Australian society pays special attention to social responsibility and ethical principles. Small market size and isolation do constrain both the overall productivity and the scale efficiency of Australian manufacturing industries. This problem will be mitigated by long-run economic growth. It may be exacerbated by the general equilibrium adjustment of an expanding resources sector insofar as it makes the suboptimal scale of operation more attractive in some industries. High levels of tariff protection impose an economic cost that consists mainly of making suboptimal scale production feasible. In so doing, Australian protection acts like amplified international transportation costs. Australian manufacturers have apparently made the best of the opportunities open to them, in the sense that their “revealed” production function claims a relative productivity advantage in activities that are small scale and not capital intensive. This behavioural finding may have implications for the allocation of investments in the development and adaptation of production technology.
Any social welfare system modifies the distribution of income that market forces alone would generate. All actions of government, from the establishment of property rights and the maintenance of national defence to cash grants to indigents, have such an effect. Hence, the designation of some programs, but not others, as “the social welfare system” is necessarily arbitrary. Furthermore, the number and size of social programs a nation find desirable depend in part on the degree to which private arrangements have evolved to meet the same objectives. Australia’s social welfare system is different from that of any Western European nation, the United States, or Canada. Australia relies mainly on income-tested benefits, not only for the nonaged poor–who receive such benefits in many other countries–but also for the aged and the unemployed. Australian tax laws encourage employees to take most private retirement benefits as lump-sum payments rather than as pensions. Somewhat paradoxically, most public transfer payments are fully taxable, whereas most private retirement benefits are substantially free of tax. Three key areas of the discussion focus on the interactions between tax policy toward private retirement benefits and public retirement income programs; the implications of the reintroduction of national health insurance by the Hawke government; and certain aspects of unemployment benefits that deserve to be reexamined in the light of trends in labour force participation.
In principle, the state can be asked to play widely different roles in trying to assure an adequate income for the elderly, sick, and disabled; the unemployed; and single parents, widows, and orphans. At the one extreme, the state can be viewed as a repairman, called in to fix problems when some people find themselves with less income than society is prepared to tolerate. In this view, the state is an agent-of-last-resort, called upon to act only if all voluntary or private measures have failed. Under this principle, cash assistance and social services are provided only for the truly needy as measured by an income or means test. Benefits would be designed to prevent utter destitution, but not much more. Alternatively, the state might not require a demonstration of the need for at least some benefits. Under this policy, some and perhaps all assistance would be available as a matter of right. How far away from the model of the state-as-repairman society moves clearly depends on the number and generosity of benefits available as a matter of right and on whether payments are generous or derisory. Indeed, benefits may be so generous or income tests so lax that virtually everyone qualifies.
This new government legislation leaves practically no corner of society untouched. It has had a strong impact on the interaction and the issues that involve the government, business, and the public. The government has imposed laws, regulations, and other forms of persuasion on both businesses and the public. In turn, the business has used lobbying and its own form of persuasion on the government for favourable treatment, while the public, in general, has used the political process, voting, and pressure and interest groups to make their voice heard by the government. The role of government in business and social actions today is broad in scope. It extends all the way from local community laws and regulations to international laws and regulations. Multinational companies like Mark & Spencer are involved with laws and regulations at all levels of government, from local laws to international laws, while domestic companies are influenced and controlled primarily by local, state, and national laws. The government has seen its role as the helper, promoter, and protector of the general health and welfare of the nation, business, the community, and the consumer. With the growth and expansion of towns and cities, the local and state legislatures felt compelled to write new legislation which would “protect the social welfare” of the increased and higher density population. New zoning laws were passed on lot sizes, fence heights and locations, sidewalk requirements, and on every imaginable subject one might think of.
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