ONE person's welfare is another's entitlement. Both sides of politics ventured into the welfare policy minefield this week. Prime Minister Julia Gillard yesterday released the government response to a Productivity Commission review of aged care, knowing Labor is in safe territory when it quarantines the elderly from budget cuts needed to deliver a promised surplus. By then, Joe Hockey, who is set to be treasurer if Tony Abbott's Coalition wins office, had made a more provocative speech in which he deplored the West's ''entitlement'' mentality and pointed to Asia as a new benchmark for Australia. Amid the ensuing Labor and Coalition caricatures of each other's policies, the need remains for Australia to develop clear welfare priorities to ensure spending is effective and affordable.
Mr Hockey cited the Confucian concept of filial piety, which obliges families to look after their own, but no one in Australia seriously suggests slashing aged-care spending. Yet in the decade since then treasurer Peter Costello warned ''demography is destiny'', Australia has grappled with the budget impact of caring for an ageing population. The growing proportion of elderly people, and the complexity of their care needs, makes this a huge and costly challenge.
The government plans, which Ms Gillard said would make it easier for people to get their preferred choice of a nursing home place or care at home, introduces welcome flexibility and a $270 million down payment on the rising costs of dementia diagnosis and care. A bond system that costs people up to $2.6 million to get into a nursing home was unfair. They now get a choice of paying a bond, periodic payments or a combination. It is sensible to shift funding to home care, given the scarcity of nursing home places and the often damaging effect on elderly people of moving out of their familiar home environment. Pensioners will welcome a $1341 increase in annual supplementary benefits. At the same time, future budgets must be protected. The government is moving towards assets tests and a user-pays system for people with the capacity to pay, subject to a cap on their costs.
Some elderly voters such as self-funded retirees are likely to be upset. However, Mr Hockey muddied the political waters by confirming the Coalition would review ''the whole range of entitlements''. The question was raised by his speech declaring that ''the age of unlimited and unfunded entitlement to government services and support is over''. Compared to Europe, he said, Asian nations' ''highly constrained public safety net may, at times, seem brutal, but it works and is financially sustainable''. Labor rushed to point out the inconsistency with the Coalition's pet middle-class welfare policies and an extravagant maternity leave plan that pays more to the better off. Mr Abbott insisted Mr Hockey was only ''making the very obvious point that governments have got to live within their means''. The Coalition certainly knows there is a point at which spending cuts become political suicide.
The fact remains that any government must set welfare priorities to avoid being overwhelmed by demographic destiny. Such decisions ought not be driven by false premises of the sort advanced by Mr Hockey: namely, that high social spending equates to debt and decline; and that cultures that shape state and family care are readily transferred. He cited South Korea as a model whose social spending is less than half Australia's 16 per cent. What of its net government debt, three times greater than ours at 26 per cent of GDP? (The global average is 20 per cent.) As for Europe, ''filial piety'' is strongest in poor nations (Romania, Bulgaria, Georgia) out of necessity. Nor are Europe's governments all ''bad parents'' who invite bankruptcy by giving voters what they want and refusing to ''reduce the size of the state'', as Mr Hockey believes Australia should. Scandinavian nations are in the world's top dozen for social expenditure, at 24 to 29 per cent of GDP, and economic prosperity and are largely debt-free. The developed world's low social spenders, the US and Ireland, have huge debts.
Australia's social expenditure is broadly within its means. This spending is not just a cost but also an investment in overall health, well-being and productivity. It is one of the main reasons ''we are all living longer'', as Mr Hockey says, and can be productive for longer too. Of course, we must be constantly mindful that this ''enormous cost burden'' can blow out with alarming suddenness. Vote-buying governments may be tempted to live beyond their means, but domestic alarmism over debt and spending is not borne out by global comparisons. This is not the simple debate beloved of ideologues on both sides. Welfare policy must take account of all economic and social costs and benefits in assessing sustainability. Any rational debate must focus on a model appropriate to Australia's means, needs and culture.
Hamlet of literature
MELBOURNE, with considerable pride, has been a UNESCO City of Literature since 2008. But this metropolis of 4 million captive readers now has competition in the form of a hamlet, rather than a city, of literature. Clunes, in central Victoria, with its population of just over 1100, has been declared a Booktown - one of 15 in the world dignified by the International Organisation of Booktowns. Following Prospero's lead in The Tempest - ''My library was dukedom large enough'' - Clunes is ennobled with seven bookshops, along with five other shops which also stock books, as well as its extraordinarily popular book festival in the first week of May, that has been running since 2007. Now the former gold-rush town, which has joined a book club that includes Hay-on-Wye in Wales and Wunsdorf-Waldstadt in Germany, has struck a seam of literacy. Victoria is all the richer for it.
