Hockey’s war on welfare – do we really want the Hong Kong model?

Hockey’s war on entitlements


“They are barely bigger than a toilet cubicle.
 Yet these depressingly cramped spaces serve as a kitchen, living room, dining room, bedroom, pantry and everything in between for their cooped-up inhabitants.
Those unfortunate enough to live in these urban slums range from the elderly and unemployed to low-income families and singletons.
Their location? Hong Kong. One of the richest cities in the world.”

Simon Tomlinson, The Daily Mail, 22 February 2013

In London last year the Shadow Treasurer Joe Hockey delivered a speech titled, ‘The end of the age of entitlement’, in which he praised the economic model of Hong Kong, stating “the sense of government entitlement …is low” and “although there is still poverty, the family unit is very much intact and social welfare is largely unknown.”

The reality is of course very different to Mr Hockey’s ideal; demonstrating it is unlikely that he met many of the 1.2 million Hong Kong residents who live in poverty.

According to CNN many are living in coffin homes’; tiny tenements in which living spaces are no bigger than a twin-sized bed. Simon Tomlinson’s Daily Mail article quoted above was accompanied by birds-eye images of these ‘apartments’, which were taken by the Hong Kong-based Society for Community Organisation in a bid to document the plight of the city’s most underprivileged people.

Oxfam says one in six poor families in Hong Kong is caught in a hunger trap having to scavenge for food with 72 per cent of poor children eating leftover foods.

In an interview with the Australian Financial Review published on 17 January this year Mr Hockey confirmed that reducing entitlements “will be a theme for me and it sits very comfortably within the Coalition’s theme. That is commitment to live within our means.”

While few would disagree that living within ones means is a sensible aspiration, it seems incongruous for Mr Hockey not to mention the ‘age of entitlement’ that was constructed for middle-high income earners under the previous Howard government of which he was a part.

Taxpayers now contribute $30 billion per year to the so-called ‘self-funded’ retirement of those with super yet the political debate more typically focuses on the ‘unaffordability’ of the age pension or unemployment benefits. And while millions of Australians think they benefit from this largesse, the fact is 30 per cent of the benefits go to the wealthiest 10 per cent.

Surely if we are going to wage war on entitlement we should start with those who have the most, not those who have the least?

* The ABC reported this morning that United Nations Human Rights monitors have raised serious concerns about the Gillard government’s cuts to single parent payments, warning that the cuts could be contrary to Australia’s international human rights obligations. Read more here.

Government inaction on antibiotic resistance exposed


“Unless we solve the problem of antimicrobial resistance to drugs, we will be facing a post-antibiotic era where things as common as a strep throat infection or a child’s scratched knee could once again kill.”  Margaret Chan, Director-General of World Health Organization (WHO), 2012

The discovery of antibiotics was one of the defining events in medicine in the 20th century, bringing about a massive reduction in the rate of human deaths from infectious bacterial diseases.

Jump ahead to the 21st century and Australians are one of the highest users of antibiotics in the world, with roughly 22 million prescriptions being dispensed every year. We sit well above the OECD average and our use is more than double that of Scandinavian countries.

But why should this matter?

Bacteria are able to resist antibiotics, with a number of important antimicrobial agents no longer being effective in fighting the bacteria which cause serious illness. This phenomenon is called antimicrobial resistance (AMR). Of greatest concern is the creation of disease-causing bacteria with resistance to multiple antimicrobial compounds – aka ‘superbugs’.

Given the gravity of the situation, the uninformed observer could reasonably assume that Australian governments, past and present, would have made this threat to public health a high priority.

This is far from reality and is the topic of a recent research paper by The Australia Institute.

Culture of Resistance: Australia’s response to the inappropriate use of antimicrobials reveals that while initially there was commitment to implementing the recommendations of a 1999 report by the

Joint Expert Technical Advisory Committee on Antibiotic Resistance (JETACAR), many initiatives failed to result in any comprehensive systematic response to the issue.

Committees, taskforces and groups were set up but disbanded, strategies were developed but not implemented, pilot programmes failed to be anything other than pilot programs, undertakings were not carried out.

Of particular concern is the failure to develop a comprehensive national surveillance system of both usage and resistance to antibiotics. This was recommended in the 1999 report and is called for by the World Health Organization.   Such data is essential for effective management of AMR.

A surveillance strategy was developed by the government in 2003, and another in 2006 for an expert advisory group but neither was implemented in any meaningful way. In 2012 a new Advisory Committee on AMR was set up by the government and their first task was to oversee the production of a scoping study and development of a business case for national surveillance of AMR and antimicrobial use. This study looks only at human use, and does not include animals, agriculture or the environment.

It is unclear why such an important public health threat has been so badly neglected over the last decade but what is clear is that this neglect has serious consequences. It is essential to devise a much more accountable and transparent system of management of AMR in Australia if we are to avoid another largely wasted decade. Given the pressing nature of the problem and the catastrophic impact of antimicrobial resistance, effective action must be taken urgently. 

The Australia Institute will this week give evidence to the Senate Finance and Public Administration Committee which is conducting an inquiry into the issue of AMR.

Mining’s not so special


Last week the RBA released a paper showing that, surprise surprise, the mining industry has spill over benefits for industries such as construction and business services. Amongst all of the hype released by the mining industry in response there was no mention of the fact that the RBA found that these spill overs were much smaller than the mining industry usually claims.

These spill over, or multiplier, effects are calculated by economists in an effort to measure the impact a change in the level of economic activity in one industry will have on other industries. For example, an increase in mining activity will likely lead to an increase in demand for transport, energy, construction and business services. No one has ever seriously suggested otherwise.

Interpreting such multiplier effects can be as difficult as calculating them, especially when the economy is experiencing rapid change. In attempting to interpret such numbers it is important to bear in mind the following:

1) All industries create flow on effects not just mining. Growth in, for example, health and education create jobs in other parts of the economy. But if all industries ‘take credit’ for the jobs they create in other industries then when we add up the total number of jobs that industries claim they create we get a number that is much bigger than the Australian population.

2) Multipliers also work in reverse. While the RBA analysis provides estimates of the flow on benefits from the mining industry’s expansion it is strangely silent about the flow on costs of the decline in manufacturing, agriculture and tourism caused by the high exchange rate.

3) Flow on jobs have to come from somewhere. As Dr David Gruen, head of Macroeconomics at the Commonwealth Treasury pointed out last year, “In a well functioning economy like ours, with unemployment close to its lowest sustainable rate, it is not the case that individual industries are creating jobs, they are simply re-distributing them.”

If jobs are just being re-distributed and not created then the benefits to society, as opposed to the benefits to the mining industry, will be much smaller than that suggested by the recent RBA analysis.

Multipliers are an important economic tool but they need to be used with extreme caution. They are open to misuse and have been abused in the past by industries keen to overemphasise their importance to the economy.

For reasons known only to the RBA, their recent analysis focused exclusively on the positive impacts of the mining boom on other industries and it made no attempt to analyse the negative flow on effects to other industries.

It is obvious why the miners’ PR machine would take such a narrow approach to ‘analysis’ but it is much less clear why the RBA would do the same.



Politics in the Pub – Andrew Leigh MP – 27 March

Andrew Leigh is the federal member for Fraser, an economist and an author. Andrew’s latest book ‘Disconnected’ highlights that political parties and unions are struggling to keep their members; sporting participation and cultural attendance is down; we are less likely to attend church and we are less connected with our neighbours.

Andrew will share his thoughts on how community engagement can be revived and also offer his insight into the upcoming federal election.

Wednesday 27 March 2013
6 – 7pm (doors open at 5.50pm)
The Lounge Bar, Uni Pub, 17 London Circuit, Canberra.
FREE – No RSVP required.

* Our April speaker is TBA but please save the date for 29 May as Nobel Laureate Brian Schmidt will join us for Science in the Pub! *


Politics in the Pub Melbourne

The Australia Institute is thrilled to be bringing its Politics in the Pub sessions to Melbourne in 2013. 

Our first event was held in February and Tim Costello from World Vision Australia discussed ‘Is Australia a good global citizen?’. You can watch his presentation here.  

If you or a friend live in Melbourne and would like to be kept up to date about these events, please send your email address to

Recent Publications


Still beating around the bush, M Grudnoff, 25 February

Culture of resistance, K Tucker, 15 February

Corporate power in Australia, R Denniss & D Richardson, 6 February

For a full list of our publications, click here. All papers can be downloaded for free.

Recent Media


Age of the worried well-off, The Canberra Times, 2 March 

Economics and Ethics: Rationality and choice,  ABC666 Canberra, 27 February

Mining boom continues to hurt rural sectorABC ‘PM’, 25 February

Why can’t the government stand up to big polluters, ABC Radio National, 24 February

Economics and Ethics: How much do we need to live on?, ABC666 Canberra, 20 February

PM stokes wrong fire, Ausralian Financial Review, 19 February

The Project talks with Richard about why Australians pay so much more for goods, Channel 10, 14 February

Every CSG well another nail in manufacturing coffin, The Drum, 14 February

Economics and Ethics: What is stealing?, ABC666 Canberra, 13 February

Economics and Ethics: Preventative health, ABC666 Canberra, 6 February

There is no “opt-out” clause, The Canberra Times, 2 February

Economics and Ethics: Can you put a price on life?, ABC666 Canberra, 30 January

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Jake Wishart Senior Media Adviser

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