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The ethics of 'user' pays'

by Hugh Mackay and Simon Longstaff

This paper is presented in two parts. The first part, written by Hugh Mackay, presents a distillation of findings arising from a qualitative, diagnostic exploration of community attitudes and reactions to the growing emphasis on the concept of User Pays. These findings were originally published in The Mackay Report: Keynote (October 1992)(1).

The second part, written by Simon Longstaff, is an examination of some of the key ethical issues that press for consideration.

PART 1: the findings

By Hugh Mackay

User Pays appears both inevitable and reasonable ... at least in theory.

The evidence suggests that Australians are well on the way towards general acceptance of the User Pays (UP) principle. The idea that, increasingly, people will be expected to make payments which are specifically related to the services they receive - especially from governments - is an idea which is regarded as being symptomatic of 'the way the world is going'.

As economic conditions become harsher and less predictable, Australians appear resigned to the fact that UP will become an even more widely accepted phenomenon, and that the trend towards making individuals pay in direct proportion to the services they use is likely to accelerate.

Indeed, although there are some very specific objections to UP, some underlying doubts about the integrity and legitimacy of its implementation and some uneasiness about the real relationship between UP and taxation, there appears to be general approval for the idea that individuals should be made more aware of the services they are using and that, in turn, they should become more thoughtful and responsible in their usage.

Sometimes, the acceptance is based on the idea that 'the principle seems fair enough'. When Australians debate the UP question, they often find it hard to argue with the principle (even though they have plenty of argument with the practice). When consumers talk about the fairness of the UP principle, they are generally referring to the legitimacy of a direct relationship between receiving a service and paying for it:

It is more equitable ... people who don't use a service shouldn't have to pay for it.

They are thinking of charging you to take out library books. People who don't use libraries think that's a good idea, because, at the moment, the money is coming out of their taxes.

My neighbour spends two hours a day watering her footpath. When I watch her, I think the pay-for-what-you-use water bills are very fair.

But when they discuss the fairness of the UP principle, consumers are also very quick to point out two implications which they believe should flow from this principle:

1. People providing the service should be more accountable
2. UP should reduce taxation

Discussion about the UP concept led into some deep and complex questions: the efficiency of the Public Service; the relationship between taxation and other charges; the responsibility of governments; the extent to which efficiency should be tempered by compassion; the extent to which the community should share the cost of all government services, even if the heaviest users of them should be expected to pay 'a little extra'.

In spite of the signs of growing acceptance of the principle of UP, consumers recognise this as a relatively new concept, and so they are still working out in their minds what the long-term implications of it may be.

In the meantime, they are hoping that the increasing tendency to implement the UP principle will mean that the actual relationship between payment for services and provision of services will become more transparent.

It would be over-stating the case to suggest that consumers actually welcome the swing towards UP, or even that they strongly approve of it. But it would not be over-stating the case to suggest that they are already accepting of it, and that they can see the fairness and reasonableness implicit in the concept. But that is a very different thing from suggesting that consumers believe that the UP arrangements now being introduced are necessarily fair. As the following observations reveal, the gap between UP in theory and UP in practice is very wide ...

User pays, but who receives the benefit?

Australian consumers' growing acceptance of the UP concept should not be interpreted as benign acceptance. Indeed, their belief in the theoretical integrity of the UP principle is not matched by faith in the integrity of its implementation: on the contrary, Australians are quite cynical about the reasons behind the contemporary push towards UP, and sceptical of the long-term benefits which might be expected to flow to the community.

Whereas Australians seem perfectly willing to accept the theory of UP as being based on the principle of fairness, they doubt whether this principle is, in fact, the motive for UP initiatives. This doubt is central to the rather cynical way in which consumers speak about UP: they are inclined to reject the proposition that UP has come into vogue because of a commitment by governments and others (notably banks) to the principle of fairness; rather, they interpret the move towards UP as a rather desperate symptom of financial difficulty, probably linked to poor management.

In other words, consumers are saying that, while they themselves can accept the legitimacy of the UP principle, they believe that the widespread introduction of UP is part of a completely different agenda: comments made in this study consistently revealed the belief that UP is being introduced for reasons which have much more to do with expediency than with justice. At the heart of this belief lies an uneasiness about the managerial competence - and even the integrity - of public service and other organisations which are now so enthusiastically embracing the UP principle.

The Government says that 'user pays' will increase efficiency but why isn't it efficient to start with?

The Government is bringing in all this 'user pays' business to get more money. They are so far in debt it is another fund-raiser, like speed cameras.

The burden of such comments amounts to this: consumers would be far more comfortable with the current push towards UP if they believed it was based on a desire for a more equitable distribution of charges across the community. In fact, they believe that it is little more than an attempt to find new ways of raising additional revenue, rather than redistributing the existing charges. In other words, they believe that the benefits of UP are quite unlikely to flow to the users themselves, since the motive is thought to be almost exclusively concerned with the need for increased revenue.

Community cynicism on this point is very significant: it suggests that UP is rapidly acquiring the status of 'deceptive packaging': consumers who believe in the UP principle find themselves disinclined to believe that it is the principle which actually lies behind the practice.

Nevertheless, consumers want to believe that UP will ultimately achieve what it is supposed to: they hope that toll monies and other charges related to road usage will be directly applied to roadworks, without compromise; they hope that money charged for entry to national parks will all be spent on the preservation and care of those parks; they hope that increased bank charges will lead to an improvement in the quality of service provided in return for those charges; they hope that government departments who are now charging for services which were previously provided free of charge will become more efficient and more publicly accountable for what they do. But, at present, there is real doubt that the direct relationship between service and charges actually exists.

The more they discussed the UP concept in practice, the more consumers were inclined to adopt the view that “it's just another form of taxation”. Confirming their fear that UP, in practice, has more to do with expediency than justice, they believed that it was simply an additional revenue-raiser, rather than a means of ensuring a more equitable deployment of charges.

The fear that UP may be increasingly used by government and other organisations as a form of 'deceptive packaging' is increased by cases where consumers feel that they are being asked to pay for services which they don't use, or where levies and other charges appear unrelated to the consumers' pattern of usage.

Underlying all such concerns is the anxiety about managerial competence and public service integrity:

You pay your taxes, but then you are paying these extra charges on top. I could swallow it if I believed that the Public Service was becoming more efficient, but you don't see the signs, do you?

And it's not just the integrity of public servants which is being called into question, either:

I suppose one reason why there are all these additional charges is that so many people rort the system. Look at Austudy ... I know a lot of kids around here who went to private schools who are now on Austudy. Their parents could afford to pay for them, but they have fiddled the system somehow. That just makes it more expensive for everyone.

Many of the comments made in the study suggested that UP was something of a 'wolf in sheep's clothing'. When new charges were interpreted as 'taxation by stealth', or where charges were being imposed for services which they did not personally want or use, the UP principle was thought to be being abused.

In the end, it is fair to characterise the current state of community attitudes towards UP as being confused: whereas UP is seen as having the potential to clarify the relationship between services and charges, such clarification has not yet emerged. As things stand, consumers are reserving judgement about whether UP is legitimate or deceptive. They are still waiting to discover whether their taxes provide services up to a certain level, and UP charges cater for usage above that level, or whether, on the other hand, UP is just another form of taxation which will increase the total burden rather than shifting it in direct proportion to service usage. Indeed, the number of cases where consumers believe that UP is blatantly discriminatory only heightens their scepticism about it.

Nevertheless, judgement is still being suspended. In spite of such widespread cynicism, the hope that UP is a pathway towards a more equitable system of taxation (to say nothing of a means by which the Public Service might be made more accountable) is sustained.

The practice of UP often appears discriminatory

Consumers appear uneasy about the application of the UP principle in cases where the customer has no control over the level of usage of the service being provided, or where light users appear to be unfairly discriminated against.

Such uneasiness fuels consumers' cynicism about the implementation of the UP principle. If the principle is valid, they argue, then it should not involve any discrimination against non-users or light users, and it should certainly not involve 'trapping' people into the payment of charges which they simply can't avoid.

The contrast between charges for electricity and new (or proposed) charges for water was the subject of considerable discussion in this study. Whereas customers are now well accustomed to the idea of paying for the electricity they use, they are not yet confident that a comparable system is really being worked out in relation to water usage:

No-one turns a hair about paying for the electricity they use. We have always been used to that system. But some of the new water things seem a bit funny. For example, they reckon that the Water Board is not going to let you install water tanks ... you have to use their water. So they are giving you no choice.

I suppose it is fair enough that we will have to pay for water, the same as we pay for electricity. But it is different, isn't it? After all, the water falls out of the sky, whereas they have to produce the electricity. I suppose the charges aren't the same, really ...

Perhaps the most savage accusations of discriminatory charges were levelled at the banks. To some extent, hostility about bank charges is heightened because some banks apparently waive charges which are imposed by other banks. But the most trenchant criticisms referred to the unfairness of bank charges, on the grounds that they did not seem to be imposed in terms of the UP principle at all. Two particular criticisms were made of the unfairness of bank charges:

First, that charges appear to be more harsh for smaller, rather than larger, customers (thus contravening the fundamental principle of UP by charging light users more than heavy users);

Second, that banks impose quite substantial charges on people who receive dishonoured cheques, through no fault of their own.

That second complaint (charges imposed on the receiver of a dishonoured cheque) was regarded by many people as a symptom of the 'deceptive packaging' aspect of UP. According to any principle of fairness - as understood by consumers themselves - it could be readily conceded that a person who issued a dishonoured cheque should have to pay some penalty, but bank customers could not identify a 'fairness' principle which would justify imposing a charge on someone who had unwittingly received a cheque which was going to be dishonoured.

Although that practice evokes anger among bank customers, the practice of imposing charges on bank accounts which fall below a certain balance also generates negative reactions - but they are more in the nature of wistful sadness about 'the way the system is going' rather than real hostility.

Imagine charging you more because you are a small customer. That has certainly got nothing to do with this so-called 'user pays'. They are making the person who doesn't have so much money pay more than the person who has more money and probably uses their account more. Don't tell me that big business can't negotiate special deals ... they can probably get all their bank charges cancelled. They are hitting the little person, which is the opposite of what they are supposed to be doing.

With an increasing emphasis on tollways, Australians are beginning to realise that location can be the basis for UP discrimination:

People on the North Shore (of Sydney) have been paying bridge tolls for years. You don't think about it because it has been going on for so long. But other people don't have to pay a toll for going into town ... it makes quite a big difference to your weekly expenses.

Why should the people in the western suburbs (Sydney) pay a toll - and both ways too! Why didn't they put a toll on the Gore Hill Freeway?

The subject of tollways serves as a sharp focus for debate about the UP principle. Whereas some people acknowledge that tollways are the way of the future (because of the inability of governments to be able to afford major roadworks), they do question whether the cost of such roads should be borne only by those who use those roads, or whether the cost should be borne by the whole community, since every road is part of the total road system.

Where people have a choice (to use a tollway or a convenient alternative), the imposition of charges on the tollway seems fair. But, as in the case of the Sydney Harbour Bridge (where no 'free' alternative is convenient), the discriminatory aspect of the toll seems more apparent.

Certainly, when people talk about the discrimination of some UP charges, they often focus on the poor, the under-privileged and/or those who suffer in other ways:

It doesn't seem fair that poor people should be deprived of going to museums or national parks or things like that.

You shouldn't ever have to introduce full fees again for education, because it just means that it is only the rich who can afford to be properly educated. 'User pays' discriminates against people who can't afford to pay for something.

Art galleries and museums have always been free in the UK, but now they are starting to charge and they are getting only two-thirds of the people through because a lot simply can't afford to go. That's the way we seem to be heading here, too.

If they bring in fees for national parks, it will mean the under-privileged won't be able to go. Everyone should be able to learn about the delights of nature at no cost. The Government has no right to deprive people of seeing parks.

You can't run a society purely on the basis of economic rationalism, because then the principle of 'user pays' would be in force, and what an enormous advantage the rich would get if they were taxed at the same level as the poorer levels of the community.

Timed telephone calls are a good example. I'm in favour of that. That would be fair. That would be a good use of the principle of 'user pays'. But you have to remember poor people. ... And what about lonely people who rely on the phone for their social contact? Timed local calls wouldn't really be fair for them, would it? That would be a tough one.

As a curious footnote to the complaint about discrimination, a number of participants in this study spoke of the way in which the UP principle may discriminate against those who meet their obligations to pay, because of the number of people who are prepared to 'rort the system' or to avoid their obligations in some other way:

As for the school levies, it would be okay if you could enforce the idea of paying these fees ... too many people think they should get something for nothing.

Why should some parents have to pay the State school fees and not others? When they don't pay, it means that all the kids' equipment and facilities are lowered.

I know there are plenty of people around here who don't pay their P&C levy, when they could perfectly well afford to. But what can you do? You can't kick up a fuss, or their kids will suffer.

Thus, in spite of some feelings of compassion for the genuinely poor, consumers are very unsympathetic towards those who simply refuse to pay when they could well afford to: such behaviour is thought to be a particularly nasty response to an attempt to introduce the UP principle. In order to be fair, consumers argue, the practice of UP must embrace all users who can afford to pay. The idea of relatively wealthy people avoiding their obligations (for example, through the abuse of Austudy or other welfare provisions) is particularly distasteful.

In precisely the same way, consumers fear that, in practice, UP will probably discriminate in favour of 'big business'. As has already been reported, bank customers with small accounts resent the fact that they are being asked to pay charges which they are confident would not be imposed on larger customers: indeed, it is widely assumed that 'big business' would deal with banks on very favourable terms - as a direct contravention of the UP principle. More generally, however, large business organisations are thought to be in such a powerful position that they may well be able to avoid paying their fair share of whatever charges are being imposed on the community. Charges relating to the environment were a particular case in point:

There's new legislation that regulates heavy industry and makes them pay for the pollution of the waterways. But these costs have to be paid by the consumer in the long run. They are simply absorbed in the prices of the products we buy.

Big business has to clean up their act. Have you seen how dirty the Nepean is? They don't pay enough for the damage they do. They only fine them a minimal amount. It is cheaper to pay a couple of thousand dollars in fines than have the waste removed.

In the end, the most important sign to the Australian community that the UP principle is fair is that, in its application, it will appear to be fair.

The three main points of resistance

1. "I'm already paying taxes"

As noted earlier, discussion of UP led some consumers into quite detailed debate about the role of taxation and the extent to which governments should provide 'free' services out of taxation revenue.

Where people were most strongly resistant to the UP principle, it was generally because they believed that the taxation system should be adjusted so that it operated more realistically to provide community services traditionally associated with governments.

The sneaking suspicion that UP is a new form of revenue raising on top of taxation works against the belief that, in some areas at least, it is reasonable to expect people to pay for the services they use.

2. "This used to be free"

Understandably, consumers expressed particular hostility towards UP when they are asked to pay for a service which was previously provided free of charge.

Objections on this point range from recently-introduced bank charges to delivery charges from furniture stores:

The Police Department changed its name to Police Service and now the police send bills for sporting functions. They shouldn't be marketable like this ... they are an essential service.

Government departments seem to have started charging for every piece of information they give out now.

The park ranger said our club could have a fun run through the National Park, but only if each runner paid a dollar. We told him to stick it. Why should we have to pay for the use of nature? It's been free for centuries.

They quote you a certain price, and then you find out there is quite a big delivery charge on top of it. I think they should include it in the price.

3. "The bank is making money out of me anyway"

At various points in this paper, it has emerged that particular hostility has been directed at banks' implementation of the UP principle. Undoubtedly, one of the major points of resistance to bank charges is that bank customers believe that the bank is already making money out of them - either by the way it invests their deposits, or by the rate it charges on their loans. Given those 'classic' sources of income, bank customers find it hard to see why the banks need to impose additional charges:

It infuriates me when I realise that I am paying fees on a cheque account, and the bank is not even paying me any interest. So they have the use of my money plus the charges. I suppose I am a fool, really, because some of the banks do pay interest on cheque accounts.

'User pays' just means you pay more to the bank.

The bank invests your money to their advantage and then charges you more on top.

The banks are going to have to change their tune. It's not fair - they are using their power to get at us.'

My wages go automatically into my State Bank account, so I have to pay to get at my own money?

UP makes you think twice about what you are doing

Because Australians believe that the principle of UP is an inherently fair one, they are disposed to look for some of the benefits of its implementation - in spite of their current cynicism about the 'real' reasons for its introduction.

The prospect of having to pay in direct proportion to the use of particular services creates the possibility that we may become more responsible in our use of those services:

If they introduced this system where you pay per weight of rubbish you throw out, I think it will make people cut down on their rubbish.

I think we should have to pay for tertiary education. It might get rid of all these perpetual students. I know someone who is forty now and who has been studying ever since she left school. The government shouldn't be paying for her ...

Such reflections indicate a willingness on the part of some Australians to accept that, in the past, we may have been reckless in our over-use of available services.

But Australians acknowledge that the introduction of UP, while making some of us more responsible, may make others less responsible: the idea of increased garbage charges, for example, led several participants in this study to assume that some people would put garbage in their neighbours' bins, or simple dump rubbish on the side of the road.

More generally, though, people seemed to think that the gradual increase in the imposition of UP charges would lead to people being more thoughtful about their use of available services:

I try and avoid paying a toll by driving a different way to work. It is cheaper, but it takes me longer to get there. You have to weigh it all up and work out whether you want to save money or time.

I wouldn't mind having to pay more for water, as long as I had the option of installing a tank to collect it off the roof. They can't have it both ways.

In relation to rescue services, a number of participants in the study vehemently argued for UP on the grounds that it would cut down reckless and foolhardy behaviour among more adventurous members of the community.

In discussing the tendency to avoid charges imposed under the UP principle, many participants in the study returned to the theme of cynicism about government efficiency: they argued that, since the public service is so notoriously wasteful and inefficient, it is quite reasonable to avoid having to pay 'even more money to government':

People will always try to avoid paying for things, because the money is going to the government, and the government has always wasted our money.

I think you would get a lot more believers in this if people felt that the public service was really efficient. With the image public servants have got, people naturally resent the idea that they have to pay more for the same old inefficiency.

Such comments sometimes led on to a more general discussion about corporatisation and privatisation of the public sector. Although the community is hazy about the meaning of these terms, there is some awareness of the fact that increasing emphasis is being put on accountability and that some governments (notably in NSW) are attempting to introduce the methods and disciplines of private enterprise into the public service. Where UP is seen as being connected to such a move, people are inclined to be more sympathetic and to believe that their own more thoughtful behaviour could be seen as part of a general push towards being more responsible and accountable. But this is regarded as being a very long road to travel, with the goal of true accountability still far off.

UP is a symptom of a 'tougher' community

Even though consumers accept the legitimacy of UP in principle, they sometimes pause to reflect on the fact that, if UP becomes more widely adopted in our society, this will be a sign that Australians have lost some of their previous sense of being a community. Although the subject was not always explored in much detail, there is widespread awareness of the fundamental democratic ideal of people's taxes being pooled to provide services for the common good: the more we move in the direction of UP, the more people feel that our focus may have shifted away from 'the common good'.

This is obviously a vexed question, and it would be quite wrong to infer that Australians are generally in favour of higher taxation! Nevertheless, the relationship between taxation and the concept of UP is seen as a very delicate relationship, and there is no doubt that many Australians would agree with the participant in this study who, when attempting to sum up her feelings about the swing towards UP, commented that, &qupt;we have lost a precious intangible".

What is meant by the loss of that 'previous intangible'? Three themes emerged in consumers' discussion of the impact of UP in our sense of being a community:

• An increasing emphasis on 'my rights' which may encourage self-centredness and diminish our sense of responsibility towards the community as a whole;
• An emerging UP mind-set which could make us increasingly conscious of the need to avoid paying for things we don't use and could also, over time, condition us to believe that everything should be paid for and that we should neither expect to receive nor to give anything free;
• A heightened awareness of 'rorting' by others which could lead to a more aggressive and moralistic attitude towards those who appear not to be fulfilling their UP obligations (including the poor).

This is not to suggest that Australians see UP as an essentially self-centred concept: indeed, we have already seen that they generally acknowledge the inherent fairness of the UP principle. Nevertheless, there are definite signs of a shadow cast by the concept of UP: for all its alleged fairness, it is seen as placing increasing emphasis on the individual's own needs and rights, without encouraging people to take the needs and rights of others sufficiently into account.

Conversation about the loss of the 'previous intangible' sometimes led to direct comparisons between the public service and private enterprise. A recurring theme was that, although the public service is not expected to be as efficient and cost-conscious as the private sector, this is not necessarily a bad thing: the point was often made that the public service should serve the community and that it should be under no pressure to cut costs (often implying 'cut corners') in ways which might increase its cost-efficiency but decrease the quality of its service to the community.

The railways were occasionally cited as a good example of this principle:

There is a kind of 'user pays' because you do pay for your ticket, but there is no way that can support the railways. The railways are always heavily subsidised - and so they should be.

Some participants in the study reported experiences which suggested that the move towards a tougher UP policy can indeed diminish the sense of compassion:

The hospital where I work is run by accountants these days. So now it is cost-driven, not care-driven. Patients have become clients or customers. The management might be more efficient, but something has definitely been lost in the process.

I hate the way students are now described as clients in education. Teachers like us are 'human resources'. The money men have taken over.

'User Pays' is creeping into every facet of our lives, but I don't know that it is really a good thing if we go too far. Are you going to try to get individuals to pay for repairing environmental damage they have done? I don't think that's realistic.

Working for the government is entirely different from private enterprise. You are more efficient when you have to earn a profit, but you will inevitably cut corners. When you are working for the government, you might be more inefficient and you might be less dollar-driven, but you do have the time and the resources to do things properly ... at least that used to be the way it was, but it is all changing because of all this emphasis on 'user pays'. Everyone is being treated like a customer.

Underneath all such concerns is the nagging fear that, when the public service is corporatised, when some government instrumentalities are privatised, and when users find that they are paying for everything, the concept of community service will have been lost:

I know we have to pay tolls if we want world-class roads, and I know that people who ring up the NRMA too often should be made to pay. But I still think there is a risk in all this ... are we going to get to the stage where people feel that they shouldn't be expected to do anything unless they are paid for it?

Given time, UP is simply accepted

The evidence of the study would suggest that the acceptance of UP is a classic case of attitudes following behaviour. As Australian consumers are conditioned by the increasing tendency to pay fees in direct relation to their use of services, so their attitudes will gradually evolve to match their new patterns of behaviour.

Nevertheless, complete acquiescence is still in the future. For the present, there is a need for more information about the basis on which specific UP arrangements are made, and a strong desire to ensure that a correct balance is struck between taxation-funded services (which should then be available 'free' to the community at large) and UP-funded services.

As the trend moves inexorably in the direction of UP, some consumers enjoy trying to identify which genuinely free services are left: going to the beach was often mentioned (although there was some fear that even that might ultimately be restricted in some way); OPSM was credited with adjusting spectacles free; most public toilets are regarded as being available free; some car parking in commercial areas is still free ( and is highly valued when it can be found). Such lists tended to be short and they reminded consumers that, in reality, they pay for most of the services they use - one way or another. Against the background of such discussion, acceptance of UP comes more easily - but, until it is better understood and more persuasively justified in individual cases, the community will remain cynical about the motives which lie behind it.

It's inevitable, but I still feel we are being tricked into it, in some way.

PART 2: the ethical issues

by Simon Longstaff

As will already have been noted, a considerable number of ethical issues are thrown up by Hugh Mackay's research. It will not be possible to deal with all of them here in anything like the degree of sophistication that they demand. This is because the issues are ultimately to be resolved as the result of 'full blown' debates on issues as fundamental as: the nature of justice (in its different forms), the basis for political obligation, the theory of markets, and the problem of egoism and altruism, amongst others.

Some of these issues will be touched upon in the following discussion. As is usual in such instances, this part of the paper is bound to raise more questions than it answers. Where possible, some indication of the scope of the debate has been given.

On reading Hugh Mackay's research findings on this matter, one is struck by the frequent and regular reference to the issue of fairness. But there is a related and equally important element of concern that underlines Australian attitudes - namely the issue of Trust. Both of these matters will be briefly addressed below.

The debate about UP needs to be set within a context in which many Australians feel that they can no longer trust long-established institutions to look to and work towards securing the public interest. There is a feeling that the nominal leaders of our community are prepared to say anything and do anything in order to secure their own interests. Many believe that the tone of society is set from the top. It is therefore not surprising that ordinary people conclude that one ought to look out for oneself (and perhaps members of the immediate family) but that 'others' have a responsibility to protect their interests as best they can. This is to extend the idea of caveat emptor into a vague doctrine of social relationships. This notion will be explored below as the first of two perspectives for considering the idea of UP.

The first perspective

Some advance the argument that the 'public interest' is best served by encouraging a set of relationships based on the individual pursuit of self-interest. Indeed this is the argument that is frequently advanced in the name of Adam Smith. Others point out that, for all the talk of 'community', it is ultimately the individual that must take responsibility for his or her actions. This is then allied to psychological and ethical theories that are tied to the notion that people are basically motivated by self-regarding and self-serving impulses.

But it is important to remember that the much misrepresented (by supporters and detractors alike) Adam Smith (a moral philosopher) mounted his argument on the basis that the 'invisible hand' would inevitably lead to an overall improvement in the common good. That is, it is the anticipated improvement in the weal of every person that largely (but not totally) justifies the decision to promote the operation of a free market. As a second and related point it should be noted that Smith did not argue the case for selfishness, merely that self-interest (a very different concept) ought to be the spring to action.

However, there is even greater significance to be found in the fact that the author of The Wealth of Nations was writing against a background in which there was a fair degree of agreement in society about the quality of the relationships that ought to obtain between people. One should never forget that Smith wrote during the golden age of what has been termed the 'Scottish Enlightenment' - one of those rare times when one can point to the existence of an 'educated public' that shared certain common customs and practices as a rich base for economic relations (amongst others). That is, Smith lived at a time when the importance and existence of community could be assumed.

The reason for mentioning all of this is that Mackay's research indicates an underlying concern that a sense of community might be the unintended 'victim' of a wholesale move to the implementation of a policy of User Pays. Mackay notes an undercurrent of feeling that the UP principle is the ultimate expression of a set of values in which everything is 'commodified' and in which all relations are reduced to the economic dimension. At the same time, people are increasingly aware that the one-dimensional face of homo economicus is a fairly sterile conception of what 'flesh and blood' people are really like. In a world of increasing complexity and accelerating change, there is a growing awareness of the less 'obvious' or immediately 'useful' dimensions of human being such as: the aesthetic sense, the ethical sense and the sense of the spiritual and so on. But that may be another point to be explored somewhere else.

The key observation in all of this is that the debate about UP ultimately boils down to being a debate about relationships. It's not that UP couldn't be fair, nor is it the case that those who might manage the system couldn't be trusted. Rather there is the somewhat paradoxical notion that a wholesale acceptance of the notion of UP is likely to entail a further move in the direction of caveat emptor. And if this is so, then the conclusion must be that simple prudence dictates that those who might manage the system ought not to be trusted.

It is immediately evident then that, under this type of characterisation, there is a significant individual and social cost flowing from the adoption of the principle of UP. This is the cost of establishing mechanisms to ensure that all parties comply with their obligations. If you like, it represents the difference in costs borne by individuals and societies that make deals 'with a shake of the hand' and those that depend on the full panoply of regulation, surveillance and legal remedies.

Supporters of the market will (or should) immediately point out that there are internal standards that ought to apply if the market is to work as intended. For example, the flow of complete and accurate information ought to be unimpeded and fair. No party ought to be in a privileged position when it comes to striking a bargain. Monopolies are forbidden and so on. Even the point noted above ought to suggest that there should be tendencies to honour agreements as a way of keeping down the overall costs of doing business. Supporters of the market will point out that there is a significant difference between the idea of fre e markets and the principles of laissez faire.

Unfortunately, the reality of markets is such that these ideal conditions nearly never apply. People distort information, there are unequal relationships of power and knowledge, monopolies exist and there are many 'sharp' operators who will feign virtue and pay lip-service to the idea of the free market while all the time indulging in arch-skulduggery.

Once again the point needs to be made that abstract ideas such as the free market only take form when adopted by flesh and blood people. The market is neither ‘good’ nor 'bad', it takes on the character of the people who make it. And this is to reinforce the earlier observation that there is a world of difference between the pursuit of self interest and selfishness. It is neither impossible nor unreasonable (nor even all that naive) to imagine a community made up of people who believe it to be in their interest to be selfless in certain of their dealings.

The 'classical' view examined above will be assessed in more detail below. But for the moment, we should turn to a different vision of UP.

The second perspective

The whole idea of UP has been (up until this point) painted in a light that seems almost bound to cause concern. But is there an alternative perspective that might give the idea a rosier glow? One such move would be to argue that the idea of UP is motivated by genuine community concerns. Indeed, it could be argued that the whole idea of UP being motivated by classical economics is gravely mistaken. Rather than being the extension of any principle to do with the rational pursuit of self-interest, this alternative view suggests that citizens ought to adopt UP as part of their duty to the community.

From this perspective, community obligations are seen to include a responsibility to pay for what you use and not force costs onto others of your neighbours who have not had the benefit of the goods or services that have been consumed. That is, UP presumes the actions of a 'selfless' citizen who, under the old scheme, could have defrayed his or her costs across the community as a whole. Even with a very progressive tax scheme in place, some of the cost would have been borne by the poorly paid.

One supposes that a similar sort of reasoning lies behind the intuitive responses, recorded by Hugh Mackay, that UP is basically fair.

It's difficult to see how far this type of argument can be pushed. It doesn't take too long before one gets into a position where it becomes necessary to start asking questions about the availability of essential services, or the idea of communities having a certain store of common wealth to be spent for the common good. One comes back to questions of justice and the nature of the relationships that bind individuals in community. But before exploring these issues, it should be observed that both perspectives tend to converge at one point. Working backwards in the arguments, one sees that they both arise from a view that the promotion of a common good is a desirable and worthy outcome.

The reality of UP

Part of the reality of the context into which the principles of UP might be introduced is that, in nearly every case, the 'market' is distorted. As noted above, Adam Smith wrote his great work at a time when the scope of government was far more limited than today and at a time before the advent of the industrial revolution and the invention of the joint stock company. This is not to say that there weren't powerful companies at work. Part of Smith's objective was to target the iniquities of the Age of Mercantilism. He was especially incensed at the power of monopolies.

Yet, these same conditions are at work today. The idea of UP is nothing new. We have been using it since the dawn of time in the patterns of exchange for goods and services. What makes the current debate so interesting and important is that, in this case, it is government that is seeking to apply the principles. Government has a monopoly in the exercise of civic compulsion, many government services are monopolies providing absolutely essential services. Despite Freedom of Information legislation, government rarely provides all of the information that an informed voter or consumer might need in order to make a decision.

As noted above, another aspect of current reality is that people are cynical about and distrustful of most of our large, established public and private institutions. It's as if the 'excesses of the '80s' combined with the legacy of the recession have led to a tarnishing of icons and institutions that were once associated with the (currently failed) 'Australian Dream'.

Hugh Mackay's research shows quite clearly that this lack of trust is a major factor in inhibiting popular endorsement of the principles of UP in the wholesale provision of government services such as utilities, and in relation to any business/institution that already has an existing stream of income which it receives in return for the provision of goods and services (for example, the banks). What people seem to doubt is the sense of honour and justice that will inform the decisions of those who are powerful enough to unilaterally determine how they will act. Will such powerful individuals and/or institutions pursue an enlightened vision of their self-interest, or will selfishness be their credo (even if it is promoted in support of a noble cause)? Just how do the powerful view their relationships with the relatively powerless individuals and families who make up the bulk of society?

The justice of UP

There are plenty of competing conceptions of 'justice'. There is justice as fairness, distributive justice, procedural justice and so on. So to point out the need for UP to be considered in terms of justice might seem to be begging the question. And to a certain extent this is true. However, it may be that this discussion is just the sort where such questions ought to be 'begged'. That is, it can be argued that a certain fuzziness in the concepts is a useful thing because it will force people to abandon glib formulations and, instead, sit down and try to work out some sensible and defensible positions.

Having said this, one can probably point to one or two principles that ought to inform the debate (at least as it is conducted within government circles):

• any development should not worsen the position of the least well off,
• the process of implementing UP ought to be transparent,
• if the income from UP is to be in addition to existing sources (eg taxes, interest rate margins) then the community should be advised of this in advance of the scheme being introduced,
• pricing policies should be fair to all concerned; where there are differentials then they should be justified (this would help to prevent manipulation of the system for extraneous purposes - such as when government charges move to meet the needs of those in marginal electorates),
• when developing and introducing the principles of UP, proper account should be taken of how these measures will affect the community's view of itself and of the characteristic relationships that ought to be the norm.

Because ordinary people are unequal in their relationship to government, they have to hope that government (with its considerable power) can be trusted to promote and preserve the public good. Some question whether the checks and balances are sufficient in themselves to secure this objective. There is a suspicion that the 'good of the government' or 'the good of the governing party' can be confused with the common good. That is why ordinary people ultimately depend on the character of the people elected. And this, in turn relies (to some extent) on the overall tone of the society from which those elected persons are drawn. Hence the importance of becoming clear about the prevailing significance of inter-personal and social relationships.

When it comes to the further extension of the principle of UP throughout the private sector, some argue that this should be accompanied by new forms of regulation (usually price control as an equivalent to product safety standards). Such calls come whenever the principle is seen as a device for raising extra funds and especially when introduced in industries where there is a perception that competition is stifled or non-existent. There are few such situations in the private sector today.

But more importantly, one needs to be wary of a situation where regulation by government is looked to as a matter of first resort. Some regulation and surveillance is necessary. However, too much (of the wrong kind) can weaken any sense of personal responsibility by helping to create conditions where the conscience of the government is 'conveniently' substituted for that of citizens. This may give the appearance of short-term security. However, the long term effect may be to exacerbate conditions where unfettered selfish impulses take charge of the muted opposition of a now redundant personal conscience.

The whole idea of User Pays is both familiar and strange. We are struck by its normality in nearly all of our transactions. And this, we suppose, is the crux of the matter when it comes to examining the ethical aspects of this issue. Not all of our relationships are equivalent to 'transactions'.

Conclusion

The public are not mugs, are they? They have heard the message that, increasingly, the user will have to pay and they buy the concept - with some reservations - as being just and fair. But, as soon as they detect a whiff of deception, inconsistency or opportunism in the application of User Pays, their hackles rise.

To the banks, they are saying, "Hang on: aren't you supposed to make money by balancing what you pay in interest on deposits against what you charge on loans? If you're going to charge us fees on top of that arrangement, does that mean you couldn't get your sums right? And why can some banks get away with not charging additional fees?". Underlying such questions, of course, is a deeper concern: if bank fees are based on the User Pays principle, how come the light user appears to pay more?

When it comes to government services, User Pays raises different questions. On the one hand, users of government services at all levels are now wondering whether User Pays is a devious new form of taxation (rather than a legitimate application of a principle based on justice and fairness). On the other hand, are we simply pouring more money into an inefficient public service? Will paying for services give us more clout in demanding better services? Why are we suddenly paying more, when the corporatisation/privatisation game is supposed to be about greater efficiency and cost-consciousness (with an implication of lower, rather than higher, charges to the end user)?

As of 1992, the consumer is prepared to suspend judgement about the application of User Pays, pending more information. But things like the 'Pyramid tax' in Melbourne and the Water Board's 'Environmental Levy' in Sydney raise questions which fuel consumers' cynicism about the whole question of devious taxes. Such levies are not directly related to the User Pays principle, and yet they seem to the community to be part of an increasing array of new charges by which the community is being asked to compensate for bureaucratic incompetence in the past.

It's not just that the concept of User Pays raises questions about fairness, justice and so on. There is an equal concern from some that this is just another move closer to a time when the sense of community will have been dissolved in the harsh acid of limited economic relations. Everyone accepts the justification of the User Pays principle in some circumstances. There may be a fear about what could happen if it became the dominant principle to be applied by default in all circumstances. Attractive as the principle of UP may be, it is essential that it be introduced with a degree of sensitivity to the context into which it will be placed.

Consistent with the emerging mood of the Nineties, Australians are asking for much more information about increased charges of all kinds - certainly including those which are levied in the name of 'User Pays'. Whilst it is true that the community is adapting quite quickly to the idea of legitimate applications of the UP principle, there is enough cynicism about to ensure a hostile backlash whenever the consumer suspects that he or she is the victim of a con job.

Nothing will ring alarm bells louder than the suspicion that User Pays has become a form of 'deceptive packaging': a slogan which is concealing rather than revealing the truth.

nb: The content of this paper should not be reproduced without the permission of the authors.

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