The Coalition’s Budget class war

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By Leith van Onselen

It seems the Coalition Government doesn’t understand the meaning of ‘shared sacrifice’ – the notion that if the Federal Budget is on an unsustainable footing, then expenditure cuts and/or tax increases should be spread across the community in order to share the pain and restore Budget balance.

Yesterday, Coalition Social Services minister, Kevin Andrews, flagged that the Government was planning to cut-back welfare benefits for the unemployed and disabled via changes to the NewStart and Disability Support pensions – reforms that would adversely affect the poorest members of the community. This follows cuts to Aboriginal legal services, as well as revoking promised pay-rises to childcare and aged care workers – both among the lowest paid in the community.

At the same time, the Coalition has ruled-out any changes to the Aged Pension and retirement system, despite this being one of the biggest and fastest growing areas of Budget expenditure and retirees receiving generous welfare support, in part due to an ineffective means testing system that allows wealthy retirees to receive taxpayer assistance.

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Today, more Budget hypocrisy is on display, with the Coalition seeking to use its constitutional powers to override all existing parental leave schemes:

The move would ensure all working women get 26 weeks of leave at full pay from 2015, capped at $75,000, regardless of current contracts, collective agreements or award conditions.

The present paid parental leave (PPL) scheme guarantees 18 weeks at the ­minimum wage.

University of Sydney academic ­Marian Baird, who has been briefed on the scheme by federal officials, said the government planned to use the “social welfare” powers in the constitution to ensure all women received the same leave ­entitlement.

“As I understand it, the government wants to use what is called the social welfare powers of the constitution to displace existing paid parental leave entitlements,” she said…

Big businesses would no longer be able to “top up” minimum parental leave entitlements to attract staff…

The PPL is forecast to cost $5.5 billion a year when fully operating.

So on the one hand, the Government is seeking to cut back support to the unemployed and the disabled, while on the other it still intends to lavish up to $75,000 for high income earners to have a child at a whopping cost of $5 billion a year to the Budget! Surely, if there is a Budget emergency, then cutting back this inequitable monstrosity of a scheme is a good start, along with other lurks like negative gearing.

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No, what we have instead is a Government that seems intent to cut-back support to the disadvantaged, while maintaining perks for the well-off. And to think, that the Coalition is the party that always complains about Labor engaging in class warfare!

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.