The combined effect is that an average low income family loses $844 per year in disposable income (earnings after tax and government payments) due to the budget. Middle income earners forgo $492; while a high income family is down by $517.
As argued many times previously, instead of attempting to claw back loose change from the most vulnerable members of society in a desperate bid to plug the Budget deficit, the Abbott Government must instead attack Australia’s world-beating tax expenditures – such as superannuation, negative gearing, and capital gains tax concessions – which deprive the Budget of many billions of dollars of revenue, make the tax system less progressive, and overwhelming benefit richer, older Australians.
Tightening the Aged Pension also makes good sense. That the biggest asset most households retiree with – one’s principle place of residence – is essentially excluded from their capacity to fund their retirement makes little ethical or budgetary sense. The Aged Pension is also one of the largest and fastest growing areas of the Budget, and very poorly targeted.
Ultimately, the only way for the Coalition to get back on track, and earn a second electoral term, is to craft a Budget and reform program that places equity considerations front-and-centre.
Australians will accept reform, but only when it is clearly explained and the burden is equitably shared. Coalition backbenchers seem to recognise these facts, and it is time for the leadership to do likewise.