The shadow treasurer's address on welfare entitlements is refreshing.
JOE Hockey went to London last week to give a speech declaring "The End of the Age of Entitlement". Pity he didn't also go to Washington, to listen to the biannual meetings of the International Monetary Fund and the World Bank.
Within 18 months, Hockey is likely to be Australia's next Treasurer. If he is, he will face a very challenging task in reconciling the Coalition's rhetoric and the expectations it has aroused with the limited resources he will have to meet them.
The Coalition's economic policy, we are told, is to cut taxes cut personal income tax, cut company tax, scrap the carbon tax, scrap the mining tax while putting the budget back into a fiddle-free surplus, and increasing some spending.
Uh-huh. Labor claims that would require $70 billion of spending cuts over four years roughly 5 per cent of budget spending which the Coalition refuses to spell out at this stage. You can understand why, but after Treasury found $11 billion of holes in its 2010 campaign promises, the silence leaves the Coalition's economic team short on credibility.
Hockey clearly understands this, and his speech set out to tackle it. It will be dismissed by some as another gaffe by a bloke who is likeable but gaffe-prone. A shadow Treasurer implying that he wants to cut welfare entitlements? When the Howard government reaped such an electoral harvest from expanding them?
Abbott quickly told us that Hockey was talking only about Europe, declaring: "Australia hasn't got there yet, and it's the job of the Coalition to ensure that we never do". Yesterday Hockey fell in line, as if to put an embarrassing episode to rest.
I hope it doesn't. In London, Hockey gave the kind of speech you wish our political leaders would give, but, with the exception of Malcolm Turnbull, rarely do. It was well-argued, full of ideas, largely bereft of cheap point-scoring, and confronted a real problem that will loom large over Australia and the rest of the West as their populations age.
You can read it on joehockey.com. It was not just about Europe "Australia has not completely avoided the problems", Hockey declared, while praising the Future Fund and four Labor initiatives that reformed our retirement system. It summed up powerfully the forces that caused Europe's fiscal problems, and which our governments too must contend with. The key problem, Hockey said, is "a belief that one person has a right to a good or service that someone else will pay for . . . In our collective effort to win votes, political leaders deliberately portray a new spending commitment as if it is coming out of their own personal bank account. Political leaders rarely thank taxpayers for funding the policy.
"The sovereign debt problems we are seeing in Europe and the US today are the outcome of countries wanting a lifestyle they cannot afford, but are quite happy to borrow from others to pay for . . . Whether it is defence, law and order, income support, social programs and so on, the outcome is the same. Eventually the piper has to be paid." Too true. Witness the culture in our tabloids, talkback, even in letters to The Age, that berates governments for spending too little, taxing too much, and not running a surplus. We forget arithmetic and we forget that governments don't spend their money, they spend ours. In turn, we receive what that spending buys for us: education, health, a welfare safety net, transport, security. As former US Supreme Court Justice Oliver Wendell Holmes famously put it: "I like to pay taxes. With them, I buy civilisation."
Hockey wound up: "The bottom line is that our communities need to make a tough decision. We cannot choose both higher entitlements and lower taxes. We must make a decision one way or the other. We can take more and more of our citizen's money and spend it for them, or we can take less of it and rationalise government services."
Hockey chose the latter. "We must rebuild fiscal discipline. Budget surpluses must be restored, ideally until the debt is repaid." He urged increasing the pension age, means-testing "all government-funded pensions and other such payments", making superannuation compulsory, requiring user co-payments for some government services, citing health care and eliminating public debt.
You don't have to accept all his argument or prescriptions (particularly the last) to find them refreshing to read. At last, here is a politician talking frankly in public about the real difficulties policymakers face. Wayne Swan would be a far more effective Treasurer if he did the same.
But Swan was in Washington, where he too performed a PB: giving a speech to the IMF that did not boast that Australia is doing better than any of them (perhaps because IMF data shows it isn't).
Ideally, Hockey should have gone with him, to absorb the IMF's key message: give growth and jobs priority now, and allow time to get budgets into surplus over the medium term. IMF data shows Australia has very little debt by global standards and Hockey knows that half our economy is in or close to recession.
Why doesn't the Coalition back the IMF's message, and oppose Labor's plan to force the budget into surplus by slashing spending and raising revenues? Hockey's speech implies one reason: they're fiscal hardliners. But is it also a cynical tactic, to close off Swan's options so the ensuing economic pain costs Labor votes?