Towards a circuit-breaker on welfare reform

In a recent post for the Foundation for Economic Freedom, US ethics professor Richard Ebeling revisits the vital role that voluntary associations once played in the United States in providing assistance for those who needed a ‘helping hand’.

In Australia, such voluntary arrangements were also important — but they did not cover the entire population. As Steven Schwartz noted in the Autumn issue of Policy, even at their peak these organisations only covered about 30% of the population. The remaining 70% had to depend on charities or government if they needed help.

“At first government support was minimal,” he explains, “but over time public welfare expanded and crowded out many charities” — with the transition to public welfare occurring especially quickly here.

Decades of state welfare and political paternalism have since conditioned some people to believe they cannot take care of themselves without government support. So they jeopardise their own freedom by giving government increasing authority over their lives while reducing the freedom of others too.

Ebeling does not despair of change, however. He argues that the modern classical liberal agenda needs “to explain and to make appealing the possibilities and benefits of greater self-responsibility in a free society.”

In the new Spring 2017 issue of Policy, Roger Douglas and Robert MacCulloch take up this point about personal independence — what was once proudly known as self-reliance — in outlining a bold package of reforms that would change the system’s incentives.

They show how compulsory individual savings accounts can be established using tax revenues, so a publicly funded welfare system can be changed into a largely privately funded model that promotes individual choice and responsibility.

They use New Zealand as a case study before considering how their ‘savings not taxes’ reforms could be applied to Australia.

Importantly — pace Ebeling — they emphasise that their policies “aim to give low-income earners the opportunity, encouragement and incentive to make some real progress for themselves by themselves.”

In short, to help them regain independence.