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| Version 1 | Version 2 |
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| Economic modelling shows budget cuts will hit lowest-income earners hardest | Economic modelling shows budget cuts will hit lowest-income earners hardest |
| (3 months later) | |
| A second analysis of the Abbott government's budget has concluded it will have the biggest impact on the lowest-income earners. | A second analysis of the Abbott government's budget has concluded it will have the biggest impact on the lowest-income earners. |
| Ben Phillips, the principal research fellow at the National Centre for Social and Economic Modelling (Natsem), said most families would be financially worse off after the planned changes, even factoring in the proposed abolition of the carbon price. | Ben Phillips, the principal research fellow at the National Centre for Social and Economic Modelling (Natsem), said most families would be financially worse off after the planned changes, even factoring in the proposed abolition of the carbon price. |
| The research, commissioned by the Labor opposition, follows the release of separate modelling by Australian National University public policy experts which showed working-age Australians at the lowest income levels will suffer the most pain from the budget. | The research, commissioned by the Labor opposition, follows the release of separate modelling by Australian National University public policy experts which showed working-age Australians at the lowest income levels will suffer the most pain from the budget. |
| Phillips said his modelling compared the difference in household income under Coalition and Labor policies. The budget flagged major changes in the transfer system including adjustments to family tax benefits. | Phillips said his modelling compared the difference in household income under Coalition and Labor policies. The budget flagged major changes in the transfer system including adjustments to family tax benefits. |
| The modelling included the proposed abolition of the Schoolkids bonus, legislation that is yet to pass parliament, and the reintroduction of indexation on fuel tax. The government said it had announced its intentions to scrap the Schoolkids bonus as far back as January 2013 and argued it was “disingenuous” to present it as part of 2014 budget changes. | The modelling included the proposed abolition of the Schoolkids bonus, legislation that is yet to pass parliament, and the reintroduction of indexation on fuel tax. The government said it had announced its intentions to scrap the Schoolkids bonus as far back as January 2013 and argued it was “disingenuous” to present it as part of 2014 budget changes. |
| The modelling also factored in the abolition of the carbon price under the Coalition compared with Labor policy of moving to a lower, floating price in 2014-15. The government has repeatedly argued the carbon tax abolition would save an average household $550 per year. | The modelling also factored in the abolition of the carbon price under the Coalition compared with Labor policy of moving to a lower, floating price in 2014-15. The government has repeatedly argued the carbon tax abolition would save an average household $550 per year. |
| Phillips said lower income earners did the heavy lifting, whereas higher income earners were left with barely any change or an improvement in their financial position in 2017-18 due to the carbon price abolition. The three-year deficit levy on income above $180,000 a year is due to expire at the end of June 2017. | Phillips said lower income earners did the heavy lifting, whereas higher income earners were left with barely any change or an improvement in their financial position in 2017-18 due to the carbon price abolition. The three-year deficit levy on income above $180,000 a year is due to expire at the end of June 2017. |
| "We're looking at low-income single parents being hit around 10% by 2017-18," Phillips said. | "We're looking at low-income single parents being hit around 10% by 2017-18," Phillips said. |
| The government challenged aspects of the family-impact tables circulated by Labor, including the fact it did not take into account the “grandfathering” of changes to family tax benefit part B. | The government challenged aspects of the family-impact tables circulated by Labor, including the fact it did not take into account the “grandfathering” of changes to family tax benefit part B. |
| The government will limit family tax benefit part B to families whose youngest child is younger than six from July 2015, but families with a youngest child aged six and over will remain eligible for two further years, as part of the transition. | |
| Phillips conceded that the family scenarios did not include grandfathering, but described it as a “fairly academic argument”. | Phillips conceded that the family scenarios did not include grandfathering, but described it as a “fairly academic argument”. |
| “By 2017-18 all of these arguments no longer apply because grandfathering is no longer there,” he said. | “By 2017-18 all of these arguments no longer apply because grandfathering is no longer there,” he said. |
| The impact of health changes, including the $7 GP fee and higher costs for prescription medicines, was modelled by Labor, not by Natsem. The GP co-contribution is not due to begin until July 2015, while the increase in the co-contribution for medicines is scheduled for January 2015. | The impact of health changes, including the $7 GP fee and higher costs for prescription medicines, was modelled by Labor, not by Natsem. The GP co-contribution is not due to begin until July 2015, while the increase in the co-contribution for medicines is scheduled for January 2015. |
| The opposition leader, Bill Shorten, said the “cruel” and “unfair” budget would make life harder for families. | The opposition leader, Bill Shorten, said the “cruel” and “unfair” budget would make life harder for families. |
| Tony Abbott has argued everyone must make a contribution to the task of budget repair. | Tony Abbott has argued everyone must make a contribution to the task of budget repair. |
| The prime minister said on Tuesday it was "absolutely necessary" to ensure the budget was "not just fiscally responsible but fair as well". | The prime minister said on Tuesday it was "absolutely necessary" to ensure the budget was "not just fiscally responsible but fair as well". |
| Abbott’s parliamentary secretary, Josh Frydenberg, said that, taken as a whole, the burden of the budget was being shared across the board. | Abbott’s parliamentary secretary, Josh Frydenberg, said that, taken as a whole, the burden of the budget was being shared across the board. |
| • This article was amended on 23 May 2014 to include the government’s challenges to the assumptions behind the modelling and the Natsem response. | • This article was amended on 23 May 2014 to include the government’s challenges to the assumptions behind the modelling and the Natsem response. |