Despite the unprecedented and corrosive bile of the Luvvies and Not Happy John (or what I call Not Happy Now and Never Will Be) crowd, this is an enlightening analysis, that highlights just how close the two main parties are, and how remarkably cohesive Australian political values have been over the past generation.

Still, I remain confused about this weasel phrase “social democracy” just as I can never work out what people are talking about when they say they are interested in “social justice” issues. From my reading, what these people really mean is common garden variety Socialism.

Am I missing something? Please Explain.

Yendis while you have the 1936 EOD open you may want to look up the term ‘Physiocrat’.

ANDREW ELDER, I agree that private ownership of social infrastructure, like public-private partnerships, can often work well and deliver better results for taxpayers and users. What I object to is the presumption that private ownership is always better than public ownership - which is what the freeze on tax levels and on public debt implies. Reliance on private ownership of infrastructure makes sense only if
o the project risks are predominantly commercial in character,
o there is a genuine transfer of risk,
o there is sufficient contestability in financing and service markets,
o private ownership improves managerial performance
o it does not create distortions in resource allocation (e.g in usage of roads) or bias against social infrastructure

These conditions do generally apply for self-funding economic infrastructure but they do not always apply to social investment.

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JC, I have never advocated adopting the Scandinavian model lock, stock and barrel. I have only argued that instead of moving slowly and gradually towards the US model we should tip toe towards the Scandinavian model of equality of opportunity. Despite what Americans think, the US has less income mobility and the battlers have less opportunity for advancement than the Scandinavians and the smaller European countries.

As to which direction Australians want to move, Andrew Norton is the expert but my assessment is that when Australians are simply asked (in polls) if they want lower taxes, there is always a majority saying yes. But when they are asked to express a preference for lower taxes relative to additional spending on such things as health, education and the environment, the responses are much more positive for spending. I suspect however Australians lean towards universalism rather than the targeted spending I advocate.

On government borrowing, it is true that there is probably some public hostility. But this is because politicians misleadingly call it a budget deficit and equate it with bad management and higher interest rates. Australians would respond much more positively if
• government borrowing were linked specifically to particular investment projects;
• the benefits (shorter commuting times, fewer accident risks, improved power availability and water quality etc.) were clearly spelt out;
• they were told that government borrowing for investment purposes is prudentially sound and that, if fiscal policy was well managed, it would have no adverse effects on interest rates.

By setting arbitrary fiscal targets, governments are restricting their own ability to respond to the preferences and expectations of the community.