1. “Getting off the welfare tiger could be dangerous,” The Australian Financial Review, December 15, 1978, p. 3.
2. “That welfare State tiger may eat us in the end,” The Australian Financial Review, July 13, 1979. p. 3.
Bert Kelly, “Getting off the welfare tiger could be dangerous,” The Australian Financial Review, December 15, 1978, p. 3. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 136-38, as “Welfare State (2).”
When the parliamentary session is ended for the year, Eccles leaves the shelter of his ivory tower in Canberra to spend a week with Fred on his farm.
I would like him to stay at our place but Mavis cannot stand him because she thinks that it was Eccles’ insistence that I follow the straight and narrow path of economic rectitude that got me out of Parliament so that I have to wring a reluctant living from the land instead of lording it around as a member of Parliament.
So I went across to Fred’s place to get the latest Canberra gossip from Eccles.
I was not surprised to see Eccles looking miserable.
Economists are taught at the university to wear a hangdog look and Eccles learnt the lesson quicker than most.
As I was eager to catch up with the latest Canberra scandal, such as who was fighting whom, when was the next Cabinet reshuffle going to be, and so on, I inquired if it was the behaviour of members of Parliament that was making him sad. He replied:
No, they are much the same as when you were there.
I have long since given up hope that democracy is going to be saved by the sudden emergence of a new and superior breed of politician.
I know now that we will have to manage with the sort we have. No, it isn’t the politicians that are worrying me at the moment but the economic rocks I see looming.
This did not surprise me because Eccles has been prophesying economic ruin ever since I have known him.
But this time he was worrying about our long-term future rather than what will happen next year.
“We will limp along for a while yet,” he admitted gloomily, “but this Welfare State tiger will eat us in the end if we do not get off it almost immediately.”
Then he brought out the Budget papers, which he always carries with him, which show where most of our Commonwealth money goes.
Most of our money is spent on defence (8.9 per cent), the welfare group (50.4 per cent) and payments to the States (22.1 per cent), much of which is spent on welfare.
That makes 81.4 per cent. To that must be added 6.2 per cent as interest to public debt, making a total of 87.6 per cent, leaving only 12.4 per cent in the remainder column, to run the Government departments such as industrial relations, immigration, transport, treasury and so on.
The welfare component of the Budget is now a considerable burden but what is making Eccles go off his feed is that the position is going to get worse.
The chief reason for this is that the percentage of our population of pensionable age will increase and so the demand for more social services will increase in the future.
The percentage is 11.34 now and it is estimated to rise to 12.25 per cent by 1986.
So the welfare vote will clearly expand even if we do not expand the welfare services.
But the demand for improved services will grow because so many of them are thought to be costless.
The way the health costs have escalated has shown us that. Goods and services we think we get for nothing we use wastefully.
And we have trained our people to depend on the Government and we justify this dependence by claiming that we have been paying high taxes in order to pay the pensions to others in the past, so now it is our turn to be looked after.
So unless we are prepared to take a lot of unpopular decisions, the proportion of future budgets spent on welfare will increase alarmingly and this what is making Eccles so sad.
I suppose we could cut the defence vote but that would be reckless indeed with the world in the mess it is in.
And the 6.2 per cent interest on public debt is likely to increase, with deficit budgeting so common.
We could cut payments to the States but this would be unpopular because the sympathy of the ordinary citizen is always on the side of his State and against the big, bad Commonwealth.
There is, of course, another alternative to cutting the welfare vote and that is increasing taxation.
But this too in unpopular.
And we are already rightly committed to cutting taxes because we are all too well aware that even the present rate of taxation is destroying the incentive of people to work and invest.
I can see then why Eccles is so sad about the future.
Fred and I have learnt the hard way that it is when you are leaving a rough horse that things get nasty; Eccles seems to think that getting off the welfare tiger may be even more dangerous. Yet if we don’t get off him it may well be worse.
He may indeed eat us.
Bert Kelly, “That welfare State tiger may eat us in the end,”
The Australian Financial Review, July 13, 1979. p. 3.
Towards the end of last year Eccles was moaning about the devastating effects of the welfare State.
His message was that if we didn’t get off the welfare State tiger it would eat us in the end.
I will give his figures again: Defence 8.9 per cent, the welfare group 50.4 per cent, payments to the States 22.1 per cent and interest in public debt 6.1 per cent. This makes 87 per cent of the Commonwealth Budget, so clearly, if none of these is to be cut, there will be precious little room for much economic manoeuvring in future.
However, it is not the economic effects of the welfare State that concern me most; far more important to me is the damage done to the spirit of self-reliance of which we used to be so proud.
We have now become like the bears at Yellowstone Park who become so dependent on handouts from passing tourists during spring, summer and autumn, that they are said to have died in large numbers when the stream of tourists dropped to a trickle in the winter.
But what is happening to us is better put by Professor Hartwell in the book The Coming Confrontation published by the Institute of Economic Affairs in Britain. I quote from page 119:
In Britain the responsibilities of government are continually expanding while those of the individual are continually contracting.
There has been, in consequence, a retreat from freedom: as the individual’s responsibilities are taken from him, so his ability and willingness to accept responsibility decline, and government has to take over even more responsibilities.
As government grows more active, the individual becomes more passive and intervention becomes an imperative.
The process is a vicious circle, a responsibility or public trap that has led to the almost universal acceptance of a substantial and increasing role for the State in all our affairs.
Indeed, at a certain point the retreat from freedom becomes a fear of freedom, an avoidance of responsibility, a feeling of helplessness in the face of needs and problems, a willing dependency on, and a fearful servility towards, government and its agencies.
If you want to see examples of such servility at close quarters you should see the representatives of the various industry pressure groups fawning on Ministers [as though] they are [a] government cow.
Sometimes, of course, the fawning turns to blackmail, particularly if there is an election looming.
These groups will parade, with fitting eloquence, their belief that free enterprise is the best philosophy for Australia in general, but you should see them when they are after something for themselves in particular.
Professor Hartwell goes on:
Most increases in government have been achieved by offering inducements, almost invariably economic, and most of such increases have been difficult, if not impossible, to reverse: hence they are aptly described as traps.
The combined effect of such traps has been to produce the “they” complex, the prevailing attitude of mind which, when faced with a problem, expresses itself in the effortless phrase, “they should do something about it.”
If you do not admit that “they” are expected to fix almost everything these days, then you have not been to many political meetings lately.
I guess that Labor Party meetings spend most of their time begging or demanding that the Government “they” kiss almost everything better because this is their avowed philosophy.
But at Liberal meetings we spend most of our working time asking for some kind of government intervention or other.
It is true that we usually begin our meetings by making ostentatious obeisance at the private enterprise shrine but we seldom allow these formalities to distract us from our stern determination to buy popularity by sacrificing this principle on the altar of political power.
I have no inside information as to how the Country Party meetings overcome any philosophical problems of this nature they may meet.
But I have a shrewd idea that they would not waste too much time and effort worrying about such niceties; if the government cow was in the bail, they would just grab a big bucket and go to it.
They are a bit like Ginger, who when the retreat was sounded, said he didn’t want to be hindered by any plurry horse.
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