would make these “invalid” pensions the fourth biggest single pension category, after aged, unemployment and family allowance pensions, in that order.

It does not require a great leap of the imagination — nor more than a nodding acquaintance with the facts of life in the streets of our cities — to observe how the “invalid” pension is growing to assume the status of a “right” in our handout society.

This is another “growth area” in handouts, where a government cheque represents a far easier way out than fighting for a job or competing with the ambitions of violent union leaders fighting for ever higher money wages for the able-bodied adult workers (who in a fine ironical twist are nowadays the mugs who through escalating pay-as-you-earn taxation and petrol taxes are paying the lions share of the handout insanity anyway).

(in order of appearance on Economics.org.au)
  1. Advance Australia fascist: The forces that make Australia a fascist country
  2. The Economic Guerrillas: A lecture in honour of Maxwell Newton
  3. Maxwell Newton Audio at Mises.org
  4. Max Newton on Video at first Mises Institute Conference (1983)
  5. Up the Workers! Bob Howard's 1979 Workers Party Reflection in Playboy
  6. Max Newton stars in Ron Paul video
  7. Bunny of the Welfare State
  8. The Crumbling Oligarchies
  9. Is Australia So Bad That It Can't Get Worse?
  10. Max Newton: Cauldron-Journalist
  11. Max Newton: a muckraker makes good
  12. An open letter to Bob Hawke, B. Litt., Oxon; from Maxwell Newton, B. A., Cantab.: In black and white
  13. Welfare Creates Poverty
  14. Welfare State a National Disgrace
  15. A "spy" replies
  16. Ron Manners on the Workers Party
  17. Josh Frydenberg vs Maxwell Newton on Sir Robert Menzies
  18. The traumatic birth of a daily
  19. The Bulletin on Maxwell Newton as Workers Party national spokesman on economics and politics
  20. Menzies: A Legacy of Lies and Legislation Limiting Liberalism
  21. Max Newton: Maverick in Exile
  22. King Leonard of Hutt River Declares Defensive Just War Against Australia the Aggressor
  23. Crying in the wilderness
  24. State aid and the privileged
  25. Maxwell Newton on Reg Ansett
  26. How to stop Labor running wild
  27. 1975 Max Newton-Ash Long interview on the Workers Party
  28. The Working Journalist in Public Administration
  29. Max Newton: controversy is an asset
  30. Maxwell Newton chapter of Clyde Packer's No Return Ticket (1984)
  31. The "irresponsible" way is the only way
  32. Maxwell Newton on Moral Hazard
  33. Maxwell Newton on Handout America and unbridled Welfare Mania in 1980 New York Post
  34. Tony Dear on Paul Krutulis, the Workers Party and murder
  35. Max Newton on the gold standard
  36. Maxwell Newton on ideas for cutting government waste
  37. Maxwell Newton on Bureaucracy
  38. Maxwell Newton measures bullshit tertiary schooling
  39. Australia's biggest newspaper insider on manipulating the media
  40. Never put your faith in politicians
  41. Profiting from propaganda
Powered by Hackadelic Sliding Notes 1.6.5