The InsIder Winter 07
What the Government
Giveth,
the Government
Taketh Away
By Peter Saunders
In the 20th century, the growth of the state was a
worldwide phenomenon. Now in the 21st century, hav-
ing second thoughts is a worldwide phenomenon, too.
Following is a report from Australia.
—Ed.
Welfare
State
Mindset
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The welfare state developed to support
people who could not afford to look after
themselves: old-age pensions for elderly people
with no savings; help for widows; child pay-
ments for families; allowances for unemployed
people who couldn’t find jobs; financial help
with health costs for those who fall sick.
But Australia is now a much richer country
than it was when these pay-
ments and services were first
introduced. Economic growth
has more than doubled liv-
ing standards in the last 40
years (indeed, real incomes
have risen 25 percent just in
the last 10 years). Rates of
growth this high have deliv-
ered a level of affluence that
our grandparents could only have dreamed
about. We buy houses that are bigger and bet-
ter equipped than ever. We run cars. We take
exotic holidays, and we think nothing of tele-
phoning the other side of the world or flying
to the other side of the continent.
This increased affluence should mean that
most of us can afford to cover the basic neces-
sities of life that our grandparents struggled
to attain—things like private health insurance,
personal unemployment savings or a retire-
ment annuity. But here’s the puzzle:
Given that the welfare state came into exis-
tence to provide necessities for those who
couldn’t afford them, and since we are all
much better off now than we were a couple of
generations back, why is the welfare state still
getting bigger? If more people are in a posi-
tion to look after themselves than ever before,
shouldn’t the welfare state be shrinking?
In recent decades, the welfare state has
become one of Australia’s biggest growth
industries. For exampl