Ideas@TheCentre – The Centre for Independent Studies


Ideas@TheCentre brings you ammunition for conversations around the table.  3 short articles from CIS researchers emailed every Friday on the issues of the week.

Crowding of the welfare state is detrimental to everyone

02 March 2012

Prime Minister Gillard’s victory speech after defeating Kevin Rudd for the leadership of the Labor Party on Monday raised some important issues for those interested in public administration.

To emphasise that the federal government was now ‘moving forward,’ the prime minister spoke of her devotion to finding ways to improve the lives of all Australians. She also reiterated the government’s commitment to ‘getting on’ with the National Disability Insurance Scheme (NDIS) to help the most vulnerable members of the community.

Mentioning support for the NDIS has become a common refrain in political interviews. Any politician looking to humanise their image and identify with the underdog gives the disabled a metaphorical hug.

The notion that politicians have discovered how useful the NDIS is as a rhetorical prop is certainly cynical. There is of course a genuine need for greater awareness of the challenges facing people with disabilities and to recognise how inadequate disability services often are.

Hence it is a good thing that doing things differently in this sector is on the national agenda. Yet this begs a question that has received insufficient attention: Why is it that government has grown so large in the name of creating a welfare state that has demonstrably failed to properly secure the welfare of those who require the greatest assistance?

The obvious answer is that instead of targeting assistance towards the genuinely needy, politicians prefer, as per the prime minister’s speech, to operate universal or quasi-universal programs that help ‘all Australians’ and are most likely to harvest the all-important ballots of marginal voters come election time.

Hence in this country we have the spectacle of government doling out generous family, pension and health entitlements to the middle classes and above who ought to be self-reliant, while the most disadvantaged, including the disabled and the mentally ill, receive well below par support.

Those on the Left have hailed the NDIS as another great leap forward for social justice. They ignore the incongruity of piling a new welfare scheme for the disabled on top of the existing welfare state. Similarly, the problem of ‘middle class welfare’ only attracts the Left’s attention in relation to pet ideological hates – such as the private health insurance rebate.

The Left also downplays the obvious problem of cost. It is entirely likely that despite expressions of bi-partisan support, both sides of politics will baulk at the hefty price tag of the NDIS. In other words, all of the unnecessary but politically important welfare provided to those who don’t need it will continue to crowd out assistance to those who do.

Those on the Right who criticise ‘big government’ are often called heartless and accused of not wanting to help the disadvantaged. But it is only by limiting the role of government, and ending the charade that is the contemporary welfare state, that we can help those most in need.

Dr Jeremy Sammut is a Research Fellow at The Centre for Independent Studies.



Wasteful energy

02 March 2012

By providing capital to subsidise clean energy projects, the CEFC aims to reduce Australia’s carbon emissions. But the government has multiple climate change policies, including the Emissions Trading Scheme (ETS) to cap greenhouse gas emissions from 2015, a situation in which the CEFC cannot succeed.

Economic logic says if a fully implemented ETS will determine the total amount of emissions for the economy, why subsidise alternative energies at all? By its very construction, the amount of carbon emissions would not change but the price of the right to pollute would be reduced. This may be good for polluters but it is of no consequence to the environment.

In terms of ineffectiveness, the CEFC is going to beat all previous programs – such as Pink Batts, school halls, or Roads to Recovery – that produced dubious outcomes. Under a comprehensive, fully functioning ETS (big assumptions, of course), the CEFC will yield a carbon dioxide saving of precisely zero grams.

A $10 billion cost for a non-existent benefit should secure the Australian government a place in the Guinness World Records for the most wasteful climate change policy. Alas, the German government has already usurped that honour.

For more than a decade, Germany has been trying to combine subsidies for renewable energies with the European Union’s cap-and-trade scheme at a cost of more than $15 billion per year. Even the German government’s own economic advisors have repeatedly stated that these subsidies cannot lower overall emissions as they are locked in via the European Union’s ETS. Unfortunately nobody is listening to them. What do economists know about the environment anyway?

Given Germany’s disastrous experience with this so-called energy policy, it is astonishing that any other country would want to copy it.

Australia is trying to return the budget to surplus, so a saving of $10 billion would be handy. But blinded by activism and without a sense of economic logic, Australia is bound to waste both money and energy.

Dr Oliver Marc Hartwich is a Research Fellow at The Centre for Independent Studies. His report, A Waste of Energy—Why The Clean Energy Finance Corporation is Redundant, was released on Thursday.



Southeast Asia’s American Embrace

02 March 2012

In November 2011, Barack Obama made his first (and long-awaited) official visit to Australia. Australia and the United States share a close relationship, but this visit was more significant than usual.

With wars in Iraq and Afghanistan winding down, and the global centre of economic gravity shifting to Asia, Obama came to Australia not just to bolster our alliance but to sell a message: America’s strategic ‘pivot’ towards the Asia-Pacific.

In his speech to the Parliament, Obama announced the strengthening of our defence cooperation, primarily by increasing the number of US troops stationed in Darwin. But this speech, like his other speeches throughout the weeklong Asia-Pacific tour, was also crafted for a wider Asian audience.

A few weeks before the tour, US Secretary of State Hillary Clinton began outlining this policy shift. In a cover story for Foreign Policy, she said: ‘One of the most important tasks of American statecraft over the next decade will … be to lock in a substantially increased investment – diplomatic, economic, strategic and otherwise – in the Asia-Pacific region … We are prepared to lead.’

America has long been the preponderant military power in Southeast Asia. But since the end of the Cold War, it has been dogged by the perception that its interest in the region has waned – sentiments exacerbated by terrorism and Washington’s focus on wars in the Middle East.

Now with China emerging as a major world power, and tensions in the hotly disputed South China Sea running high, America is especially keen to bolster its leadership credentials in Southeast Asia.

Southeast Asian countries approach America and China quite differently, but all see America’s presence as a useful way of balancing a growing China. Recent dramatic policy shifts by Vietnam and Burma highlight this. Many of these countries have only recently been free of colonialism, and value regional autonomy and sovereignty above all else. They may have different reasons for welcoming America’s renewed interest in the region, but they welcome it nevertheless.

Jessica Brown is a Research Fellow at The Centre for Independent Studies. This is an extract of a speech she will give on Tuesday evening at the CIS. Click here to register for this event.