The purpose of this study, which was supported by the New Zealand Business Roundtable, is to suggest the guiding principles for the reform of the welfare state. Plainly any such task involves taking a view about the ideal of a free society. The report, therefore, undertakes two main tasks. First, it describes what I take to be the true liberal ethos and differentiates it from some modern doctrines which seem initially to resemble it. And second, it describes the ideal of private welfare which, before the development of the welfare state, permitted the government an essential but limited role whilst the chief burden was assumed by the unpoliticised community.