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Government cost cutting must not be borne by most vulnerable

By Ray Cleary - posted Wednesday, 30 January 2008

Rising inflation and the pressure to significantly cut spending mean the Rudd Government is facing its first major challenge since taking office.

While it might be necessary for the nation to tighten its belt, spending cuts must not be made at the expense of the most vulnerable in the community - families who are already experiencing rising food, transport, health, education and housing costs. Their need for protection and support from the further disadvantage that will result from a loss of income and services has both economic and social justice implications.

The Labor Government swept to power on the back of a promised education revolution and greater protection for working families. If it can successfully implement these measures, Australia will gain a skilled, flexible and secure workforce able to participate in the knowledge economy. This will also provide an opportunity for low-skilled workers and the unemployed to move into stable employment and better provide for themselves and their families.


Just two months after the election, this vision is under threat as inflationary pressure is set to curtail government spending. Prime Minister Kevin Rudd must back his vision and make some tough and potentially unpopular decisions to deliver long-term stability to Australia. He must, for example, reconsider the wisdom of implementing the tax cuts promised to high earners, who have already been the recipients of government largesse.

Anglicare Victoria released a report last year that looked at social policy direction over the past 10 years. The results showed an alarming trend towards Federal Government subsidies for private market services such as health and education.

It is here the Government can make substantial savings. An uncapped 30 per cent private health rebate that is not means-tested was introduced in 1999 to encourage individuals to take out private health cover and ease the strain on the public system. The cost of this rebate is about $3 billion every year and mostly benefits middle to high-income earners.

In 2003, only 19 per cent of people with total household incomes below $20,000 a year had private health insurance, compared with 68 per cent with incomes over $100,000. In 2004, young single mothers were least likely to have private health insurance.

This raises significant questions. How much do we value our right to choose private cover rather than rely on the public health system?

As consumers, are we prepared to pay a more realistic price to use that service? More importantly, is the Rudd Government prepared to withdraw subsidies and force those of us who can afford the luxury of private health cover to spend more?


Education is another area in which the Federal Government has invested large amounts to subsidise a private alternative to the public system - again, largely to the benefit of middle and high-income earners.

Between 1999-2000 and 2004-05, total government funding per student in private schools increased at three times the rate of increase per student in government schools. According to the latest figures, total spending on each private school student (including government and private contributions) is nearly $2,000 more a year, on average, than that on public students.

Those living comfortable lives should remember that our national anthem commits us to "advance Australia fair". This should entail being prepared to pay the true cost of exercising our right to choose, rather than assuming entitlements to luxuries that too many in our society cannot even dream about.

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First published in The Age on January 23, 2008.

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About the Author

Dr Ray Cleary is the Chief Executive Officer at Anglicare Victoria, the state’s largest provider of support services for children and families.

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