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Issue #1545      2 May 2012


Indictment of the system

“Government spending on a range of social programs including education, health, housing, subsidised transport, social safety nets and retirement benefits has reached extraordinary levels as a percentage of GDP,” shadow treasurer Joe Hockey told a gathering in London last week. He was delivering a speech to the right-wing, neo-liberal Institute of Economic Affairs under the title “The end of the age of entitlement”. It was music to their ears, Thatcherite to the core.

Entitlement to public education, public health services, unemployment or sickness benefits, the age pension, is coming to an end according to Hockey. Governments must stop providing these public services; it should be left to the private sector. People should provide for themselves, pay the full cost of everything themselves. That is the message.

Hockey gives examples of these “extraordinary levels” of government spending. He says France spends close to 30 percent of its GDP on public social expenditure as though it is a disgrace that the government provides public services and social protection for its citizens. In Australia, Hockey says, public social expenditure is at 16% of GDP, in the USA 20% and in the United Kingdom 23%. Apparently our 16% is dangerously high and must be lowered by cutting government spending. In reality it is a disgrace, one of the lowest rates in the OECD.

Hockey cites South Korea’s example where only 10% is spent on social security and Hong Kong’s low social expenditure. “Without a social safety net, Hong Kong offers its citizens a top personal income tax rate of 17% and corporate tax rates of 16.5%.” Hockey poses two options: “The bottom line is that our communities need to make a tough decision. We cannot choose both higher entitlements and lower taxes. We must make a decision one way or the other.” The Coalition has already made the “tough decision”, their option being tax rates that compete with Hong Kong.

Governments must act soon, as “an inadequate level of revenue has forced nations into levels of indebtedness that, in an age of slowing growth and ageing population, are simply unsustainable,” Hockey says, omitting to mention the billions of dollars of lost revenue due to more than a decade of tax cuts for business and billions of dollars being spent on burgeoning military budgets and wars. He also overlooks the global financial crisis and the crippling debts incurred by governments as they bailed out the financial institutions. To him, it’s all the fault of a society living beyond its means.

“The social contract between government and its citizens needs to be urgently and significantly redefined. The reality is that we cannot have greater government services and more government involvement in our lives coupled with significantly lower taxation,” he said repeating an earlier point. Of course governments cannot continue to provide as they have in the past, let alone improve services, if they significantly lower taxes which are their main source of revenue.

“As a community we need to redefine the responsibility of government and its citizens to provide for themselves, both during their working lives and into retirement,” said Hockey openly admitting his agenda. By redefining the responsibility of government he means abolishing the “welfare state”; privatising public health, education, transport services; and cutting back unemployment benefits and the age pension.

Under its redefined role the government/state would no longer take responsibility for the well being of its people through the provision of public services or income support during times of sickness or unemployment or on retirement. It is called “self-provision”, and those that cannot “self-provide” will be thrown onto the scrap heap or left to the mercy of philanthropists and religious charities.

“Entitlement is a concept that corrodes the very heart of the process of free enterprise that drives our economies,” Hockey adds. In other words, capitalism is no longer prepared to make the concessions of the past, no longer prepared to put back a single cent of its sacred profits into central revenue for the benefit of the people it so ruthlessly exploits. Hockey is the voice of 21st century capitalism, a system which will not and cannot provide basic social security for the people, not even the limited reforms of the past.

Capitalism has clearly passed its use-by date. The future is socialism.


Next article – A tribute to Yindjibarndi Elder Mr Cheedy

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