Friday, November 01, 2013

The age of entitlement really is over

The hardest task in life is to say no to someone you care about.  A weak government tends to give its citizens everything they wish for.  A strong government has the will to say "NO!''

That's from Joe Hockey's The End of the Age of Entitlement speech at the Institute of Economic Affairs in London in April last year.  The NO in capital letters is exactly as in Hockey's original.

It's an important speech and a good one.

However, it's one thing to say it to a free market think tank in another country while you're in opposition.  Now that Hockey is Treasurer he must say it to his ministerial colleagues while they're sitting at the cabinet table four feet away from him.  Hockey must put his words into action.  He must say NO to Holden's demands for more taxpayers' dollars.  And then he should say NO to calls for taxpayer bailouts of food companies.

Hockey is right.  The age of entitlement is over.  In his speech he talked about the welfare entitlements of individuals.  Everything he said about individuals applies to corporations as well.

"As the electoral pendulum has swung between socialist and conservative sides of politics, the socialist governments — often winning electoral success thanks to the funding from unions — have created a huge array of entitlements for selected classes of individuals."

After "individuals" Hockey should have added "and industries".  It's reassuring that earlier this week he said:  "We are not running down the street, chasing an individual car maker with a blank cheque."

The trouble is it looks like that's exactly what the Coalition is doing.  Which is not anything different from what Labor did.


Hockey's assessment of what "economic liberals" usually do is spot on:  "When the electoral pendulum swings, conservative governments have come in promising to fix the problem, but in most instances have just trimmed around the edges without addressing the real problem of the growing entitlement burden."

Yet another inquiry on the car industry, this time by the Productivity Commission, can only be described as a cop-out.  There's nothing about Australia's feather-bedded, inefficient, indulgent-of-the-unions automotive sector that hasn't been known for decades.  It's a cop-out with consequences though.  Every week a decision is delayed is a week closer to the next federal election.  If ever there was a time to say "NO more money" it's immediately after a resounding election victory.  Hockey identified the two reasons why the age of entitlement cannot continue.  The first is simply that the current welfare system is financially unsustainable.  The second is that the system is unfair.  The Treasurer talked about the unfairness of the current generation borrowing from future generations to pay for a lifestyle that future generations will themselves never be able to afford.

What Hockey could have pointed out, but didn't, was the double standard of much of the political left.  On the one hand, for "the sake of the children" the Left urges a reduction in the standard of living of the present generation by cutting carbon dioxide emissions, yet at the same time the Left supports a burgeoning welfare state paid for by those future generations the Left says it cares so much about.

As Niall Ferguson wrote last year, a few weeks after Hockey's speech, the public debt of governments around the world "allows the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn".  Young people should welcome austerity and "if young Americans knew what was good for them, they would all be in the Tea Party".

There's another point about fairness when it comes to industry assistance.  It's unfair to protect some industries and not others.  Which is precisely the point made by National senator Bridget McKenzie when she called for government money for struggling food producers.  "Governments have supported car manufacturing to the tune of about $10 billion over seven years, while agriculture subsidies remain very low compared to international standards."

That's a fair point.  But the answer is not taxpayers' dollars to food companies.  That's a guarantee our food industry will eventually end up like the car makers.

The answer is NO taxpayers' dollars to either industry.

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