Hockey blasts attitude of 'entitlement'

SHADOW treasurer Joe Hockey has condemned systems of "universal entitlement" in Western democracies, contrasting this attitude with the concept of "filial piety" thriving across Asia where people get what they work for and families look after their own.

By InvestSMART · 19 Apr 2012

By InvestSMART ·
19 Apr 2012

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Speaking in London, Mr Hockey said that by Western standards the highly constrained public safety net in Hong Kong and other Asian places might seem brutal "but it works and it is financially sustainable".

"Contrast this with what we find in Europe, the United Kingdom and the United States. All of them have enormous entitlement systems spanning education, health, income support, retirement benefits, unemployment benefits."

Government revenues fell far short of meeting the cost and the difference had to be made up by borrowing.

While he was less critical of Australia, saying that over the years there had been some key decisions to reduce spending, Mr Hockey said it still had "a lot of spending by government which many voters see as their entitlement".

He said a lower level of entitlement meant countries were free to allow business and individuals to be successful. "It reduces taxation, meaning individuals spend less of their time working for the state, and more of their time working for themselves and their family."

Both sides of the Western political spectrum were to blame for the entitlement mentality. Socialist governments had created a huge array of entitlements, and conservative governments had promised to fix the problem but just trimmed round the edges.

"Perhaps the real problem is the exuberant excesses of politicians who do not seem to understand or care about the fact that, like a household, a nation needs to balance its budget over time," he said.

But now "the age of unlimited and unfunded entitlement to government services and income support is over", he said. "We are now in an era where leaders are much more wary about credit risk."

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Frequently Asked Questions about this Article…

What did Shadow Treasurer Joe Hockey mean by criticizing 'universal entitlement' in Western democracies?

Joe Hockey argued that Western countries have developed large entitlement systems—covering education, health, income support, retirement and unemployment—that people treat as guaranteed, and he says those systems can be unaffordable, prompting governments to borrow to meet the costs.

How did Hockey contrast Western entitlement systems with Asian approaches like 'filial piety'?

Hockey contrasted Western universal-entitlement attitudes with Asian traditions of filial piety, saying in parts of Asia families look after their own and people generally get what they work for, which he believes reduces reliance on large state welfare systems.

What did Hockey say about Hong Kong's public safety net and sustainability?

He described Hong Kong and some Asian jurisdictions as having highly constrained public safety nets that may seem harsh by Western standards but that 'work' and are financially sustainable, implying they avoid the heavy borrowing that comes with larger entitlement systems.

How did Hockey say entitlement systems affect government budgets and borrowing?

Hockey said governments with extensive entitlement programs often face revenues that fall short of costs, and the shortfall has to be made up by borrowing, which he views as fiscally unsustainable over time.

What was Hockey's view on Australia's level of government spending and entitlements?

He was less critical of Australia than of Europe or the US—acknowledging some past decisions to reduce spending—but said Australia still has substantial government spending that many voters regard as their entitlement.

What did Hockey claim are the economic benefits of having lower entitlement levels?

He argued that lower entitlement levels reduce taxation, free individuals and businesses to be more successful, and allow people to spend less time working for the state and more time working for themselves and their families.

Who did Hockey blame for creating the entitlement mentality?

Hockey said both sides of Western politics share blame: socialist governments created extensive entitlements, while conservative governments often only trimmed them at the margins instead of fully addressing the problem.

What did Hockey mean when he said 'the age of unlimited and unfunded entitlement is over' and how might that matter to everyday investors?

He meant leaders are now more cautious about credit risk and unwilling to promise unlimited, unfunded government services; for everyday investors this suggests a political environment where policymakers may focus more on fiscal sustainability, potentially affecting taxation, public spending and the economic backdrop for businesses and markets.