In our view it is the responsibility of government to provide equality of opportunity with a fair and comprehensive support system for those who are most vulnerable. After that it is up to individuals in the community to accept personal responsibility for their lives and their destinies. Our first budget is based on the premise that it is fair to expect those who have the capacity to pay, to accept more personal responsibility for their cost of living, the cost of raising their children, their health services and their education. Our welfare system is unsustainable in its current form and it is not well-targeted to those who really need our assistance. The federal government will spend $146 billion next financial year on welfare. This is 35% of the federal budget. We spend more on welfare than we spend on any other single policy area including health, education or defence. Payments are too broadly available to too many people. As a result, less is available for those most in need. At the moment over half of Australian households receive a taxpayer-funded payment from the government. We have a very comprehensive welfare system. But it should not be taboo to question whether everyone is entitled to these payments. This year the Australian government will spend on average over $6,000 on welfare for every man, woman and child in the country. Given that only around 45 per cent of the population pays income tax, the average taxpayer must pay more than twice this amount in tax to fund welfare expenditure.

In other words, the average working Australian, be they a cleaner, a plumber or a teacher, is working over one month full-time each year just to pay for the welfare of another Australian. Is this fair? Whilst income tax is by far our largest form of revenue, just ten per cent of the population pays nearly two thirds of all income tax. In fact, just two per cent of taxpayers pay more than a quarter of all income tax. Maybe these taxpayers would argue that the tax system is already unfair. Our duty is to help Australians to get to the starting line, while accepting that some will run faster than others. So with a compromised taxation system we must deal with the pressures on our spending programs ... and they are growing. As it stands around one in five Australians pays to see their doctor. For these patients the average additional cost was $28.60 per visit – or more than four times the proposed co-payment.

Our universal health care system is certainly not free. Over and above Australians’ individual contributions, Medicare costs the budget around $20 billion each year. Some critics claim it is unfair to ask a pensioner to pay $7 for each of their first ten visits to the doctor. At the same time those critics argue it is fair to have the very same pensioner pay $360 for their first 60 PBS medicines prescribed each year by that very same doctor. By introducing a co-payment for Medicare we are able to build a $20 billion Medical Research Future Fund that in the next decade will double medical research funding in Australia. This is fair. Our universities are overwhelmingly government-funded but the only way they have been able to survive and grow is with international fee-paying students and increasing taxpayer support. But times have changed. Our reforms not only lift the capacity of our universities to be able to compete in the frenetic and intensely competitive global world of education, but they deliver equality of opportunity on a scale never previously provided.

Student loans will continue to be made available to students to ensure that they don’t pay a dollar upfront, making study more accessible to all, regardless of their socio-economic background. And most importantly, for the first time, universities will be required to direct $1 of every $5 of additional revenue raised towards the Commonwealth Scholarship fund, to support access for students from disadvantaged backgrounds so they don’t miss out on a university education because Austudy or Youth Allowance is not enough to see them through. By 2018, our reforms will see the Australian government supporting over 80,000 more students in further education. As the world becomes more competitive and global, as information becomes more immediate and comprehensive, as disruptive influences from outside our immediate community become more powerful, governments will inevitably have less influence on people’s lives. In health, it is more medical research combined with new technology and better global partnerships that will deliver better health outcomes.

In education, it is tomorrow’s employer who is driving the new standards in curriculum rather than public policy. In welfare, it is self-sufficiency and personal empowerment that will help people get off welfare and into productive employment. It is not the job of government to manufacture the outcome from public policy in such a way as to ensure that every person is an equal beneficiary notwithstanding their personal effort or circumstances. Some observations of inequality are based purely on outcomes with no regard to efforts or circumstance. Our duty is to help Australians to get to the starting line, while accepting that some will run faster than others.

In striving to achieve equality, it is not the role of government to use the taxation and welfare system as a tool to level the playing field. We must use the levers of government to help those who are vulnerable and frail. Provided we ensure that those most in need receive the most support, our ambition must be for equality of opportunity rather than equality of outcome. This is what the budget sets out to do. Joe Hockey is the Treasurer. This is an edited extract of his speech, A Budget for Opportunity, to the Sydney Institute last night. Read the full speech here.