Culture of entitlement has to go: Invest political capital and fix budget

In working to make the budget more sustainable, Jim Chalmers wrote on Monday, next week’s mid-year economic and fiscal outlook will not be a spendathon but will deliver more savings and fiscal restraint. While commendable, the Treasurer’s decision to scrap universal electricity rebates needs to be part of a wider cutting of taxpayer-funded largesse, especially if it is not well targeted or means-tested. With the looming $1 trillion national debt, debt servicing costs – one of the government’s fastest-growing fiscal pressures – will go on rising. The culture of entitlement has to go.

Given the budgetary position, it is disconcerting that Anthony Albanese aspires to use 2026 to make his favoured legacy, universal childcare, a reality. When Labor previously asked the Productivity Commission how much universally affordable childcare would cost, it estimated implementing a $10 flat rate would cost the budget $8.3bn a year. Introducing a 90 per cent subsidy for every family would cost $6bn a year. It’s not a realistic prospect.

The Prime Minister’s push for universal childcare is part of a wider pattern under Labor of government welfare steering away from means-tested cash benefits towards increasingly universal in-kind payments, such as subsidised education (including cutting student debt) and disability and healthcare, Matthew Cranston reports.

The National Disability Insurance Scheme is a case in point. Up to $3bn in savings could be made by the NDIS every year if means-tested co-contributions were implemented, according to modelling from Kismet, a company involved with the scheme.

New research from the e61 Institute covering Department of Social Services data between 2000 and 2024 shows universal style in-kind payments have risen from 1.4 per cent to 3.7 per cent of GDP while means-tested income support cash payments such as JobKeeper and Family Tax Benefit have dropped from 7.8 per cent to 5.3 per cent of GDP. But the benefit from direct cash payments for low-income households is much higher than the advantage to them from in-kind transfers.

That said, another emerging problem that needs government attention is monthly rises in the number of people falling back on to welfare payments, as Geoff Chambers reported last week. Regional areas, where jobs can be harder to find, are reporting some of the highest numbers of welfare recipients. At the end of October there were 991,540 working-age Australians receiving JobSeeker and Youth Allowance (Other) payments. Almost 400,000 JobSeeker recipients were under 34 and 356,680 had been on welfare for less than 12 months. Amid a generally buoyant jobs market, the government must ask hard questions about why almost a million people are unemployed and kept by taxpayers.

Starting with MYEFO and continuing with next year’s budget, the Albanese government has the political capital to bring the budget back under control. At this stage of the electoral cycle it should not waste that opportunity.