Media Releases
A Streak of Hypocrisy
THIS YEAR’S CHRISTMAS LUNCH FOR RETIREES WILL BE AT THE EXPENSE OF YOUNG TAXPAYERS
Net household saving in Australia have plunged from 12% of GDP in the 1960s to around 5% today.
Borrowing to purchase housing at inflated prices, and credit-driven consumption in excess of current incomes have meant that Australians are no longer saving for a rainy day. And the forecast is not looking good.
In a new report released by the Centre for Independent Studies today, A Streak of Hypocrisy, Dr Jeremy Sammut says that ‘household savings have collapsed due to an unnecessary dependence on welfare handouts. A new era of thrift is overdue!’
‘Instead of using the good economic times to solve the intergenerational inequity in healthcare financing, the federal government spent tax surpluses on expanding the welfare state and increasing dependence on the government and debt,’ says Dr Sammut.
The Rudd government has continued this legacy of irresponsible spending by taking taxes from future generations to hand out billions of dollars of bonus payments to elderly voters in its economic stimulus package.
‘The welfare state—which is, after all, a gigantic system of living beyond one’s means—has changed our attitude towards saving. Since the 1970s growth of the welfare state has undermined the expectation that people should be thrifty and take responsibility for their own needs,’ says Dr Sammut.
If the government promises to provide taxpayer-funded pensions and ‘free’ healthcare, individuals no longer have to save and pay their own way.
‘Why sacrifice and save your own deposit when the government hands out grants to help you buy your first home?’ asks Dr Sammut. ‘Why put money aside to cover old-age healthcare costs when Medicare and younger taxpayers are forced to foot the bill?’
Government sponsored living beyond our means has become part of the national way of life.
Without adjustments to existing health policy arrangements or cuts to public health services, future taxpayers will face as much as a 40% increase in income tax over what is paid by current generations, to fund the ageing-fuelled cost of Medicare on a smaller base of workers.
Sammut’s report outlines a variety of models of health savings accounts which would enable people to save to pre-fund their own healthcare instead of depending on Medicare and tax transfers to prop up an already overburdened and creaky health system.
The report is available at www.cis.org.au/policy_monographs/pm90.pdf
Dr Jeremy Sammut is a research fellow at the Centre for Independent Studies.
He is available for comment.
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