Today there has been some pretty credulous reporting around the traps by journalists who should know better about a Centre for Independent Studies report that suggest government spending is out of control.

I don’t really want to get into a think tank war, but this report got big coverage in the AFR and might spur some debate so I thought it worth running a comb through the pages and see if we find any lice.

And yeah we do. A lot.

I know some of you are stretched for time, so here’s a quick summary of the paper:

1. Police, teachers, doctors, nurses, firefighters, defence personnel and anyone working in care are unproductive because they get money via the govt (just trust us this must be true)
2. Relying on public health is less productive than… errr what happens in the USA (oh dear)
3. Australia has a big public sector (if you exclude the biggest spending nations and also ignore the data that shows we actually have a very small govt)
4. Countries with big public sectors are inefficient (but please don’t ask us to provide any evidence of this) 
5. If we have more govt spending then we will have less charity and philanthropy (seriously)

Ok, So now you know the big strokes, let’s get into it.

First off the report was given a cosy run in the AFR with the headline “More than 50pc of voters now rely on government for their main income”. This if course is meant to scare you because it wants you to think they are talking about welfare dependency because of the idiotic belief that providing assistance for those on low-incomes or with caring and disability concern is a bad thing. The only problem is that JUST LAST WEEK the Parliamentary Library put out a report on “Working-age income support recipients”.

What did it find?

• In June 2023, close to 12% of the population aged 15–64 received income support payments—the lowest level in more than 45 years. June 2024 was only slightly higher at around 13%.
• The long-term decline in working-age welfare receipt is partly due to previous governments’ policy changes restricting eligibility for some payments, phasing-out other payments, and tight targeting through means testing.

So clearly the suggestion that somehow Australians are massively dependant upon welfare is wrong. So what is the CIS talking about?

They are talking about public servants which includes (hold your breath) teachers, public nurses and doctors, care workers, defence personnel, police, and anyone who receives money through the NDIS (eg a speech therapist whose patient is NDIS funded) – basically anyone who can be included in the “non-market” sector of the economy.  

Yeah. Suddenly it all seems rather a stretch. Once they add that up and also welfare recipients the paper says “it is likely that more than half of voters rely on government for most of their income.” Cripes, couldn’t even be bothered actually providing a precise number.

Ok, so why is this even a bad thing? Well the CIS says “Bigger government also corrodes ‘social capital’, which is a way of describing the ties that keep society functioning effectively — such as extended family supports, philanthropy, charities, volunteering and the spirit of self-reliance in place of state dependency.”

Seriously. They are arguing that big govt is bad because it lessens the need for philanthropy.

Talk about threatening us all with a good time.

They also think that teachers, nurses, police, defence personal are in effect leeches on society because they are “dependent” on govt funding and this means they will all want wage rises which means more govt spending.  

They also suggest that the government arguing for better pay for care workers was a bad thing. The report doesn’t want to think they are cruel, because it notes that “this is not to deny that many of these workers perform useful and sometimes vital services for the rest of the population and are motivated by high ideals of service.” But you know… fuck ‘em.

Because the paper is pretending to be a serious bit of analysis instead of a ideological brain fart, it tries to link all this government spending  with productivity. Does it do this with data and facts? Oh my sweet naive child. Please no. Merely the paper asserts that “As government spending grows, the marginal benefits become smaller while the marginal costs of financing the higher spending through taxation or borrowing increase.” Any proof of this? Nope.

For example, they could have compared the level of government spending and productivity across the advanced economies in the OECD. But then that would have shown that higher govt spending is associated with economies with higher levels of productivity. Oops

So what is the up shot? Apparently we are “moving toward European-style welfare state dimensions.”

Please. If only. This claim is completely without any basis in reality or fact. As we know welfare dependency is at record lows. But idiotic ideological reports its seems continue to grow…