Australian equity and public policy

Equity is a touchy subject these days. The march towards a more pure, but still thoroughly mixed market, lends us to ask how we value equity in relation to different groups of people, and if there are possible significant changes which could dramatically improve society.

Horizontal equity asks that people are treated to same, if they are in the same position. This is an important concept that helps sustain a sense of equality and simultaneously combats discrimination. In relation to Government, this is can be applied to the tax system. Anyone in Australia who earns $100,000 gross income from a salary (as most Australians do) will pay the same tax on that income (obviously, after deductions etc etc).

On the other hand, vertical equity asks those of us who are above the average to contribute more, in an attempt to help those who are below the average. Again in relation to Australian tax, this applies as income tax is ‘vertical’ – as income increases, as does the percentage that is given as tax.

Taxation seems to be the common subject when we talk about equity and equality in Australian public policy. It is fairly simple to understand, the vast majority of people can relate to it and it goes to the heart of values about how much an individual should contribute to the broader society they live in.

Yet there is a whole wide world outside of taxation that can be subject to a discussion on equity. For example, youth allowance. When I was at university, to qualify for independent youth allowance benefits, you had to earn approx $18,000 over an 18 month period. This applied if you were from the poorest household in the neighbourhood or had just completed your education at the most prestigious school in the state. This system was strictly horizontal – eligibility was determined only on the total monetary figure. Yet is this type of system ‘equal’? Do kids from rich families deserve money for earning money? Do kids from average families deserve the same amount of money compared to kids from poorer families?

I think in this example most people would agree that kids from poorer backgrounds deserve more support. However, I also think that most people would agree that if two kids do the same amount of work, then they deserve the same benefits. These statements can be highly contradictory in certain situations but I think it demonstrates quite nicely why public policy can often be a very difficult nut to crack.

To perhaps a more relevant area that will have to be thought about very seriously over the next couple of decades. How much should people have to individually contribute to their own health treatments? As the baby boomers decline gracefully in age, there will be loud shouts on all sides of the debate – more health spending, more health spending on old people, more preventative health spending, less health spending on smokers and fat people. This debate is inevitable so I suggest you form some opinions on all of the above questions. Yet what should be done? If I am 80 years old and my health costs are $5000 / year, should the Government pick up the tab? Should they pick up the bill if I have $5000 sitting in my bank account for my next holiday to Fiji? Should I get my treatment faster if I can provide some of the money?

These issues all relate to equity in a society that provides by individual contributions. They are also issues that are playing out now. Think about private health cover. My Dad was in the enviable position to pay for my private health cover right up until I was 25. This allowed me to get my tonsils out extremely quickly when required. Comparatively, the waiting list for a public hospital was about two years. Despite the benefit I enjoyed, I am not sure I am comfortable with a society in which that disparity can exist so easily. It is not an issue on the tips of people’s tongues. In fact I have never once seen a written word in a newspaper discussing the issue of tonsils and the public/private health debate. This is only some-what in jest. While I may be naive to wish for money not to totally dictate how society functions, I think it should be a serious discussion point.

Horizontal equity would have me believe that everyone can contribute to a private health fund if they wish to do so. There are no major restrictions on who can join (again, obviously pre-existing conditions are a factor here) and everybody gets the same service for the same price. Resources can be allocated and the benefits enjoyed. Yet this strikes me as a highly unjust position to be in.

When you add layer after layer of expense that is incurred in daily Australian lives – rent/mortgage, petrol, food, phone, sport, films, children, bills – the situation quickly becomes unequal as an individual must choose between the benefits of two (or more) societal wants. To me, this says that the Government should provide for those who cannot in the most basic of our communities expectations – shelter, health, education – and further, those who can provide should provide.

The current environment for public and private healthcare in Australia is unsustainable. In the ACT, healthcare accounts for over 30% of the total budget. This will only increase over time. Our response to these questions about health access will say a lot about the society we choose to live in.

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