Working-age poor will suffer most pain from Australian budget
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Version 0 of 1. Working-age Australians at the lowest income levels will suffer the most pain from the budget, despite the government’s rhetoric about everyone making a contribution, according to analysis by public policy experts. The researchers said they sought to replicate the type of analysis included in successive federal budgets since 2004, but such estimates were omitted in this year’s budget. A Nielsen poll published by Fairfax Media on Monday showed 63% believed the budget was unfair, while just 33% believed it was fair. A single, unemployed 23-year-old faces an 18% cut in disposable income in 2016-17 as a result of the budget, the largest proportional reduction of the 13 household types analysed by the Crawford school of public policy at the Australian National University. Professor Peter Whiteford and PhD candidate Daniel Nethery found the second-biggest impact would be borne by a single parent on Newstart with one child aged eight, with a reduction of more than 12% in disposable income. By comparison, a single person earning nearly $250,000 a year, or three times average earnings, would face a 0.9% reduction. A childless couple with one partner earning the average wage and the other earning 50% more than the average wage would face no change in their disposable income, the analysis indicates. “High-income couples could together bring in up to $360,000 per year and not contribute an extra cent,” Whiteford and Nethery write in their analysis, because the temporary deficit levy applies to income above $180,000. The pair chose to examine 2016-17 because that was when most budget measures would have taken effect. Many of the changes affect the social security system, including family tax benefits and unemployment benefits. Disposable incomes – the amount available to the household after taxes and benefits – are analysed with and without the changes proposed in the budget. The difference is expressed in 2014 dollars and then as a percentage of disposable incomes, to provide an insight into how much budget pain is being borne by which groups. The analysis does not include the impact of proposed new health charges, increases in fuel excise or other changes to the education system. Whiteford and Nethery said the calculations are conservative because they do not take into account the proposed abolition of the schoolkids bonus, or deduct the costs of rent or childcare. They said the government’s stated savings to households of $550 a year if power prices fall due to the abolition of the carbon tax was “likely to have a mildly progressive effect but would offset less than one fifth of the losses of those who are unemployed or in low-paid work”. “Our conclusion is that the budget proposals mean that the budget pain is not being evenly shared but will be heaviest for many working-age people at the lowest income levels,” Whiteford and Nethery said. The prime minister, Tony Abbott, was asked about the question of fairness during an interview with the ABC on Monday. “If you look at the actual decisions in the budget, the high-income earners, like politicians, will pay the deficit levy. That’s the top 3% of earners will pay the deficit levy,” he said. “Yes, everyone is going to pay fuel excise indexation, but for the average family that is about 40 cents a week in the first year. So, look, there are tough things in this budget, there is absolutely no doubt about that, tough things in this budget but it is absolutely necessary if we are going to get Labor’s debt and deficit under control and stop paying a billion dollars a month just in interest on the borrowings.” |