Australia: Top earners paying the benefits bill

Australia: Top earners paying the benefits bill, by Adam Creighton.

The top fifth of households by ­income are almost entirely supporting the bottom 60 per cent of earners, according to a report that argues the dwindling share of net taxpayers is making it harder for parliaments to govern wisely.

Analysis of the latest official survey of incomes and benefits, ­including in-kind health and education payments, shows the bottom 60 per cent of households received more in benefits than they paid in taxes, including GST and excise taxes.

Based on 2016 data, the top fifth of the nation’s nine million households, whose incomes averaged $269,000, were paying more than $1000 a week into the tax-transfer system, while the bottom fifth, whose incomes averaged $30,300, received $619 a week after subtracting benefits received, cash and in kind, from taxes paid.

Robert Carling, a research fellow at the Centre for Independent Studies, which conducted the analysis, said: “The emergence of a large segment of the population that in a sense ‘votes for a living’ could help explain much of what has gone awry with public policy in Australia in recent years.” …

“Bringing it all together, just over 50 per cent of households are net beneficiaries of the tax/transfer system as broadly defined,” the study concluded. …

A recent survey by the Per Capita think tank found more than 75 per cent of voters favoured more spending on health and education and more than half supported more spending on social security, which at the federal level is expected to increase more than 10 per cent over the next three years to $194bn.

It is important to know who is paying the bills. The effects on politics are obvious — often little more than lightly-disguised vote buying (just listen to some of Bill Shorten’s recent speeches).

The ancient Greeks had a lot of experience with democracies in their city states. They found that a democracy usually lasts until the citizens learn to vote themselves the contents of the treasury, after which the situation deteriorates and eventually a strongman takes over.

hat-tip Stephen Neil