In my working life I have often had to battle complexity. People of great intelligence see an issue that needs attention most react and say, “What should we do?” The result is a series of complex plans to address the problem. Often these plans work for a short time, but as circumstances change other problems arise and then people say, “What should we do?”
Multiple iterations result in the overwhelming complexity that plagues government services and revenue collections. We can see this in the recent bizarre activities at Centrelink. I did some calculations in my head and the number of permutations permitted by the various payments systems existing in the welfare system amount to many trillions, while the number of beneficiaries are measured in only millions. That’s complexity overkill. It’s no wonder that it’s beyond the capability of an individual public servant to be certain that any individual qualifies for a specific benefit at what particular rate. Only a computer can work it out and this week we learnt that even the computer gets it wrong.
So why don’t we ask the question, “What should we stop doing?” We should stop trying to fine tune and target every payment in every case. We shouldn’t have both the welfare system and the tax system handing out welfare. What do I mean? Consider the tax-free threshold. It sounds fine doesn’t it? Lower wages pay less tax. But actually, every income earner gets the benefit of the tax-free threshold. So that is possibly $65 billion dollars that is effectively welfare given to everyone! And lower tax rates for lower incomes takes that figure to over $100 billion.
Just think about how much money that is. Suppose we collected that tax and gave it back as a welfare payment? The result would be similar. Taxes would be flatter. And what about if people were unemployed? They would still get the payment. Then it would be welfare in the traditional sense, but they wouldn’t have to make a claim. They wouldn’t have the chance to cheat or get overpaid. They would still have the same incentive to work as everyone else. No welfare-dependence and no poverty traps.
As the French say “Voila!” And as the Romans used to say, “quod erat demonstrandum.”