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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