The latest issue of Policy has an article by former Costello adviser Dave Alexander defending what he calls Australia’s low-tax egalitarianism.
Compared to other OECD countries Australia’s tax-welfare system combines a relatively low tax take with relatively egalitarian outcomes because benefits are more targeted on lower-income earners. Australia also has unusually high rates of voluntary opt-out from full government entitlements, with many people taking partially subsidised private options in education and health.
For Alexander, this policy mix helps Australia avoid some of the pathologies and dysfunction associated with either high levels of inequality or over-sized government.
The Catallaxy crowd aren’t convinced. And indeed in publishing the piece I expected some flak from my classical liberal comrades. But I thought the Alexander article was a strong one. In my own political life I have always been torn between my philosophical commitment to smaller government and my pragmatic sense of what it takes to achieve even incremental change towards that goal. Politically, relatively low-tax egalitarianism may be the only viable model we have.