The two killers of the Australian party will be the collapse of house prices and rising interest rates due to the inflation by our central banks.  Australia is going to be a big government nightmare in the wake of these catastrophes as there is no culture of liberty or freedom in this country.

Hey mate, a friend of mine had a question about the data:

“Washo, I have to ask where these numbers come from. Looking at the graph, it would appear that in 2007 we were sitting on about 40% of GDP going to welfare. According to the World Bank, in that year Australias GDP was $AU1.13 trillon. This would mean that $452 billion was spent on welfare. This figure is almost twice of the budget of the entire country ($262 billion in 2005). Additionally, if these numbers were correct, it would mean that every person in the country (pop 20.7 million in 2007) would be receiving $21 835 per year in welfare payments.

Looking at these numbers I’m afraid I can’t take that article seriously, although if there is an error in my reasoning, please let me know”

My response:

“Just some quick research myself, according to the CIA factbook the GDP of Australia from 2007-2008 was $1.011 trillion (Aussie dollars). I can confirm that the Australian government spent $96 billion on social security and welfare in 2007 (http://www.rba.gov.au/EconomicsCompetition/2007/Pdf/2007_first_year.pdf), or close to 10% in terms of budgetary expenses and classification. According to the graph, between 2007-2008 the expense was 35%.

So yes there is 25% unaccounted according to the graph, I’ll chase it up and get back to you.”

What report from the RBA did you get the graph or base the data from the graph from?

God bless,

Dr Washo

http://www.rba.gov.au/Statistics/Bulletin/E01Ahist.xls

Expenditure in 2007-2008 was 36% of GDP. In 2008-2009 it climbed to 45%.

Exact numbers ($million):

GDP went from 273,448 to 275,135
Total welfare and Social Security payments from 97,842 to 124,406.

Both figures are nominal.

FYI - welfare and social security payments, as a % of total budget expenses, was 38% from the 12 months June 2008 - June 2009 (the most recent data available).

GDP is from here: http://www.rba.gov.au/Statistics/Bulletin/G10hist.xls

Could it be a % of the Federal Budget rather than GDP?

I’m not sure how the RBA calculate GDP in the above document, but they put total government expenses at $324,568m and GDP at $275,135m. Which makes government spending almost 120% of GDP…sounds a bit off!

I’m just taking what the RBA have on their website.

They also put GDP per capita at $12,607 (2009) - a quick google shows the CIA putting it at $37,300 (2007).

Confused here! Obviously the RBA’s methodology is different…but the welfare stats are from them too, so just being consistent here.

Hey Justin,

The cumulative GDP for 2008-2009 is roughly $1.37 trillion.  The RBA values for GDP are for quarters, so to get the total GDP for the year you need to add from June 2008 - June 2009 (like you did for the Welfare and Social Security payments).  In which case you find that 9% of GDP was spent of Welfare and Social Security rather than 35%.

Yeah the RBA put it a crappy way, really confusing.  Alternative site for Aussie economic numbers:  http://www.economagic.com/aus.htm

ah christ, how did I miss that :P

Well it’s still 38% of total govt. expenditure - will have to amend the chart.

cheers.

No worries, it got me too!  Thank goodness for another friend of mine, ironically also called Justin, who pointed it out for us!  But yeah, 9% of GDP and 38% of the budget… what the heck!!

Alright made a quick update to the article.

Thanks for spotting the error!

Back to your initial comment - “there is no culture of liberty or freedom in this country” - that is a huge problem in Australia, it’s all “what can the government do for ME”. There is no concept of responsibility on an individual level.

No problem,

Are you going to change/adjust the 1st figure that was incorrect?

Yeah I’m trying to figure out how to affect the mass opinion (as in regular battler) about the government through a libertarian lens… the only way I can think of is a movie or funny but still serious documentary?

Never mind about my first line :P

Hehe, I assume the old one was stuck in your cache?

I’ve been wondering the same thing…there is no way Today Tonight & ACA (where most Australians get their ‘news’) would show anything anti-government…unless it was poor regulation or something which they would of course propose ‘better’ regulation to solve.

PJ O’Rourke seems to have a fair bit of success using humour to humiliate the government…to highlight how absurd 99% of what they do actually is.

When you add healthcare in as well (which is basically a form of welfare spending) it’s almost 16% of GDP; over 53% of total spending just on health and welfare.

Healthcare spending alone has gone from 0.76% of GDP in 75/76 to 4.45%. Welfare from 1.28% to 11.36%.

Those are pretty significant increases.

I wonder whether the increase in spending is inversely proportional to the quality of healthcare… don’t know how to measure that?

I believe it is…Friedman seemed to think so anyway: http://hadm.sph.sc.edu/Courses/ECON/CLASSES/Friedman.html

“Gammon’s Law” - ”[Gammon] was led to enunciate what he called “the theory of bureaucratic displacement.” In his words, in “a bureaucratic system . . . increase in expenditure will be matched by fall in production. . . . Such systems will act rather like `black holes,’ in the economic universe, simultaneously sucking in resources, and shrinking in terms of `emitted production.’”

There’s also a slew of books done by Charles Murray, one in particular called ‘Losing Ground’ about the welfare programs of Pres. Johnson (you know, the Great Society crap).  Totally pwns it.  Been listening to Tom Woods Jr give lectures about it (Mises.org), very good.

Yeah - the evidence is overwhelming but it’s still very hard to get people to understand it…they always resort to emotional pleas “but people will die”, “but people will starve” and so on.

To be fair, they are partially justified - generation after generation know nothing but welfare. Their dad was on welfare, his dad and so on. It makes it very hard to remove welfare programs when these people honestly have no idea how to survive without it. This includes ‘free’ health.

At some point you have to ween them off the juice - but I agree with Hayek that it has to be a gradual process, you can’t just cut them off overnight without causing some serious social problems.

The most important thing is to try to prevent even more government involvement. It’s a lot harder to wind bad policy back than it is to implement it…

A good example is the calls by politicians to ‘curb population growth’ - in other words stop the poor reproducing…I don’t know how crazy they can go, probably to the extreme of sterilising people by adding stuff to their water/bread (it’s pretty easy to do - the whole reason Hitler added floride to the water was so he could easily drug his population - we happen to be one of the few countries that still do it…and add iodised salt to bread).

It’s like feeding the birds at the park and instead of telling people (government) not to feed them (welfare) they simply poison the excess birds…