Envy: the deadly sin of the left

Moral hazard describes a situation where individuals lack the incentive to guard against a financial risk because they will not bear the full financial consequences.

The problem is rife in respect of "free" publicly provided services. National health services almost always suffer cost blowouts because users don't bear the costs (but taxpayers do) and suppliers of medical services take advantage and over-service or over-charge. Another result is long queues for some services (e.g. surgery) in most nationalised health systems, including Australia's. Privately funded health care is largely unaffected by this problem, but individuals obviously need to be able to pay the cost.

Measured autism rates in Australia have significantly increased over time, with a 41.8 per cent rise in diagnosed individuals between 2018 and 2022. The introduction of the National Disability Insurance Scheme (NDIS) undoubtedly has been a big influence. Australia's NDIS is now totally out of control and poor value for money, but politicians lack the will to take decisive action.

Similarly, (though we definitely need a safety net) welfare can be a big disincentive to workforce participation, and countries with generous welfare can attract unwanted illegal immigration. Voters get addicted to their "free stuff" so that once a benefit is provided by the state, it is politically very difficult to take away. In this manner public expenditures get ratcheted up in Australia almost every time a federal Labor government gets into power. Hard left administrations (Whitlam and Albanese) have been the worst offenders.

High income taxes (favoured by the Left) create disincentives to work effort, but spendthrift governments need the revenue.

The default policy in Australia has been to increase taxation through the non-indexation of tax thresholds. In this manner personal income and stamp duty revenue automatically rises because of inflation. The top marginal tax rate now cuts in at a mere two times average male full time earnings, and high stamp duty rates, originally set for lavish mansions, now apply to modest dwellings. At the bottom end, increasing income tax thresholds didn't just help low- income families. Generous thresholds also mean that students from well-off families generally pay little or no tax, and they incentivise income splitting by high income couples.

Overall, it has been estimated that half the Australian population pays no net tax (after benefits are taken into account), and that the top 5 per cent of Australian income earners contribute approximately one-third of all individual income tax revenue. Based on data from around 2021-2023 the top 1 per cent of taxpayers paid more than 18 per cent of all income tax revenue.

Universal free child-care is often considered regressive because it is a big subsidy to dual-income middle-class families, and wasteful where it applies to non-working parents. While child-care is not yet totally free in Australia, this is the outcome sought by many on the Left. The Education Portfolio Budget Statement indicated that the estimated cost of the Commonwealth Child Care Subsidy for 2024–25 had reached a massive $15.429 billion. This cost is indicated to rise by 4 to 5 per cent per annum in the forward estimates.

The big problem with free or heavily subsidised universal child-care is that the concept of personal responsibility goes out the window, along with any consumer incentive to restrain usage. Childcare is also commonly not available in non-urban areas so many in rural and remote areas (especially farmers – never liked by the Left) can't easily access this $15 billion programme but are required to share the tax burden.

Government schemes designed to help first-time buyers have backfired. Such programmes always inflate prices in the market segment they aim to assist. Similarly, regulations and controls, supposed to be tenant friendly, drive landlords (another pet hate of the Left) out of the market and lead to increased rents. The Left generally either fails to understand how markets work or ignores the market consequences of its actions.

The Left's most obvious policy disaster has been the Albanese Government's raising of tobacco taxes.

Labor imposed big increases in tobacco taxes several years ago aiming to deter smoking and increase revenue. The move also reflected the Left's historic dislike of big cigarette companies. Instead of deterring smoking, however, the government fuelled a massive illicit market, leading to increased crime (including shootings and arson). The illicit tobacco market is now estimated to account for 64 per cent of all tobacco consumed in Australia and 82 per cent of total nicotine consumed.