Abbott’s Budget class war

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By Leith van Onselen

Fairfax’s Peter Martin has produced some nice analysis today showing how the Coalition’s proposed Budget cuts are targeting areas of low spending growth – that is where spending is growing far more slowly than other government spending:

…spending on the disability support pension is projected to grow only 2.8 per cent, spending on unemployment benefits only 1.1 per cent, and spending on family tax benefits is expected to slide in real terms even before any budget cutbacks…

Newstart, family tax benefits and the disability support pension between them account for less than 3 per cent of the expected expenditure growth in the next 10 years.

These views were supported earlier in the year by The Guardian’s Greg Jericho, who argued that the Government’s crack-down on welfare recipients scapegoats the unemployed and disabled, whose growth has actually been contracting in real terms:

…the percentage of the population on welfare has fallen significantly over the past decade. In 2002 it wasn’t one in five on welfare, it was one in four. Since 2008, rather than an unsustainable growth, the percentage of those on welfare has risen from 21.6% to 22.1%.

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And if we look at the “dramatic” increase since 2007, a rather different picture emerges than one Andrews would suggest wherein the major problem is the growth of people on disability support pensions (DSP) and Newstart:

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Seventy-one percent of the increase in welfare payments from 2007 to 2012 was in age pension payments. Rather oddly, this is the one payment area which Andrews is ruling out being considered in the review chaired by Patrick McClure…

Twenty years ago there were almost six people in the labour force for every person on the age pension. Now it is down to 5.3 people per pensioner and the trend is heading further down.

The welfare problem is by and large an ageing population problem. And it is a problem that will be much better served with a bit more context and a lot less of political parties blaming each other, the unemployed or those on disability pensions.

Reading the above gives the strong impression that this Budget will be more of a display of class warfare rather than a genuine attempt to place the Budget on a more sustainable footing. Indeed, it is interesting to also read from Martin that Tony Abbott’s paid parental leave (PPL) scheme, if implemented as planned, will also become one of the fastest growing areas of federal government expenditure. So in effect, the Government is seeking to cut back support to the unemployed and the disabled, while on the other hand it intends to lavish up to $50,000 for high income earners to have a child at a whopping cost of $5 billion a year. 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 superannuation concessions to high income earners and negative gearing.

In Opposition, wasn’t it the Coalition that always complained about Labor engaging in class warfare?

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  1. ceteris paribus

    What Abbott is doing is dismantling Australia”s time- honoured “social wage” for all citizens, around life essentials like health, education and an income safety net, to return a tax dividend for business and the rich. Redistribution to the top.

  2. what to expect from the most conservative ideological neo-liberal government in the world. The only goal they have is to make sure this country slips back into feudalism, where a few own everything and the others do everything.

    I wouldn’t be surprised if Abbott soon proposes abolishing voting rights for “welfare recipients”.

  3. GunnamattaMEMBER

    Meanwhile back at the ranch……

    ‘The latest tax statistics show 75 ultra-high earning Australians paid no tax at all in 2011-12. Zero. Zip.

    Each earned more than $1 million from investments or wages. Between them they made $195 million, an average of $2.6 million each.

    The fortunate 75 paid no income tax, no Medicare levy and no Medicare surcharge, even though 60 of them had private health insurance.

    The reason? They managed to cut their combined taxable incomes to $82. That’s right, $1.10 each.’

    Then there are 1.2 million Negative Gearers, etc etc etc

    Viva la revolución

    • The Patrician

      “I keep a lot of my properties. And if you keep them and there’s capital gain it’s beautiful,” he says “You don’t pay tax. I don’t lease them so I don’t pay tax on the rent, but I get depreciation.”

      He paid tax on apartment sales but that’s where the land banking came in.

      “You have to buy lots of empty land,” he said. “You keep the land and it brings you no income, so you claim it against your tax.” – Harry Triguboff

      • migtronixMEMBER

        And there’s our beautiful Anglo-land-bank system at work! Tax the productive and give back to those doing nothing! Brilliant…

      • LabrynthMEMBER

        WOW, he has 60,000 apartments on his books. His grandsons who are set to inherit them don’t have the same ruthlessness he possesses. When Harry dies it could get very messy.

  4. These numbers must be vastly skewed by immigration over the same period. The total number of welfare recipients has probably not changed. Just the number of taxpayers has increased. We all grow old though.

  5. General Disarray

    In Opposition, wasn’t it the Coalition that always complained about Labor engaging in class warfare?

    Yes. It’s very strange. Although, when you understand the current mindset afflicting our government it makes perfect sense. These perceived “attacks” on the less well-off are just the government taking back some ground for the downtrodden wealth creators who have been giving so much and asking so little.

    • migtronixMEMBER

      I posit that in the Anglo world we have currently the worst for of political debate, it devolves to CEO-like “managing the message” with a media that couldn’t raise a decent opposition if it fell out its new Audi 8 series.

      Why is Mining Bogan the only demanding that the journo Abbott lambasted — with despicable affront — get an apology? If the entire press corps asked for an apology everytime rubber ears popped up we wouldn’t be in this mess….

  6. Tax expenditures which favour business and the very well off (which is basically the same people) were basically ignored by the commission of audit in favour of looking at expendiutres which tend to favour the less well off.

    All in spite of us being one of the lowest taxed of all developed countries.

    It’s class warfare.

  7. Class warfare is for grubby, beer guzzling, dishevelled socialists flailing their arms about. Our gentlemanly amateur pugilist Tory betters prefer to think of these light touches to the lower orders’ goolies as a recalibration to the natural order of things. Float like butterflies, sting like WASPs.

    • GunnamattaMEMBER

      Well I was thinking with all this standing over the young with guilt trips was more like something else.

      There are no women in the Torynuff cabinet apart from the International tea lady. We can find plenty of indication that a little bit of intimidation for the powerless get the rocks off for a certain type of gentleman. And if they are powerful enough nobody will think to ask questions and they can get away with it quite flagrantly.

      Maybe we should call this the Rolf Harris budget. Anyone got a cuddle or a tickle for TestosterTone or Bariatric Joe?

  8. $50k is about half of what Sydney unit prices went up by recently thanks to the Rudd/Gillard foreign investor treason and SMSF “investors”.

    Also the top 10% of earners pay 50% of the tax.

    Maybe we should all just become bogan breeders and not work, I hear you can live quite comfortably. Just get the government to pay the rent plus have a few hundred a week left over.

    After all the bogans are the “real” people. 🙂

    A family with 7 kids with dad on $90k but it gets bumped up to $120k with benefits. Greece here we come.

    • intertubernet

      Your figures are rubbery Bluebird, and deceptive in their incompleteness.

      Based on income tax returns from the 2010-11 financial year, the top 1 per cent of individual income earners – who in the 2010-11 tax year were those with taxable incomes of more than $281,800 a year – paid $23.55bn or 17.7 per cent of the total income tax. The top 10 per cent of taxpayers – with taxable incomes of more than $105,500 – paid 46 per cent, up from 45.3 per cent a year earlier. The bottom third paid less than 5 per cent in both periods.

      Also, the wealthiest 20% of households in Australia account for 61% of total household net worth, with an average net worth of $2.2 million. The wealthiest 10% own 45% of the wealth.

      So, the top 10% of Australians pay 46% of the taxes and own 45% of the wealth.

      How unfair, eh Bluebird?

      Sources here…[email protected]/Lookup/6523.0Main+Features22011-12?OpenDocument

      • Aren’t you being deceptive too?

        Also, the wealthiest 20% of households in Australia account for 61% of total household net worth, with an average net worth of $2.2 million. The wealthiest 10% own 45% of the wealth.

        That’s the wealthiest 20%, not the highest income earners?

        We’re vilifying hard workers without taking into account assets, I’ll tell you what me and most people here would rather be on $90k and have bought before the housing boom rather be on $150k now with no house.

      • intertubernet

        Not at all – the wealthy hide their incomes, so wealth is a better measure than taxable income.

        “We’re vilifying hard workers without taking into account assets”

        Hence my use of wealth data.

        “I’ll tell you what me and most people here would rather be on $90k and have bought before the housing boom rather be on $150k now with no house.”

        I agree!

        But now I think I understand your point – you object to the unbalanced tax on income while assets/economic rent gets off free.

        In which case, again I agree.