Doing the maths: Hockey’s ‘fair budget’ hurts the poor

Joe Hockey’s claim that the budget is “fair” has unraveled, with detailed analysis showing that the poorest will suffer the most from the changes.

This year, as in last year’s horror budget, the Liberals removed tables from the budget papers that show “what the budget means for you”, by adding up all the budget changes to show whether different households are better off, or lose money, overall.

The aim was to ensure positive media coverage and most of the media fell for it, gushing about the money for childcare and small business.

But the National Centre for Social and Economic Modelling at the University of Canberra (NATSEM) released modelling that did the sums. As Ben Phillips from NATSEM explained, “the overall picture is one where low income families do the heavy lifting.”

Any additional money parents will get from childcare subsidies is more than offset by the proposed larger cuts to family tax payments and other spending.

Those who lose the highest proportion of their income are single parent households—many of them already doing it tough balancing work and looking after children. A sole parent with income of $55,000 will lose around $70 a week after 30 June, or $3700 for the year. This increases out to 2018-19 when they will lose $6100 a year.

In 2018-19 the lowest 20 per cent of income earners will lose 8 per cent of their income, while the richest 20 per cent will lose just 0.7 per cent.

The story is similar for couples with children, with the poorest 20 per cent set to lose 7.1 per cent of their income compared to an increase of 0.2 per cent for the top 20 per cent by 2018-19.

A couple with a single income of $40,000 and two kids will lose around $70 a week or $3500 over the next year. Both single parents and couples in their position will be $20,000 worse off over the next four years.

The bulk of this is a result of cutting Family Tax B payments for parents when their youngest child turns six, previously available until a child turns 16.

The boost in spending on childcare subsidies, by contrast, is less progressive because middle and high income families make greater use of childcare than those that earn less. Parents who work or study for less than eight hours a fortnight will get no funding at all. Statistics from 2009-10 show that the poorest 40 per cent of households gained 73 per cent of family tax B funds, but just 35 per cent of childcare assistance.

A separate report by ACOSS found that, by keeping cuts from last year’s budget, the government has delivered a $15 billion cut to services and income support over four years. It found that of $9 billion in cuts to family payments $6 billion hit poor families.

The government has made its boost to childcare subsidies contingent on the cuts to family tax payments. As ACOSS concluded, the budget “fails the fairness test”.

So it’s no surprise that voters aren’t buying the Liberals’ claims about the budget. A phone poll conducted in marginal seats showed that 54.5 per cent in the NSW seat of Page thought the Liberals wanted to introduce more cuts to health and education, as did 52.4 per cent in Leichhardt in Queensland. Over 60 per cent in all the seats surveyed said they weren’t doing enough to create jobs.

This is another budget where the rich get off, and workers and the poor are made to pay the price.

By James Supple


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