Government needs to look to older Australians and the unemployed to stimulate the economy, writes Kaye Fallick.
Today, Treasurer Josh Frydenberg is delivering the MYEFO or mid-year economic financial outlook.
At one level, you might believe this is a dry economic document that will have little effect on the life of a retiree. But here’s a thought you may wish to consider.
MYEFO is a chance for the government of the day to share a statement on how its economic policies are travelling, post the May Budget. You may recall that the big deal back in May was the tax cuts, designed to pump money into the economy.
Well that didn’t work.
No matter the gloss that the Treasurer puts on Australia’s economic performance, three things are fundamentally true:
- Those still working are largely suffering from wage stagnation – with wages growth limping along at 2.3 per cent.
- The tax cuts were largely stashed away by people on flatlining wages, perhaps as insurance for an unsure future.
- And finally, the single-minded focus of the federal government on a surplus is considered by most experienced economic commentators as a serious error when our economic growth is foundering.
What can be done?
Investment in infrastructure is badly needed and when interest rates are so low, this is something a government could do to kickstart the economy, particularly in regional areas suffering from long-term drought and now ravaged by bushfires.
Reducing or forgoing the surplus actually makes good economic sense, but a dogged determination to deliver this surplus is a seemingly immoveable policy for the Morrison government.
And then we get to what would actually work quickly to boost our economy – and help those most in need.
And that is an immediate increase in welfare payments, which would put money in the hands of those who need it the most – the unemployed and full Age Pensioners – and be spent immediately on household essentials.
This is not rocket science, it is basic economic theory which has been shown to work in other eras of economic downturn.
And will the MYFEO deliver good news for an aged care sector in crisis. No, according to leaked reports.
A coalition of aged care bodies is pleading for emergency funds, warning that services around the country are in danger of closing if more support is not quickly provided.
“MYEFO is shaping up as a tipping point,” said the groups, including Leading Age Services Australia (LASA), Aged and Community Services Australia and the Aged Care Guild.
In a statement, they warned that residential facilities were incurring “unsustainable losses” and that “there are grave fears for certainty of care”.
An analysis by LASA showed about 200 nursing homes – providing care to up to 50,000 people – were at risk of closing. It said $1.3 billion in extra funding was needed before Christmas, The Age reports.
The government last month announced a $537 million package in response to the aged care royal commission’s damning first report titled Neglect, with the bulk of the funds going towards 10,000 more home-care packages.
Earlier this year, the Health Department estimated it would cost an extra $2 billion to $2.5 billion a year to provide access to everyone on home-care waiting lists.
So, when the MYEFO comes through today, consider whether a surplus really is the Holy Grail, or whether helping those who do without is both the right thing to do – and the smart thing to do.
Do you believe the government is on track to boost a flagging economy? Or is it overly fixated on a surplus?
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