Month: May 2008

Family finances under familism

~ Andrew Norton ~ 32 Comments

My blog suggestion yesterday that ‘working couples with children’ deserve ‘much less’ welfare assistance attracted some questioning in the post’s comments. NPOV asks

is this from the starting point that you believe almost everyone deserves “less”, and couples with children deserve “much less” because they already get more than everyone else?

Certainly my starting point is the classical liberal one that people are entitled to keep their earnings unless there is some strong reason to tax it away from them. Among the reasons given for taxing, redistribution of cash to families seems to me to be among the weakest. It is not specifically aimed at meeting any need that is generally agreed upon, such as for education or healthcare. It is given to people with incomes that are well above average, who are quite capable of giving their children food, clothing and shelter without any outside help at all.

Though some family welfare meets genuine needs, much of it is redistribution between family types irrespective of need. Recent years have seen a significant improvement in the financial position of families relative to single people and couples without dependent children (though people in the latter still generally have the most to spend on themselves).
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First signs that familism has limits?

~ Andrew Norton ~ 13 Comments

The previous government was extraordinarily generous to families.  According to calculations I did from Treasury’s Intergenerational Reports, the FTBs alone increased, in per person terms, 29% per person between the 2002 and 2007 reports. And that’s not counting the baby bonus or childcare handouts.

Yet according to the 2007 Australian Election Survey, only 41% of respondents thought that the Howard government had become more generous over the last 10 years to ‘working couples with children’. 23% of Australians, who must have been holidaying on another planet during the Howard era, even thought that they had become ‘tougher’ on these working families.

But in this familist time, is there any end to the demands of ‘working families’? According to the AES, 49.5% of respondents agree that ‘working couples with children’ deserve more or much more from the social welfare system. My answer, that they deserve ‘much less’, is supported by a miserable 0.8% of respondents. Even the answer that they deserve ‘less’ support has only 4.5% support. And I thought I had a tough task selling higher education reform.

But some hope comes from this morning’s Newspoll reported in The Australian. About two-thirds majorities support means testing the baby bonus and FTB B, and 57% support means testing childcare tax rebates. And there is majority support for the testing to begin at $70,000 a year, which if based on household income would start to make some serious savings.

Of course I think these savings should be directed to tax cuts, which would in part benefit those same families. Yet this Newspoll, like other recent polling on the subject, finds that support for tax cuts drops (in this case from 66% to 36%) if respondents are told that tax cuts might cause interest rates to increase. But tax cuts financed from reduced family spending ought to be neutral for interest rates, since the total amount ending up in consumers’ pockets will be the same.

Gambling with issue strengths

~ Andrew Norton ~ 22 Comments

As various opinion pieces have pointed out this week, the Liberals are playing high-stakes politics with their budget strategy.

They are going against the conventional wisdom that spending cuts are necessary to avoid future interest rate increases, and instead saying that there is a danger the economy could slow too much. Intellectually, I think this is a defensible position. The budget is a very clunky mechanism for macroeconomic fine-tuning, with its measures unlikely to have any significant effects for months and hard to change if they prove to be misjudgments.

Politically, however, the argument is too complex and risks further undermining the historic issue strengths of the Liberals.

The recently released results from the 2007 Australian Election Survey (a mail-out survey, which closed in March 2008) shows that while more respondents prefer the Liberals than Labor on interest rates, the margin has narrowed significantly since 2004. The 29 percentage point lead the Liberals had after the 2004 election had shrunk to 6 percentage points after the 2007 election. By not being seen to be strong on the interest rate question this is put further at risk.
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Gay marriage delayed but not defeated

~ Andrew Norton ~ 7 Comments

The Rudd government’s decision to block the ACT government’s civil union plans continued to attract criticism this morning, but also a religious defence.

The Australian Election Survey 2007, conducted after last November’s election, provides some further polling evidence on where the public stands on this issue. In a question about whether same-sex marriage should be recognised by law, the public is now evenly divided, with 43.6% in favour and 43.2% against. That’s less than the June 2007 figure of 57% in favour in a GetUp! Galaxy poll, but I thought at the time that this number was suspiciously high and probably due to it being asked directly after a question on various other forms of discrimination against gays. However the AES result is above the 35% in favour in the 2005 Australian Survey of Social Attitudes.

The three polls all had different question wording, but there are some consistent patterns of opinion. Men and women are mirror images on this issue; 34% of men are in favour of same-sex marriage and 53% against, while 52% of women are in favour and 35% against. I can’t immediately think of any other issue on which male and female opinion is so different.
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HECS for sportspeople

~ Andrew Norton ~ 40 Comments

In one of the many possible budget savings that probably won’t be announced next Tuesday, Andrew Leigh suggests charging elite sportspeople for their Australian Institute of Sport education. This is a rare issue on which I broadly agree with The Australia Institute, which put out a paper (pdf) some years ago callling for income-contingent loans for AIS sportspeople, as Andrew L also proposes today.

Currently Australia’s elite sports education costs about $130 million a year, though I could not quickly see how much of that was directly spent on people enrolled at the AIS. Even if all of it was recovered it would not exactly be a major blow against big government, but worth doing.

Governments have, however, long been wary of this idea. I’m not sure whether this is because they think the negative publicity involved with popular sportspeople criticising them outweighs the relatively small financial benefits the scheme would bring to the government, or whether they were worried about triggering ‘HECS for TAFE’ (assuming that the AIS is a glorified TAFE) controversy. Perhaps a bit of both.

Still, if the punters can be conned into structural reductions in spending to supposedly deal with a cyclical inflation problem, we should take advantage of this political opportunity.

Banning political party donations

~ Andrew Norton ~ 19 Comments

Since I last posted on political donations, the debate in NSW has escalated beyond disclosure to prohibition. The SMH was endorsing this route again yesterday. As usual, no serious consideration has been given to the likely consequences of such a move.

Arguably, in the Labor Party unelected party officials and conference delegates already have too much power over elected Labor MPs. They were trying again to exercise that influence at the NSW Labor conference yesterday. If ‘outsiders’ have less access to politicians, then the party insiders, in Labor’s case the unions, will have even greater relative influence. That is not to say that they will always get their way – politicians will usually be more concerned with the broader real-world and electoral implications of policy. But the insiders will proportionately get more of the decision-makers’ time.

But a ban on political donations won’t help political parties, even while it will help party power-brokers. Most of what parties do between elections is fundraising. Much of the social capital element of political parties would disappear without fundraisers. Already parties are suffering from not being able to give members enough to do, and this problem would worsen further if donations were banned. Parties would become quasi-state institutions, rather than being parts of civil society. Continue reading “Banning political party donations” →

Why taxi fares are high and taxi driver wages low

~ Andrew Norton ~ 21 Comments

I don’t often agree with The Age‘s campaigning journalism, but I thought they picked the right cause – if not quite the right argument – in their advocacy this morning on behalf of taxi drivers. The paper led this morning with the heading:


Assault
Abuse
Fair evasion
12 hour shifts
Poor security
All this for $8 an hour

For the benefit of interstate readers, on Tuesday night a taxi driver, like many of them an Indian student, was stabbed by a passenger (who thanks to the cameras installed in cabs was arrested by police within 24 hours). At last report, the driver was still in a serious condition in hospital.

Drivers responded by blocking a major city intersection, eventually forcing the state government to agree to security screens and pre-paid fares late at night.

Though an analysis piece and an editorial did refer to the licence system in the industry, they did not draw the obvious conclusion that it is to blame for the miserable earnings of taxi drivers, despite the seemingly high fares paid by passengers.

The CIS has a long history – though one unfortunately without policy success – of criticising taxi regulation. One of its earliest publications, by Peter Swan in 1979, was a critique of regulation of the Canberra taxi industry. This was followed by articles by commenters on this blog, Jason Soon in 1999, and Christian Seibert in 2006.
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