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Confronting the welfare culture is a political risk

7 July 2012 1,777 views 2 Comments

WITH far too many exceptions, a new sense of reality seems at last to be dawning across the governments of Western nations that the age of entitlement may be coming to an end. British Prime Minister David Cameron took a leadership role by proposing a stunning blow to a population long accustomed to feeding at the public teat.

Cameron has decided to take on the culture of entitlement that has become an ingrained component of the welfare state.

In doing so he’s taking a political risk, but the stark reality is that “lifters” in any economy must outnumber the “leaners”. “There are few more entrenched problems than our out-of-control welfare system, and few more daunting challenges than reforming it,” Cameron said.

After the multi-billion-dollar bank bailout in Spain and the protracted election process in Greece, we are seeing the new government in Athens pursuing unpopular austerity measures imposed by Germany and the European banks. Now, by zeroing in on the welfare state, Cameron is attacking those who claim they are owed a state-funded entitlement.

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Trust France to be out of step. Newly minted President Francois Hollande would rather lower the retirement age and impose punishing new taxes on the rich that will force the wealthy to leave the Republic in droves. Instead of going in the same direction as 28 of 34 of his OECD partners in increasing the retirement age, the new French President has done the opposite.

But across the Channel, Cameron says a serious debate is needed on the idea that citizens should receive something for nothing. “Raising big questions on welfare, . . . might not win the government support,” he announced in a speech in Kent.

“Frankly, a lot of it might rub people up the wrong way. It’s about the kind of country we want to be. It’s about doing what is right for our country, not just for today but also for the long term.”

Cameron is keen to take the biggest of axes to a system he describes as “mind-numbing”, “complex” and full of unfairness. So it is instructive to note the timing of words delivered in London three months ago by Australia’s opposition treasury spokesman Joe Hockey before a group of Tory backbenchers at Westminster.

In a speech called The End of the Age of Entitlement, Hockey told them Western nations had lived beyond their means for too long, that now was the time for an end to the expectation that governments would continue to provide for all. In other words, citizens need to take more responsibility for themselves.

Some domestic commentators criticised him, but Hockey is unbowed in his determination to send a message to Western countries, including Australia, that demographics and debt are tearing down the era of welfare largesse. A restless group of Tory backbenchers had been pressing their leader for a dramatic overhaul of Britain’s welfare state, so Hockey’s timing was prescient.

With a pound stg. 90 billion ($136bn) budget deficit — 6 per cent of gross domestic product — Cameron knows any reform to the culture of entitlement is a political and economic imperative.

With pound stg. 1 in every pound stg. 3 of British government expenditure being poured into welfare, Cameron has reassured his backbenchers, who are constantly receiving knocks at their electorate office doors from furious constituents sick of subsiding others: “Those within (the British welfare system) grow up with a series of expectations: you can have a home of your own, the state will support you whatever decisions you make, you will always be able to take out no matter what you put in. This has sent out some incredibly damaging signals. That it pays not to work. That you are owed something for nothing.”

Cameron highlighted the young couple both employed full-time in service industry jobs, together earning pound stg. 24,000 versus a couple who have never worked, have four children, get paid pound stg. 27,000 by the government. Little wonder the Prime Minister said: “Can we really say that’s fair?”

Under Cameron’s proposed reforms, welfare for families would be capped at pound stg. 26,000, while the young unemployed would be forced to live at home rather than automatically qualifying, as now, for government housing.

The yowls of protests across Britain were loud and fierce, but this was a calculated risk by Cameron. He knows welfare may consume a large part of his budget, but the majority of citizens are honest, hard-working people wanting to get ahead because of hard work, not handouts.

Margaret Thatcher, not a usual source for me, said in a 1975 New York speech as opposition leader that the age of personal responsibility was finally being revived.

She commented: “It’s not that our people are suddenly reverting to the ideals of laissez-faire. Nor are they rejecting the social advances of recent decades. It’s rather they are reviving a constructive interest in the noble ideals of personal responsibility.”

Thatcher was right, but sadly it has taken 37 years for this start to come to fruition.

At its core, personal responsibility means the rejection of entitlement. If an individual chooses to work hard and obtain a decent job, this means they are earning their income, not receiving it as a handout — and they expect their compatriots to do the same.

Voters, especially those who pay no tax, care little for the preferences of future generations.

Spending on Australia’s welfare bill is also about a third of the total outlays of the federal budget.

Australians resist when told they could lose middle-class welfare tax breaks and payments, but at the same time any poll will also show they want their governments to spend more on health and education.

Both sides of politics know this is unsustainable, yet neither has displayed the political will to take it on. Short-term populism has so far won every time.

Once the carbon tax debate ebbs away, as it surely will, the Labor government will still be a hostage to welfare — how else can it protect its disappearing base and placate its union mates?

Unlike Britain, where Prime Minister Cameron has at least outlined what should be done, Australia is lagging in rigorous intellectual debate — the Hockey contribution so far being a rare light in a fog of inaction.

No matter how tough it is, the tough questions will have to be asked. In summary, it’s time for us to grow a backbone, not a wishbone.

Ross Fitzgerald is the author of 35 books, including his memoir, My Name is Ross: An Alcoholic’s Journey, and the political satire Fools’ Paradise

The Weekend Australian July 7 -8, 2012, Inquirer, p 24.

2 Comments »

  • Angela Cmende said:

    Dear Prof. Fitzgerald,

    The really good thing about having lived 70 years, as I have, is that you can remember so much! [so far no Big A]

    In the 1970s, when mass middle-class welfare was being handed out like lollies by political opportunists, part of that “sense of entitlements” being fostered was that all school-leavers should automatically be enrolled for unemployment benefits. Noone had to look for a job, first, or anything distasteful like that. I protested violently at the time, that one could not be “unemployed” before actually seeking , and not finding, employment, and that this would lead to a culture of gimme, gimme, detrimental to Australia.

    Guess what happened? Now three generations on welfare, with no intention of ever working, thank you very much, despite what those earnest commentators who live in upper echelon areas choose to believe and spruik.

    Since I have always lived in lower socio-economic areas, I see what those commentators refuse to see. Universal talk of “payday”, where noone has ever worked; a society where people on welfare “earn” more disposable income than low-paid workers, plus have other benefits, as per your article.

    Oh Prof. Fitzgerald, your article rang clarion-clear to someone who never allowed her children to register for any dole, and worked all her life, from being a young widow, to rear and educate four children.

    I have lived through generations of gutless politicians now, and an Australia which is thought to respond only to a “hippocket nerve”.

    I pray we will change from the Culture of Entitlement.

    Thanks.

  • Alan Jones said:

    **ALAN JONES PROGRAM**
    **12 JULY 2012**
    **INTERVIEW WITH PROFESSOR ROSS FITZGERALD**

    ALAN JONES:

    It is the theme articulated by the academic and Labor historian Ross Fitzgerald, the author of 35 books, including his memoir My Name is Ross – an Alcoholics Journey, a fantastic piece about the scourge of grog – that is another story. He recently wrote a piece which said “A new sense of reality seems at last to be dawning across the governments of Western nations that the age of entitlement may be coming to an end.”. Lets go to Ross Fitzgerald because that is exactly what I have been saying, it is what Don Argus has said, it is what Jeff Kennett has said, we are loopy! We have got governments living way beyond their means and the kids of tomorrow are going to pick up the tab. Professor Fitzgerald, good morning.

    PROFESSOR ROSS FITZGERALD:

    Lovely to talk to you Alan.

    ALAN JONES:

    Thank you for your time. You are a bit more optimistic than I am. Do you think a new sense of reality has dawned?

    PROFESSOR ROSS FITZGERALD:

    Well I don’t think it has dawned in the Gillard government, it is beginning to dawn, it is certainly dawning in England where the Prime Minister, David Cameron, has spoken about the end of the age of entitlement, as has Joe Hockey here in Australia. But it is not true of our Government.

    ALAN JONES:

    No.

    PROFESSOR ROSS FITZGERALD:

    Our spending is just absolutely unsustainable. Especially our spending on welfare. We spend a third of all the money we have got, or haven’t got, on welfare. There needs to be an end to this sense that everybody is entitled to whatever they want, whether they work or not.

    ALAN JONES:

    Yes. We have become a very dependent society, rather than an independent society.

    PROFESSOR ROSS FITZGERALD:

    That is certainly true and the notion of individual responsibility has flown out the window.

    ALAN JONES:

    You cast a very very good analogy when you said “The lifters in any economy must outnumber the leaners.”.

    PROFESSOR ROSS FITZGERALD:

    That is absolutely true. That is especially true in an ageing society. We need a fundamental reassessment – and it has to be done soon.

    ALAN JONES:

    But Gillard and Swan are attacking the lifters – the mining industry have copped it left, right and centre. They have vilified Andrew Forrest and Clive Palmer and everybody, haven’t they?

    PROFESSOR ROSS FITZGERALD:

    They certainly have.

    ALAN JONES:

    And they are the lifters.

    PROFESSOR ROSS FITZGERALD:

    The reality is we are going out backwards at the moment.

    ALAN JONES:

    Yes, you have those bailouts in Span, and the problems in Greece. Do you think governments have got the message yet? The rule we seem to operate by is if in doubt, government will fix it.

    PROFESSOR ROSS FITZGERALD:

    I think that is certainly true of the public at large. That is where people like you, influential people in the media, need to get people thinking and realise what a critical state we are in.

    ALAN JONES:

    That it is unaffordable. I have gone on and on, Ross, about, for example, a simple thing, Medicare. The taxpayer shouldn’t have to pay my health bills. But I could have the most expensive operations on the planet, in public hospitals, and others would pick up the tab. No one has the guts to tackle it. You would save $50 billion if you said to people ‘Listen, if you want to have 10 beers a day, and 15 pies a day, when you fall down in the middle of Macquarie St with a heart attack, don’t expect someone else to pick up the tab’.

    PROFESSOR ROSS FITZGERALD:

    Yes, that is certainly true, and it is certainly true of the abuse of alcohol and other drugs, which are jamming our public hospitals. At St Vincent’s Hospital – and it is not just at the weekend anymore, it is any day or night of the week – they are crammed full of people who have suffered the effects of alcohol and other drugs.

    ALAN JONES:

    They are addicted. That is it. And, of course, someone else will pick up the tab. I mean the National Broadband Network, if business wants faster internet speeds, business will provide that. That is the nature of a competitive environment. You would save another $50 billion there, but where have we got this money? It is borrowed money!

    PROFESSOR ROSS FITZGERALD:

    That is indeed the case. Nothing comes out of nothing.

    ALAN JONES:

    Nothing comes out of nothing. I just listen to these things, $5.6 billion for a social housing program we are now told won’t pass the value for money test. Ross, even in your fertile imagination, how could you spend $21 million furnishing federal parliamentary offices?

    PROFESSOR ROSS FITZGERALD:

    I hadn’t heard that, and that is an astounding figure.

    ALAN JONES:

    We are all for literacy and numeracy, but you farm out $332 million to the states, and the Auditor General says the money has achieved nothing in terms of improved literacy and numeracy. We are just chucking money away. It is what you said in your essay, it is unsustainable.

    PROFESSOR ROSS FITZGERALD:

    That is absolutely true. And I think people have a false sense of reality in a place like Australia, because we seem to be doing well, but the reality is we are spending money hand over fist. Money that we haven’t got.

    ALAN JONES:

    $4 billion of taxpayers money spent on 3472 school libraries, but now we are suddenly being told that schools are becoming cyber smart, close the libraries because the current kids are reading online. $4 billion!

    PROFESSOR ROSS FITZGERALD:

    Well as you point out, Gillard was the responsible Minister for Education. The so-called ‘education revolution’ was an enormous waste of money, and still is.

    ALAN JONES:

    You have quoted the British Prime Minster Cameron saying a serious debate is needed on the idea that anyone should receive something for nothing.

    PROFESSOR ROSS FITZGERALD:

    That is true, and that sense of entitlement pervades the whole society. The leaders of our society have a responsibility to point this out, as Don Argus did so well.

    ALAN JONES:

    And Bob Carr is giving a billion dollars to Afghanistan. It just doesn’t make sense, does it? Cameron used the phrase ‘mind numbing’ he said he found the welfare system mind numbing. I find it mind numbing the notion that governments can spend money they don’t have.

    PROFESSOR ROSS FITZGERALD:

    That is right, and certainly when you and I were brought up, it was made very clear that you can’t spend money that you don’t have.

    ALAN JONES:

    And that is what Newman I thought said in The Spectator talking about the third way, we will all be warm and fuzzy and caring and everyone is equal and everyone will have a job and it was Margaret Thatcher that says ‘You run out of other peoples money.’. Now Joe Hockey made that point three months ago in London, and he was vilified, he said ‘Western Nations have lived beyond their means for too long’.

    PROFESSOR ROSS FITZGERALD:

    That is true, and the speech that he gave to backbenchers in London – The End of the Age of Entitlement was the title of his speech – was extremely well received and it looks like Mr Cameron, the Prime Minister of Great Britain, has followed up on that idea.

    ALAN JONES:

    Yes. Cameron cited an example, didn’t he? A young couple, both employed full time, rolling up their sleeves, working hard, earning 24,000GBP, and then he cited a couple who have never worked, but they have four children, and they also will also pull in 27,000GBP in welfare.

    PROFESSOR ROSS FITZGERALD:

    No, they actually got more.

    ALAN JONES:

    They got more than the two people that were working?

    PROFESSOR ROSS FITZGERALD:

    That is right.

    ALAN JONES:

    It doesn’t make sense, does it?

    PROFESSOR ROSS FITZGERALD:

    It certainly does not.

    ALAN JONES:

    You talk at a lot of places, as do I. Do you think there is a change, an intellectual change, that we understand that we can’t go on the way we are?

    PROFESSOR ROSS FITZGERALD:

    You said I was an optimist earlier Alan, unfortunately my perception is I don’t think this fundamental idea has taken root, or certainly taken root properly.

    ALAN JONES:

    No, welfare is a third of our Budget. It is unsustainable to go on with our Medicare system, it is unsustainable to go on shovelling money out to Afghanistan and Syria and Spain.

    PROFESSOR ROSS FITZGERALD:

    And it is unsustainable to have an idea that people who don’t work, no problem, they just get paid for everything.

    ALAN JONES:

    Jeff Kennett – I had dinner with him the other night – he just shook his head. He said Victoria was broke when he became Premier and he said to me that now we are just taking Australia down the same road. It has got to start somewhere, doesn’t it?

    PROFESSOR ROSS FITZGERALD:

    It has got to start somewhere, but unfortunately it is not going to start at our current Prime Minister. Ms Gillard is the most incompetent Prime Minister we have ever had in Australia.

    ALAN JONES:

    And you are a Labor historian.

    PROFESSOR ROSS FITZGERALD:

    Indeed.

    ALAN JONES:

    You have seen them all. You have written about them – Theodore and everybody.

    PROFESSOR ROSS FITZGERALD:

    Yep.

    ALAN JONES:

    I loved the bit you said – I thought it was the best, the final sentence of your essay was the best, you said ‘it is time to grow a backbone, not a wishbone’.

    PROFESSOR ROSS FITZGERALD:

    I am glad you liked that because I think that summarises what I am trying to explain to the Australian people.

    ALAN JONES:
    That is why I wanted to share it with our listeners this morning. Thanks for talking to us.

    PROFESSOR ROSS FITZGERALD:

    Lovely Alan.

    ALAN JONES:

    There you are, there he is, Professor Ross Fitzgerald.

    [ENDS]

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