Economics

Bob’s contribution to the Australian community has been reflected in a wide range of appointments including National President of the Housing Industry Association, Co-Founder and Inaugural President of Independent Contractors of Australia, Director of The Centre for Independent Studies, and Senator for South Australia.

There Is No Such Thing As A Free Lunch

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11 July 2023

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Although commonly attributed to Nobel Laureate Milton Friedman, the expression “There ain’t no such thing as a free lunch” long predated him.

In fact, it described the practice of saloons (bars) offering a “free” lunch to patrons who purchased at least one drink. The luncheon was generally high in salt (cheese, salted crackers, nuts), enticing patrons to purchase generous volumes of high-priced beer. If you weren’t paying attention, and fell for the trap, you wound up paying much more for the “free lunch”. The exploitation of a cognitive bias leads to over consumption (eg cheap and poor quality food) and over payment (eg through purchase of excess beer).

Which brings us to Australia – the land of the free and home of the expensive. Not free as in freedom, but free as in government delivered services including healthcare and education that are perceived to be free. And as with the salty food, there is over consumption and excessive cost. Like the free lunch, Australians do not get free healthcare or education. Every single one of us pays; just in a different way.

Healthcare is funded through the Medicare levy and general taxes at the State and Commonwealth level, including income tax and GST. So, whether you are a billionaire or on welfare, you are paying taxes that fund healthcare. And because healthcare is presented as “free”, there is inevitable overconsumption and waste.

Referencing Milton Friedman again, he observed that there are essentially four ways to spend money:

You can spend your own money on yourself.
You can spend your own money on someone else.
You can spend somebody else’s money on yourself.
You can spend somebody else’s money on somebody else.

When you spend your own money on yourself, you are very careful because you are looking for value. You won’t be as careful when you spend your own money on someone else, but you will look for value.

When you spend somebody else’s money on yourself, you are more interested in making your life comfortable than achieving value, but you will at least expect to gain a benefit.

Healthcare falls into the fourth category, of spending other people’s money on somebody else. There is no incentive to pursue value at all.

While we pretend healthcare is free, in reality it is bureaucrats in offices spending other people’s money on others. That includes finding new ways to expand their domain.

Consider the Commonwealth Department of Health and Aged Care. According to its 2021-22 annual report, at 30 June 2022

It employed 5,154 persons – up from 4,450 the year prior,
These staff cost $697 million – up from $559 million the year prior, and
Its operating expenses were $1.3 billion – up from $1.1 billion the year prior.

All this and yet the department did not operate a single hospital or aged care facility.

According to the Australian Institute of Health and Welfare (a government body), in 2020-21, total health spending in Australia was over $220 billion of which over 70% was government (Commonwealth, State, and Territory). That does not sound very free.

A government commissioned review also found that perhaps 10% of the Medicare program was subject to waste and fraud. Why? Perhaps because governments are spending somebody else’s money on somebody else.

This is not to suggest that there would be no government health expenditure if this charade of free healthcare was ended. It might however lead to a much more responsive and cost-efficient system. Consider how much lower taxes could be, or how much higher pensions might be, but for the inefficiency and waste of Australia’s “free” healthcare system.

We are told by Professor Duncan Maskell, the Vice-Chancellor (CEO) of the University of Melbourne, that “one of the most important radical changes that could be made to facilitate this would be once more to make education free to the Australian domestic student”. Australia already has an over-production problem of university graduates, and Maskell’s proposal would make it even worse. Why? Because universities would be spending somebody else’s money on somebody else.

To make university education “free to the Australian domestic student” would require someone else to pay for it, including those who do not and will never attend university. It wouldn’t be free; it would just be paid for by someone else.

If Professor Maskell, who is reported to be on an annual salary package of $1.5 million, really wants to make university cheaper and/or free for students, he should first look in his back yard. According to the Melbourne University annual report, in 2022 it had approximately 53,000 students and employee related expenses of $1.6 billion. That’s approximately $31,000 per student. It would certainly make the cost of education much lower if Professor Maskell and all his staff worked for free.

Dimitri Burshtein is a Principal at Eminency Advisory and a former government policy analyst. He is a contributor to The Australian newspaper, Spectator Australia magazine and various libertarian blogs. Dimitri has also appeared on SkyNews and 2GB radio.

The Right To Keep and Bear Cash

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10 July 2023

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A libertarian friend called me at 6.30am last Tuesday whist I was riding the train to work. “How do you start a community bank?” he asked. My friend lives in rural NSW and as they say in the country, he is “jack” of the major banks.

“The banks are closing one after the other and the ATMs are disappearing too. Which means cash is disappearing. We need to get our own bank around here”.

This issue is fast becoming mainstream, reported in media outlets including the ABC, News, and Sky in the past seven days alone.

Rural folk love their cash for practical reasons. Libertarians love it for ideological ones, which some might find ironic given many libertarians also advocate the end of fiat currency and its replacement with gold or crypto.

But here is why libertarians hold cash dear:

1. Financial Privacy
Cash transactions provide anonymity and privacy. You can do your business without a centralised authority monitoring your every move. Electronic payments can be tracked and monitored by banks, governments, or other third parties, potentially compromising your financial privacy.

2. Vulnerability To Surveillance
Electronic payment systems create a digital trail of transactions, creating an incentive for governments and corporations to collect vast amounts of data on your purchasing habits, preferences, and of course personal information.

Cash means you can do your business without a centralised authority monitoring your every move.

3. Government Tyranny
A shift toward electronic payments can give governments greater control over our financial activities. They can potentially freeze or confiscate funds, impose restrictions on transactions, or even manipulate the monetary system to suit their own interests. This would never happen, right? Ask the Canadian truckers or Nigel Farage.

4. Vulnerability To Cyber Threats
Relying solely on electronic payments increases the risk of cyber attacks and fraud. Carrying cash comes with its own risks, sure, but cash can’t be hacked. Major corporations are getting hacked left and right. Who is safe?

5. Exclusion of Marginalised Communities
Not everyone has access to electronic payment methods. Not all communities have the same infrastructure as large cities. Denying communities which rely on cash for their daily transactions is surely discriminatory.

6. Dependency On Intermediaries
My economics professor used to say, “the more you cut up the cake, the more of it sticks to the knife”. Electronic payments typically require intermediaries, none of which provide their service for free. And for every intermediary in the transaction chain, there is another point of control and vulnerability as users become subject to the policies and regulations set by these intermediaries. Look what happened when Israel Folau tried to raise a ‘Go Fund Me’ for his legal fees.

7. Limitations On Personal Choice
Cash provides individuals with a tangible and universally accepted form of payment that can be used freely and without restrictions.

8. Infringement On Property Rights
Cash represents physical ownership. You hold it in your hand. It’s yours. Property rights are infringed when you are forced to rely on electronic representations of money stored at the pleasure of others.

9. Impact On Small Businesses
Cash transactions offer certain advantages to small businesses, reduced transaction costs and the ability to avoid credit card processing fees for a start. Denying small businesses the opportunity to trade in cash makes it harder for them to compete with their corporate counterparts. Libertarians believe in free markets, not markets distorted in this way.

Are ‘Community Banks’ the answer? Stay tuned.

Nicholas Samios is a fund manager and small business investor with a wealth of experience spanning three decades in commercial finance and SME capital raising. In his spare time, he puts on his “Austrian School” economist hat and utilises his insights from the commercial
world to analyse the economic landscape for SMEs and entrepreneurs.

The Libertarian Solution To Offshoring’s Inevitable Dilemma

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4 July 2023

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Libertarian principles support free labour markets, highlighting the benefits of voluntary transactions and flexible negotiations for driving economic growth. However, excessive government intervention can restrict labour market freedom and limit economic opportunities, leading businesses to resort to offshoring as a cost-saving measure.

This article does not criticise offshoring itself; instead, it explores the unintended consequences of government policies that result in a highly leveraged workforce. Similar to the risks and benefits of high levels of debt to a household, leveraging the domestic labour force with an offshore workforce can have parallel effects on an economy.

When a family home carries a high mortgage, it brings prosperity when interest rates are low, employment is abundant, and house prices rise. In such conditions, debt can contribute to personal wealth. However, if one or both parents lose their jobs, they may be forced to sell their home in a depressed market, erasing their financial wealth.

Similarly, excessive financial leverage within businesses can be perilous during a recession. As economic conditions worsen, companies burdened with high debt may struggle to meet their financial obligations, leading to layoffs and business failures.

Could an economy’s reliance on offshoring be as dangerous during a recession as high financial leverage for households or businesses? Are there parallels? Before delving into these questions, it’s important to note that no study or discourse has compared offshoring as workforce leverage to financial leverage, nor quantified the extent of workforce leverage in Australia.

Offshoring often results in job losses within the domestic labour market as companies move operations abroad to reduce costs. This leads to higher unemployment rates, reduced consumer spending, and a contraction in the local economy. Moreover, heavy reliance on offshoring creates a dependency on foreign labour markets, making the domestic workforce more vulnerable during a recession.

Offshoring can contribute to economic imbalances within a country. When a significant portion of a nation’s industries or sectors are offshored, the domestic economy becomes overly reliant on a narrow range of activities. During a recession, a downturn in these offshored industries can have knock-on effects and cause an economic downturn that affects the broader population.

Drawing a parallel, when leverage against an asset is high, it is the equity that is most at risk. In the case of the family home, if parents have borrowed $800,000 against a $1,000,000 property and the market experiences a 20% decline, the asset loses only 10%, but the equity of the parents is halved (10%/20%).

In the event of a recession, the “equity” in the workforce equation is our domestic workforce. Cost-cutting measures are likely to begin with expensive Australian workers rather than cheaper offshore workers, especially when the offshore workers are not subject to the same regulations as the domestic workforce. As a result, a small percentage drop in the combined workforce (onshore and offshore) could lead to a much larger decline in the local workforce, similar to how a downturn in the property market disproportionately destroys a homeowner’s equity.

Libertarian Solution: Free Labour Markets:

Libertarians propose that free labour markets, unrestricted by excessive regulations, provide a more sustainable solution to reduce the need for offshoring. Here’s how free labour markets can positively impact the economy and reduce the risks inherent in a highly leveraged domestic workforce:

1. Optimised Operations and Increased Productivity:

A free labour market encourages domestic businesses to focus on optimising their operations and improving productivity. By reducing regulations and bureaucratic barriers, companies can compete more effectively, leading to increased domestic production, job creation, and economic growth.

2. Incentives for Investment and Innovation:

Free labour markets foster an environment that incentivises investment and innovation – domestically. When businesses can freely negotiate wages and working conditions with locally domiciled workers, they are more likely to invest in research and development, adopt new technologies, and enhance productivity. This promotes economic resilience and reduces the need to offshore operations to access lower-cost labour.

Nicholas Samios is a fund manager and small business investor with a wealth of experience spanning three decades in commercial finance and SME capital raising. In his spare time, he puts on his “Austrian School” economist hat and utilises his insights from the commercial
world to analyse the economic landscape for SMEs and entrepreneurs.

Cut Taxes To 20%

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27 June 2023

It goes without saying that rules and sanctions should be clearly specified in advance so people know how they are supposed to behave and what will happen to them if they don’t. Also, importantly, rules must apply equally to everybody.

But the rules governing tax liabilities have become so tangled and complex that nobody can be sure any longer what they are or how they will apply in any given case. And behind the vast volume of laws – the actual legislation – looms an equally massive array of ATO public determinations, public rulings, bulletins, interpretative decisions, policy papers, circulars, administrative guidelines and practice statements. Some of these are supposed to be binding on ATO officers, and in general ATO staff rely on them rather than on the legislation. In practice that gives them something close to the force of law.

But the ATO no longer simply implements a known set of rules; it develops and amends the rules case by case. In effect, the ATO makes its own rules. As a consequence, we have tax laws which have lost their intelligibility, certainty and predictability. It is not real law as we’ve come to understand that term.

The resulting attitude of many taxpayers is to treat the law and the courts as irrelevant. “Forget legal advice, just give me an ATO ruling that will protect me from penalties or prosecution,” they say. Many taxpayers, of course, just surrender and pay up.

Systems which are complex in their application, debilitating in the sense that the more you earn the less of each dollar you keep, and unfair and unreasonable in the sense that people feel penalized for working, are destined to fail in the long term.

Take Australia’s cash economy, estimated at 15 percent of GDP, one of the largest in the developed world. An underground economy of that magnitude requires the involvement not only of a lot of businesses, but also of millions of consumers. As we know, laws only work when people believe in them; clearly a lot of Australians have no respect for our tax laws.

Despite what many advocating increases in tax would have us believe, the total tax take in Australia is quite high. Some say that compared with other developed economies, Australia is a ‘low tax’ country, and that workers and companies could comfortably pay more. This is ridiculous. When it comes to taxing incomes, Australia is right up there with the Europeans and way ahead of most of our neighbours in the Asia-Pacific region.

High tax rates undermine enterprise and destroy the will to work.

You don’t have to be a Laffer Curve true believer to accept that behavioural response is a reality. When you add to this the corrosive effect on the moral relationship between the state and its citizens, the case for fundamental tax reform becomes even more compelling.

There comes a point when the prospect of giving up half or more of any additional earnings leads people to decide that it is simply not worth it.

Taxation then starts to produce gross inefficiencies as people stop working as much or as hard as they used to, and governments find their taxes are not producing the revenue they expected. Politicians and bureaucrats who lack real world experience and an understanding of how an economy and markets work are drawn into a vicious spiral, jacking up tax rates to try to compensate for the falling revenues that their high tax demands have created.

Similarly, many on welfare reject opportunities to work because of the punitive effect that small earnings and high tax rates have on the security of their benefits and the value of extra work.

And people on very low incomes fare worst of all, for as they increase their earnings, higher rates of income tax combine with the loss of means-tested benefits deprive them of up to 80 cents of every extra dollar they earn.

If we are to extricate ourselves from this dysfunctional system, the goodwill of the public needs to be restored by getting tax levels back to something which most people would see as reasonable. To achieve this, we need to remove one of the most significant tax avoidance avenues and align personal tax rates with company tax rates.

There is certainly a pressing need to reduce the current company tax rate (25% for companies with turnover below $50m, 30% above that). I accept it can’t be done overnight, but the Government would do well to start cutting the rate by one percentage point in this Budget, and then announce its intention to make a similar reduction every year while in office. That would hold out the prospect of a 20 per cent company tax rate and, if it is really serious about an internationally competitive tax system, a 20% personal tax rate.

Nobody enjoys paying taxes but in the 1950s and 1960s, relatively low taxation and a comparatively simple set of tax rules meant that most people paid what was due without too much complaint. Today, however, the Government and the ATO find themselves locked into a destructive relationship of repression and resistance with ordinary taxpayers. Where people can avoid tax by exploiting loopholes, they will do so; where they can’t eg PAYG taxpayers, they become resentful at the unfairness of it all.

Bob’s contribution to the Australian community has been reflected in a wide range of appointments including National President of the Housing Industry Association, Co-Founder and Inaugural President of Independent Contractors of Australia, Director of The Centre for Independent Studies, and Senator for South Australia.

Why Productivity Is Like The Weather

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David Leyonhjelm

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16 June 2023

In some ways, the debate about productivity is like discussing the weather: everyone agrees it’s a problem, but nobody does anything about it.

In theory, productivity is simple: it is a measure of the rate at which goods and services are produced per unit of input (labour, capital, raw materials, etc.)

Growth in productivity is important; it’s what drives long-term improvement in living standards. As productivity improves, working hours fall, leisure time increases and goods become cheaper and better quality.

The Productivity Commission says the average Australian worker produces about as much in one hour today as it took a full day’s work to produce at Federation in 1901.

It gives the example of a bicycle which, in 1901, would have required several months of work to afford but now requires less than a day of work (for a basic model). Moreover, even the lowest quality new bicycles are much safer and easier to use than those produced then.

Early bicycle factory, derivative of agricultural works (left). Modern bicycle assembly line (right).

The problem is, productivity needs to constantly increase, yet growth in productivity in Australia has been low for at least two decades and may even have been zero in the last few years.

Both sides of politics know this and periodically declare they intend to do something about it. But when they discover what that means in practice, they find it a lot easier to just talk.

There are various factors that affect productivity growth: technological improvements, economies of scale and scope, workforce skills, management practices, changes in other inputs (such as capital), competitive pressures and the stage of the business cycle.

The two big ones are technology and labour. Personal computers, for example, gave productivity a boost because it transformed office work. The productivity of the wharves was raised when Patricks was able to implement labour reforms in 1998.

Changes like these are few and far between. Far more often, governments adopt policies that stifle productivity. There are many examples.

When the ACCC blocks the takeover of one firm by another on the grounds that it might lessen competition, this usually also prevents a productivity boost. If the takeover occurred, the firm would shed surplus staff and assets; those staff would be redeployed (ie hired by someone else), and the assets would have a new owner and be used more productively.

It is the same when the government props-up firms through tariffs, import restrictions, subsidies, soft loans, extended tax payment terms, and the like. Firms that would otherwise go out of business or change what they are doing are kept going, soaking-up capital and labour while blocking the growth of more innovative and nimble firms.

Governments also constantly raise the cost of doing business. A good example – the increasing cost of electricity. From dairy farms to tattoo parlours, prices must increase or profitability fall. Higher interest rates have the same effect. And reporting to the government on workplace gender pay, anti-slavery and emissions reductions does nothing for the business. Indeed, the whole ESG charade is a net cost.

Productivity would increase considerably
if businesses could adjust their workforce to suit variations in conditions.

But with complex awards and enterprise agreements, unfair dismissal laws, bogus harassment claims and go away money, it is anything but efficient. Many use contractors and labour hire to meet variable needs, but the Government’s attack on contractors and ‘gig’ workers, the so-called “same job same pay” legislation, will severely restrict that. Then there are restrictions on workforce participation due to barriers to work, which also inhibit productivity.

The growth of credentialism, with qualifications required for almost everything, is yet another factor. A certificate is needed even for serving alcohol in a bar. All of this contributes to a decline in business dynamism (as evidenced by a decline in firm entry and exit rates), which slows the rate of innovation and technology adoption by firms and inhibits the reallocation of resources to the most productive firms.

When it comes to the public sector, productivity is rarely considered. The growth in public servant numbers diverts resources from the private sector, which has a negative impact. And although service delivery is increasingly online, which might slightly help, this is rarely accompanied by a reduction in public servant numbers or an overall reduction in red tape.

Once understood, it is easy to see why governments prefer to talk about productivity than act. It is not easy to fix within the constraints of existing policies, particularly on labour. That explains why they periodically decide the solution lies in technology and will throw taxpayers’ money at a new idea that takes their fancy. Of course, that rarely ends well.

But despite their similarities, the weather and productivity are quite different. So far, the Government has not found a way to make the weather worse.

David Leyonhjelm

David Leyonhjelm was an Australian Senator from 2014 to 2019 representing New South Wales for the Liberal Democratic Party. Notable for his libertarian consistency, David’s work in Senate Estimates attracted acclaim worldwide for its forensic examination of government
waste. Professionally, he is a veterinarian and agribusiness consultant.

Taxing The Country Into Welfare And Disability

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13 June 2023

“We contend that for a nation to try to tax itself into prosperity
is like a man standing in a bucket and trying to lift himself up by the handle.
It is impossible.”

Those were not the words of an Australian Commonwealth Treasurer but rather of Winston Churchill addressing the House of Commons in 1925 arguing against a proposed increase in taxes.

Winston Churchill. Economic liberal and twice UK Prime Minister.

Almost 100 years after Churchill’s comment, Treasurer Chalmers presented his second Budget, in May 2023. It showed yet another record amount of tax collected and sums spent. For the coming 2024 financial year, the Government expects to collect $668 billion (25.9% of GDP) to fund $684 billion of spending (26.6% of GDP).

Of course, spending is higher than revenue so yet again
there is a deficit to add to the national debt pile
for our children and grandchildren to pay.

Of the $684 billion of spending, it is estimated that $356 billion or around 52% will be spent on health and welfare.

And within the social security and welfare line is the following:

From a standing start around ten years ago, assistance to people with disabilities, ostensibly NDIS, is now the second largest Commonwealth government program.

Over the life of the budget (FY23 to FY27), the average annual increase in spending on the aged pension increases by 6.5%, but the average annual increase in spending on the NDIS is 7.9%. Both increases are faster than economic growth and the average annual increase in receipts (3.7%).

Like much of the developed world, Australia is experiencing an ageing population. It could be reasonably expected that spending on aged pensions might increase, but so much for superannuation.

Yet given the rapid growth of NDIS spending, one might conclude that
Australia is also experiencing a dramatic increase in disability.

Maybe there is something in the water. Or perhaps the education system.

Parked near the back of the budget papers is an analysis of real per-capita spending and taxing: per-capita to adjust for government activity increasing due to population increases; real to adjust for inflation over time. And in these numbers, the true state of budget disrepair is evident.

On a real per-capita basis, in the 2024 financial year:

Commonwealth receipts are expected to be $18,102;
Commonwealth payments are expected to be $18,479; and
Commonwealth net debt is expected to be $15,574.

Impressive. From an average four-person household, the Commonwealth expects to extract $72,408.

But here is the interesting part. Thirty years ago, in per-capital real dollars:

Commonwealth receipts were $8,866;
Commonwealth payments were $10,110; and
Commonwealth net debt was $11,364.

So basically, in the space of 30 years, on a per-capita basis, we are paying double the amount of tax, the Commonwealth is spending almost twice as much, and debt is 4.5 times larger in real terms. And 30 years ago was 1983-84, when Bob Hawke came in inheriting a national economic basket case.

It is worth noting that the inclusion of historical real per-capita data in the budget papers is owed to the negotiation efforts of former Senator David Leyonhjelm. Such important government finance transparency highlights the value of a strong classical liberal voice in Australian parliaments.

Improved budget reporting. Legacy of former Senator, David Leyonhjelm.

During the 1980 US Presidential election debate, Ronald Reagan asked the (rhetorical) question: “Are you better off than you were 4 years ago?” Here is a question for Australians. Is Australian government better than it was 30 years ago? Given the doubling of taxing and spending, are services better? Is Australia safer? Are we healthier or smarter?

Perhaps Churchill was only half right. A nation can’t tax itself into prosperity, but Australia is trying to tax itself into welfare and disability.

Dimitri Burshtein is a Principal at Eminency Advisory and a former government policy analyst. He is a contributor to The Australian newspaper, Spectator Australia magazine and various libertarian blogs. Dimitri has also appeared on SkyNews and 2GB radio.

The Immorality of Medicare

By

Lionel Orellana

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24 May 2023

In May of 1973, a year before the first incarnation of Medicare became law, the Australian Medical Association sent a letter to its members warning about the dangers of socialised medicine. They were concerned about the “interference by governments in the relationship between doctor and patient“[1] and highlighted key freedoms that they said should be protected:

No barrier separating the patient from free choice of specialist or hospital.
Minimum intrusion between doctor and patient by governments.
Freedom and opportunity to practise on a fee-for service basis without threat of coercion or compulsion.
Freedom to provide a personal service based on personal responsibility within a system based on quality rather than quantity.

They were concerned about the
“interference by governments in the relationship between doctor and patient“

The AMA abandoned these goals long ago and now merely lobbies Governments for favours. But 50 years later, their worst fears have become a reality: an impossible melee of item numbers, rules and coercion stands between Australians and their doctors.

Consider the case of Dr. Andre Leong in WA. Dr. Leong was harassed for billing a series of item numbers more frequently than other GPs. His training and experience (including leading a medical team in Indonesia after the 2004 tsunami) prepared him for performing operations that most GPs do not. Other doctors frequently referred patients to him to perform these procedures. He stood out and was subjected to lengthy audits and investigations until ultimately forced to stop billing these items. He retired altogether shortly after. There is overwhelming community support for him online.

Dr Andrew Leong. Audited and then forced to stop practising particular medicine in which he had expertise.

47% of GPs report they either avoid providing certain services or claiming certain rebates due to Medicare compliance fears, while 61% report that the complexity of Medicare is something that worries them outside their workday. [2] Many choose to under-bill, fearful of compliance action, claiming 20-minute consultations despite spending up to 45 minutes with a patient. This pressure on doctors to quickly finalise a consultation is a common experience for patients.

Some doctors are fed up: ‘We have had enough of the coercive control, of the abusive relationship that is Medicare’[3], they protest. To add insult to injury, doctors are constantly accused of rorting The System. It is no surprise there is a shortage of GPs.

The situation with mental health is even more depressing. The number of hoops you have to jump through, and the fight you have to put up, can make anyone give up and surrender to their daemons. In a way it is reassuring when you realise that GPs, psychologists, psychiatrists, and nutritionists are all as confused and perplexed by The System as you are. I once spent 3 hours on the phone with Medicare, explaining to them the difference between related mental health items, the corresponding mental health plans, and the review process of these plans. All to convince them to pay me the refunds they were supposed to. It is absurd, demoralising and abusive.

It ought to be so simple. You go to a doctor (of which there would be many more), you pay, you receive the care that is right for you, and you form lasting relationships with your healthcare providers. No man in the middle setting arbitrary barriers and obstacles.

If we really are an egalitarian society that genuinely cares for the less fortunate, why would anyone think that without the Government we would just leave people to die on the streets? Despite losing half their income to the different levels of Government[4], Australians still donate generously to charity.

Not-for-profit organisations like the Little Company of Mary, which run the Calvary Hospitals, demonstrate society’s responsible concern. But like all monopolistic predators, Governments react to competition by trying to shut it down. That is the case with the Calvary Hospital in Canberra, now subject to a hostile takeover by the ACT Government. What then is the opportunity cost of this socialised experiment? How many foundations have not been created, how many research labs, how many hospitals?

And yet, calls to protect “our health system” are made repeatedly with a quasi-religious fervour. Protecting The System takes precedence over any individual’s best interest. It is the main reason why, for example, bringing your parents from overseas to live in Australia can cost up to $70k. Their old age is too big a threat to The System. The (involuntary) contributions you have made to fund it matter very little.

The overriding of your individual best interest by a collective abstraction which the Government claims to represent was in full display during the pandemic years.

It is clear that protecting The System is more important than going to see your dying mother, your job, your business, your wedding, your graduation, your first big gig; anything meaningful in your life can and will be sacrificed on the altar of the collective good.

Medicare, the crown jewel of Australia’s universal healthcare system, is an immoral, ruthless, conniving partner that manipulates Australians into paying for and celebrating their own abuse.

Please support the Calvary Hospital at www.savecalvary.com.au.

[1] https://trove.nla.gov.au/newspaper/article/110709423?browse=ndp%3Abrowse%2Ftitle%2FC%2Ftitle%2F11%2F1973%2F05%2F14%2Fpage%2F12209327%2Farticle%2F110709423

[2] https://www1.racgp.org.au/newsgp/racgp/health-of-the-nation-investment-needed-to-secure-t

[3] https://www1.racgp.org.au/newsgp/professional/a-kick-in-the-guts-frontline-gps-respond-to-medica

[4] https://www.taxpayers.org.au/submissions/the-cost-of-tax-finding-the-total-tax-burden-for-a-resident-of-victoria-australia

Lionel Orellana

Lionel is an IT engineer with more than 20 years’ experience developing enterprise applications in the private and public sectors. He completed his computer science degree in Venezuela in 2001. Then in 2002, Lionel moved to Australia after obtaining an international internship in Canberra. He became an Australian citizen in 2008.

This Tax To GDP Rate Is Mind-Blowing!

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9 May 2023

With the Commonwealth Budget due to be presented later today, Australians should reflect on the words of Winston Churchill, who wisely observed that “there is nothing government can give you that it hasn’t taken from you in the first place.” Such clarity seems missing from our contemporary economic and public finance debates.

There is a myth, even an attempt at deception, perpetuated by the tax and spend industrial complex that Australia is a low tax jurisdiction. (Hint – it’s not). And, based on this myth, that there is capacity for further tax rises in Australia to fund existing and new programs. (Hint – there isn’t).

In its recent report titled ‘Back in Black?’, the Grattan Institute presented a chart and commented that “Total tax collections across governments in Australia represented 28 per cent of GDP in 2019, about 5 percentage points lower than the OECD average of 33 per cent”. The clear implication is that there is capacity for government to increase (tax) revenues.”

Sadly, for Australian taxpayers, this is not an accurate representation. Once other State, Territory and local government receipts are added, Australia’s tax to GDP rate represents approximately 36 percent. When further adjusted for superannuation contributions, as other countries tax for social security, then Australia’s effective tax to GDP rate is approximately 40 percent. Significantly above the OECD average.

Add in the hidden taxes imposed by the massive and highly complex regulatory and compliance edifice that is pushed onto the private sector, and Australia’s tax to GDP rate starts to look very Scandinavian. But without the competence and efficiency of the Scandinavian public sector.

Those advocating for more taxes to fund more spending seem blind to the consequences. The more national resources are transferred from production to government and quasi-government activity, the lower will be productivity and economic growth. Given the MASSIVE expansion of government in Australia over the past 20 years, it should surprise no-one that GDP per capita is flat to declining. Just at the Commonwealth level, spending as a percentage of GDP has increased from about 18 per cent in 1972 to about 23 per cent in 2000, to just under 28 per cent in 2020.

What is required is a fundamental assault on Government spending, not new schemes to increase taxes.

It can start at the Commonwealth public service which has a workforce of over 250,000 public sector employees, despite the vast majority not providing front line services. That includes 10,000 employees within the Departments of Education and Health and Ageing Departments, which do not operate a single school, university, hospital or aged care facility.

The wages and salaries of Commonwealth public sector employees totalled $24.5 billion in 2022 and would increase by $5 billion if the CPSU’s claim for a 20 percent pay increase is successful.

All eyes on team Chalmers and Gallagher today

Treasurer Jim Chalmers and Finance Minister Katy Gallagher need to embrace the legacy of Paul Keating and Peter Walsh and undertake the hard but necessary work to bring Commonwealth Government spending back under control. Better yet, they should learn the expression Just Say No.

Dimitri Burshtein is a Principal at Eminency Advisory and a former government policy analyst. He is a contributor to The Australian newspaper, Spectator Australia magazine and various libertarian blogs. Dimitri has also appeared on SkyNews and 2GB radio.

Remembering Bert Kelly

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28 March 2023

In my last piece, Remembering Frederick Douglass, I discussed the evils and folly of centralised wage-fixing which, amongst other things, prevented people – young people in particular – from getting a start in the workforce; a foot on that first rung of the employment ladder.

Today, we look at centralized wage-fixing’s partner-in-crime – tariff protection. The other side of the micro-economic coin, if you like.

It was Bert Kelly (1912–1997) who once said, ‘The really bad ideas never go away’.

Bert Kelly. Member for Wakefield (Lib, SA). Leading advocate for free markets.

Along with centralised wage-fixing, protectionism is another of those really bad ideas.

The Australian settlement of 1900 was based on five key principles – two were economic, two were social and one was the imperial benevolence of the mother country.

The two social principles were the White Australia Policy and State Paternalism.

The two economic principles were regulated labour markets and tariff protection. These two went hand in hand. As centralised wage-fixing delivered arbitrary pay increases, thus increasing the cost of production, the price of the goods rose commensurately. As a result, imported goods became more competitive. In response, an import tax – a tariff – was placed on these imported goods to ‘protect’ Australian jobs from competition.

By the late 19th century, NSW had prospered under its free trade regime and had overtaken protectionist Victoria, becoming the continent’s leading colony. Following the collapse of the gold-rush, and to sustain its economy, Victoria borrowed heavily in the British capital markets but soon found itself impoverished and losing population – the consequences of 30 years of protectionism. NSW political leaders such as George Reid speculated that Victoria was desperate for federation so that its economic problems could be shared with the other colonies!

By the early 1920s, the newly-formed Country Party under Earle Page – influenced by the rural export industries of wool, meat and wheat – was officially opposed to protection, yet supported the Scullin Government’s belief that tariffs on imports would help restore employment during the Great Depression (1929–1932) by handing out tariffs virtually on demand. It didn’t work.

In 1930, Australian historian Keith Hancock had published his book Australia which contains this memorable reference to protectionism in Australia:

‘Protection in Australia is more than a policy: it is a faith and a dogma. Its critics, during the second decade of the twentieth century, dwindled into a despised and detected sect suspected of nursing an anti-national heresy. Protection is interwoven with almost every strand of Australia’s democratic nationalism. It professes to be a policy of plenty, but it is a policy of power.’

Bert Kelly arrived in Federal Parliament in 1958 as the Member for the South Australian seat of Wakefield and from then until he left the Parliament in 1977 fought a long and often bitter campaign against protectionism – first against a very powerful Deputy Prime Minister and Country Party Leader in John ‘Black Jack’ McEwen, and then against the strongly-defended populism of ‘protecting Australian jobs’.

Bert Kelly was opposed to protectionism because, like centralised wage-fixing, it was not only economically foolish, it was also morally wrong. It was wrong, he said, because it created a situation in which governments granted favours to some, who became greatly enriched, at the expense of others, who were at best impoverished and at worst, ruined.

On a parliamentary delegation to India, Bert visited a factory making bed sheets which wanted to sell in Australia but was unable to do so due to the high tariff (import tax) placed on imported bed linen. It was the same at an Indian shirt factory.

For example, a shirt made in Australia cost $50 to buy. An imported shirt $20. By imposing a $30 tariff on the imported shirt, consumers were told they had to pay $50 for a shirt to ‘protect Australian jobs’. If there were no tariff, however, and consumers were able to buy a shirt for $20 instead of $50, that would give them Bert argued, $30 to spend on something else. And it is that something else that is the catalyst for emerging industries.

Tariffs support declining industries, free trade supports emerging industries.

Bert also learned that Indians were desperate to buy Australian milk powder for their children but did not have the foreign exchange – Australian or US dollars – due to the insurmountable tariff on their textile goods entering Australia.

Thus, both India and Australia suffered. To quote Bert Kelly:

‘Australian dairy farmers can’t sell their skim milk powder, Australian families have to buy expensive ‘Australian-made’ sheets and shirts, Indian children don’t get milk and Indian factories can’t make textiles. A lose-lose situation if ever there was one. All this brought to you by our good and wise government’.

At the same time, Australia was giving aid money to India.

Bert spoke frequently in favour of Community Aid Abroad but against aid being given with no strings attached. ‘Trading with poor countries is a far better way to help them than giving them aid,” he argued.

With the union movement’s new friends in Canberra, expect to see more on the wages/tariff front.