Analysts tells why the Budget failed in three key areas

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Budget fails: workers in low and middle income tax brackets, middle-aged and older unemployed Australians, particularly women, and older Australians waiting on home care packages. That’s the view of a range of experts after Tuesday night’s Budget was analysed.

The tax cuts first
New analysis from The Australia Institute (TAI) has found that the income tax changes will disproportionately advantage wealthy Australians now and into the future.

The temporary benefit that will flow to low and middle-income earners this year will be replaced by larger, permanent tax cuts for high income earners from financial year 2021–22 onwards, it says.

Senior economist Matt Grudnoff summarised the outcome:

  • In 2020–21, 41 per cent of the government’s tax plan will go to the top 20 per cent of income earners. The bottom 20 per cent get only 4 per cent.
  • In 2021–22, 88 per cent of the government’s tax plan will go to the top 20 per cent of income earners. The bottom 20 per cent get nothing.

“This Budget gives a temporary boost to lower and middle income earners and a permanent boost to the wealthiest people in the country,” he said, adding that the institute’s research shows that low and middle income earners will actually be paying more tax next financial year than they are this year.

“Regular Australians, and those who are struggling, will get a handout this financial year while wealthy Australian get a tax cut that is legislated forever,” he said.

Mr Grudnoff warned that the tax plan will permanently widen inequality in Australia and increase the chances of the funds being saved rather than spent.

On to employment initiatives
Debby Blakey, chief executive of superannuation fund HESTA, said the Budget was a “missed opportunity” to address systemic weaknesses in the national economy exposed by the pandemic.

Women and the lower paid have been hit hardest, but the Budget directed many stimulus measures towards male-dominated industries. It would do little to address entrenched social and gender inequality.

“It’s particularly disappointing that the government did not look at childcare reform to broaden access to affordable, high-quality early education as this is one of the most effective ways to support the economic recovery and improve women’s workforce participation,” she said.

“The government needs to put in place policies and investment initiatives to support social infrastructure. This includes childcare, aged care, disability care and public and affordable housing, all of which will increase women’s workforce participation, provide further social infrastructure investment opportunities and, in turn, strengthen the economy by placing it on a more sustainable, resilient and equitable footing.

“Get this right and Australia could land a ‘triple dividend’ – a more efficient acceleration of economic growth, higher long-term productivity and greater resilience to meet future challenges like our ageing population and pandemic shocks.”

The Women’s Agenda was also fiercely critical of the lack of support for jobless women.

“So how much, then, might you expect out of roughly $500 billion would be allocated to policies and initiatives designed to support the capacity of women to participate in paid work?” wrote editor Georgie Dent. “The woefully inadequate and truly shameful number is $240 million. As many clever economists quickly calculated on Tuesday night that amounts to one third of one per cent of the entire budget – 0.038 per cent to 51 per cent of the population.

“And that’s not even the worst of it. The $240 million is to be spent over five years.”

And aged care
The government will spend $1.6 billion on 23,000 new home care packages over the next four financial years, taking the total number of available packages to 188,000.

“Unfortunately,” says the Combined Pensioners and Superannuants Association (CPSA), “the number of people without packages is around 59,000. This means that, based on current figures, 36,000 people assessed as needing care will remain without it in four years’ time.”

Failing to provide aged care to those who need it is “an inexcusable quality and safety failure”, the CPSA said.

The broader outlook
Age pensioners are looked after to some extent with two extra $250 stimulus payments, so where does that leave self-funded retirees struggling with record low interest rates, share market volatility and distressed rental markets? To put it bluntly, in the same place you were before 7pm yesterday. Quite possibly in a spot of bother, perhaps needing to pick riskier investments to stay afloat, work for longer, access the equity in your home or sell up.

Association of Independent Retirees president Wayne Strandquist sums up the plight of self-funded retirees succinctly. They are the “forgotten people”, he says.

National Seniors Australia chief advocate Ian Henschke is also critical of the lack of focus on self-funded retirees. “There have been no specific measures of support [during the pandemic] other than lowering the drawdown rate, which only assists those who can afford to do that,” he says.

What was the highlight and the lowlight of the Budget for you?

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Written by Janelle Ward

44 Comments

Total Comments: 44
  1. 0
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    Im wondering if the government will ever acknowledge the issues for older women, seems unlikely until perhaps we some in their parties. What’s wrong with the female politicians in power at the moment…don’t they care that women in a similar age bracket as their mothers face homelessness and other horrible futures…I guess they’ll be really surprised when older women start committing suicide out of desperation….men over 75 are still the highest suicide group but will that change…I hope not but the government doesn’t seem to care.

  2. 0
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    The low is certainly the lousy low one off payments to pensioners.
    I can’t see any highs, there could be some but only time will tell.

  3. 0
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    Really did any of us think this arrogant mob of shitheads would do any better,they are traitors and a disgrace to this country and its citizens.

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      Totally agree with you Hairy, I didn’t expect anything from this greedy, amoral lot and i wasn’t disappointed. A leopard doesn’t change it’s spots. It’s time Australians started thinking about the greater good, than just their own hip pockets and vote this corrupt, lying lot out.

    • 0
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      Exactly Hairy….the Government of announcements after announcements it’s been going on for over 7yrs nothing has changed for the better for most people….sick and tried of listening to slogans.

    • 0
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      Exactly Hairy….the Government of announcements after announcements it’s been going on for over 7yrs nothing has changed for the better for most people….sick and tried of listening to slogans.

  4. 0
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    Just to show how this government is shoving money where they think it will do the most good for them. I created the followin spreadsheetshowing the the allocation of infrastructure payments to the states. Note that Victoria get the least compared to population. NSW got double that. What has the Victorian state government done for that? Ho! I forgot It’s a Labor state. What about Queensland they got more. Ha! But they have a election at the end of the month.

    StatetPopulationtInfrastructure BudgettPer person
    NSWt8,156,000t$2,700,000,000t$331
    Vict6,689,000t$1,100,000,000t$164
    QLDt5,160,000t$1,300,000,000t$252
    WAt2,656,000t$1,100,000,000t$414
    SAt1,767,000t$625,000,000t$354
    Tast539,590t$360,000,000t$667
    NTt245,353t$167,000,000t$681
    ACTt429,834t$155,000,000t$361

    Totalst25,642,777t7,507,000,000t$293

    • 0
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      Yes, and they’re allocating around $400m, yep, right figure, into the seat of Mayo that they’ve lost in the last two elections. It was Alexander Downer’s stronghold and when he took his big pension and ran, up rose The Daughter. Only thing, she wasn’t nearly as popular and tried too many dirty tricks in her campaigns and lost. Sports rort being one of them.

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      Given the damage that Chairman caused to the budget and the people of Victoria, living and bungling along the way, they are lucky to get anything.
      Remember, you get what you vote for – Labor/LNP are toxic. Winds of change, where are you????

  5. 0
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    As a pensioner I would have preferred an increase of around 30 or 40 dollars a fortnight that would continue forever. Lumps like $250 are really a waste of money.

    • 0
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      Mine won’t go far in stimulating the economy as its going straight to the ripoff electricity provider

    • 0
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      $750 + $750 + $250 +$250 in about 12 months is a $38.48 a week increase. Add that the reduction in deeming rate… For some a 10% increase?
      A self funded who got naught…

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      Nobody here cares about SFRs, Garyand. They prefer to fantasize that somehow all SFRs received money that fell from the sky and therefore it should be taken from them. ‘Poor’ pensioners, on the other hand, are showered with sympathy even though hundreds of thousands of them are actually very well off, but just manipulated to qualify for a pension they don’t need.

      I do sympathize with the genuinely disadvantaged, but really, most aged folk had ample opportunity to save enough to be at least moderately comfortable in retirement. Many are struggling because they were irresponsible earlier in life.

  6. 0
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    I’m on DSP and it’s not easy but I really feel for self-funded retirees. At least we did get something but they’ve had zilch. This lot of pompous elite think only for themselves and their rich buddies and have no idea of trying to budget in a ‘real’ world. Last pension I had to spend $93 on tablets and puffers alone, yesterday $42 after private health rebate for chiro and next week is the respiratory specialist, $385 which has to be paid upfront and I end up paying about $130. I have a small super but what happens to those who have nothing, through no fault of their own?

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      Oldchick, where do you live to be paying $42 out of pocket for a chiro treatment? I curently pay $22, and even when I lived in Canberra, I had the same, and that was over 10 years ago.

      My chiro has a general fee and a concession fee.

    • 0
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      Lucky you, SuziJ. I pay $85 per visit to the Chiro and get NOTHING back. Also $85 to the physio. And over $40 per fortnight for pain medications. And as an SFR, I got ZILCH from the budget.

    • 0
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      SuziJ. I live in a semi-rural town so everything costs more and at the end of the day I guess you pay for what you get – good treatment. I also have acupuncture which I need on top of a multitude of prescription meds. It’s the only thing that really settles my myoclonic jerks. For that I’m up for $40 out of pocket after BUPA.

  7. 0
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    The pension ‘bonus’ was little more than a fluff in the pants. Both disappointing.

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      It was a token gesture, almost like – ‘oops,,,,we haven’t given anything to pensioners. We’ll throw them a small sum so they can’t complain we forgot about them’. Certainly wasn’t a bonus. Was merely covering the raise amount pensioners would normally have got in September.

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      The biannual adjustments to pensions are designed to compensate for any increase in the cost of living. If the cost of living hasn’t increased there is no need to compensate for the increase in the cost of living as the change was zero. I am not making a comment about the adedquacy of the pension but the false assumption that somehow the increases that usually apply twice a year are an increase in real terms and are therefore deserved whether or not there has been an increase in the cost of living.

      The bonus is real and I am sure would be welcomed by most who receive it.The lack of increase that you are complaining about is an illusion and is totally unjustified.

    • 0
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      Alan, I think that the biannual adjustments are more real than the bonus. Of course, any bonus is most welcome – although $250 is such a piddling amount compared to the former ones of $750. But a permanent increase like the twice-yearly ones is better. This increase is paid every single fortnight for the six months until the next increase, and the next increase, because it is always a percentage of the former, equates to more in dollars and cents than it would if the former had not been given. Also, it is a far more stable amount – it is there permanently – not a one-off. It cannot be taken away.

      Also, I refute the assumption that just because there was no increase in the cost of living, that pensioners should not have been given any increase in September 2020. Pensions are also indexed to the MTAWE (Male Total Average Weekly Earnings) and single pensioners are paid 27.7% of this per fortnight while couples are paid 41.76% of this combined per fortnight. These percentages could be increased. After all, when the MTAWE is greater than the cost of living index, each member of a pensioner couple on a full pension is paid per fortnight less than an eighth of the earnings of the average male per fortnight.

  8. 0
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    I can’t believe with all these financial experts around with all the answers, why don’t they stand for Parliament

  9. 0
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    Everyone you talk to complains that this government looks after the rich liberal governments always have you get what you vote for. I am no expert but instead of tax cuts why not build social housing in every state it would create countless job and fix the housing problem for Australians who need a roof over their heads people power can fix all this its the working class and pensioners who decide who governs this country not millionaires and billionaires think next time you vote

    • 0
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      And vote for whom, ollie? The other mob who look after the rich and lie through their teeth pretending to care about the less well off? Sadly, I see through their lies to the real truth of their policies, which are designed deliberately to keep the poor down and to push the lower middle class down as well.

    • 0
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      Youngagain You get what you vote for there is no way i would vote for this mob again they have failed in all areas Bushfires, aged care , dodgy land deals , NBN ,this current mob is corrupt and incompetent they have promised bushfire victims $200 million in aid they have not seen a cent they are still living in tents and caravans . There is no way the other mob could be any worse Wake up man.

    • 0
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      Wrong, Ollie. The other mob ARE worse. Like I said, though, they do a better job of lying and conning the naïve public.

    • 0
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      Youngagain, stop fooling yourself by using the, they are all the same. It’s just that you can’t admit that your love of the Liberals stops you voting for anyone else.
      Vote for the policies not the party and you and other Australians will be better off.

  10. 0
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    Of course the tax relief will go the the top earners…the politicians are in that bracket.

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