The lesson of the global financial crisis is that freer markets work and are vital to address our current local challenges.
At the heart of the crisis were government-mandated, sub-prime loans that were repackaged as ‘‘toxic debt” – hot potatoes that banks passed around in a circle. When the music stopped and people couldn’t repay these bad debts, the private sector was exposed because of government failure. This was compounded by unsustainable public debt.
But governments haven’t learnt their lesson. And we need them to before the next round of government failure harms our society.
At the moment we pay a lifetime of taxes expecting governments to foot our health and education bills. The ‘‘common weal” system appeals to our sense of a ‘‘fair go”.
But government reports show health costs are set to increase 3 times by 2050, while fewer people pay taxes because of an ageing population. That means longer waiting lists, higher taxes, or both.
In future, delivering sustainable, equitable services will require free-market approaches. We can start by adapting the lessons of compulsory superannuation and, with offsetting tax cuts, create Medicare private health savings accounts. Taxpayers’ money would only be needed only if a person hadn’t, or couldn’t, save enough. Considering a third of a person’s health expenditure occurs around their final years, most would have plenty of time to save. This would also create incentives for people to stay healthy.
We also need real education reform to increase opportunities and drive upstandards.
Under current education funding, less well off families don’t get to choose their school and are denied the benefits of competition that the private sector provides. It’s not fair.
Instead, government should provide parents a per-student voucher redeemable at any school for the cost of an education, thereby giving all families the same choices.
That would narrow the advantage wealthier families have over poorer ones.
But achieving these outcomes would require those on the left of the political spectrum to explain why governments are not always the solution, as they promised. Sadly, that leadership is lacking.