Why the wealthy are getting richer

A staggering $68 billion of taxpayers’ dollars is spent every year on keeping the wealthiest households wealthy, according to research commissioned by Anglicare Australia.

That equates to $37 per week from every worker in Australia and is greater than the cost of Newstart, disability support or any other benefit, according to Anglicare Executive Director Kasy Chambers.

The report, The Cost of Privilege, was commissioned by the peak body for a range of Anglican community services, and prepared by Per Capita. It was released yesterday.

The report analysed data from the Australian Bureau of Statistics (ABS), Treasury Budget Statements and the University of Melbourne’s annual Household Income and Labour Dynamics in Australia (HILDA) report. In the 2016-2017 financial year, the cost of income support in the following groups was put at:

  • Age Pension $44.468 billion ($35 a week per worker)
  • assistance to families with children $36.404 billion ($20 a week per worker)
  • assistance to people with disabilities $31.721 billion ($17 a week per worker)
  • Newstart (unemployment benefits) $10.994 billion ($6 a week per worker)

Ms Chambers said: “The Cost of Privilege report finds that tax exemptions on private healthcare and education for the wealthiest 20 per cent cost over $3 billion a year, superannuation concessions to them cost over $20 billion a year, and their Capital Gains Tax exemptions cost a staggering $40 billion a year.

“Compare that to the annual cost of Newstart, which costs just under $11 billion a year.

“Following the latest round of welfare cuts, these numbers tell us that something has gone badly wrong – we have become a country that cuts from the poorest to give to the richest,” she said.

The report says that political and economic debate too often paints Australians with the lowest household incomes as a drain on the public purse. However, the bottom 20 per cent of Australians by wealth collectively receive just $6.1 billion in such benefits, while the top 20 per cent receive 10 times as much, it says.

Ms Chambers said the report was not commissioned to highlight the cost of the wealthy relative to welfare benefits, nor to calculate exactly how much money could be raised or which tax concessions should go.

“We want to be having the conversation that that kind of money’s flowing that way whilst we consider the kind of cuts that we’re seeing being made to the kind of money that flows to people on Newstart, on disability support pension, to families with children and to Age Pensioners,” she told RN Breakfast.

The report says that in seeking budget savings, governments could close various loopholes and reduce tax concessions that are disproportionately used by wealthy Australians without causing hardship to the country’s most vulnerable citizens.

To illustrate how high-income families gained more from tax concessions and government benefits than low-income families, the report created several typical families comprising two parents with two school-aged children living in a city.

Kevin and Andrea, on Newstart, earned $42,103.13 after tax per year with no tax concessions.

Michael and Gillian, one working full-time and one part-time, earned $215,446 after tax, of which $71,705 was a tax break.

Tim and Michelle, small business owners with one parent working full-time and one not working, had an annual income of $208,421 per year, which included $99,708 in concessions.

The principal savings were from the lower tax rate on superannuation contributions and earnings, the capital gains tax exemption on the family home, negative gearing on investment properties and being able to deduct household as business costs.

Who do you think is the bigger drain on the public purse? Should some tax concessions be shut down?

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