Australian Treasurer Scott Morrison is waxing lyrical about the state of government finances ahead of next week's 2017-18 Budget announcements.
Tax cuts for low and middle income earners, company tax cuts, increased infrastructure spending and no increase in the Medicare Levy - all on the back of increased taxation revenue.
But that is not quite the whole truth. The Abbott and Turnbull governments have been steadily reducing the safety-net income and living conditions of welfare recipients for years in order to increase the budget bottom line.
It has been reported Scott Morrison has found over $8 billion in savings in the forthcoming Budget and one can guess where a significant portion of those 'savings' have been found given past history.
A walk down memory lane.......
Exhibit One
The 2014–15 Budget
proposes to change indexation arrangements for the Age Pension, veterans’
pensions, Carer Payment, Disability Support Pension and Parenting Payment
(Single) so that payment rates are only adjusted by movements in the Consumer
Price Index (CPI). The measure will save $449.0 million over five years…
The budget savings from
this measure arise from lower growth in the rate of payment provided to
pensioners. Effectively, pensioners will receive a lower payment over time than
they would have had the indexation method not been changed. Lower payments also
affect the impact of the pension means test with less people likely to qualify
for a payment under the income and assets test over time…
The Government estimates
that $1.5 billion will be saved over four years through a freeze on the income
and asset test threshold for all Australian Government payments. The
thresholds for Family Tax Benefit, Child Care Benefit, Child Care Rebate,
Newstart Allowance, Parenting Payment (Single and Partnered) and Youth
Allowance will not be subject to annual CPI indexation for three years from 1
July 2014…
A further change to the
pension means test, lowering the deeming thresholds, will accrue minor savings
of $32.7 million for one year of operation (in 2017–18) but significant savings
in the years beyond the forward estimates.....
Exhibit Two
The Australian, 5 December 2016:
The Turnbull government
is ramping up efforts to claw back $4 billion believed to have been incorrectly
paid to welfare recipients, issuing debt notices worth $4.5 million every day
in a bid to rein in the ballooning welfare bill.
The Australian has
learned a new automated system that matches a welfare recipient’s details with
information from the Australian Taxation Office is generating 20,000
“compliance interventions” a week, up from 20,000 a year before the crackdown
came into effect in July.
Human Services Minister
Alan Tudge said the new system, which is expected to generate 1.7 million
compliance notices to welfare recipients over the next three years, was helping
to meet the government’s debt recovery targets.
“Our aim is to ensure
that people get what they are entitled to — no more and no less. And to crack
down hard when people deliberately defraud the system,” he told The
Australian…..
In the 2015-16 budget
and midyear budget update, the government estimated $4bn in welfare benefit
overpayments were likely between 2010 and 2018. Budget papers forecast that the
government will achieve savings of $1.7bn over five years through debt recovery….
In March 2015 the Reserve Bank cut its cash rate and cut it twice more by December 2016 and the big banks had followed suit. However, the Turnbull Government cut deeming rates for pensioners once only. The base deeming rate continues to date at 1.75% while CBA pensioner security account interest ranges from 0.50% to 1.10% for a good many age pensioners - giving the government a sly and petty saving over time.
Exhibit Three
In 2017 the waiting period for new claimants of New Start Allowance, Youth Allowance and Special Benefit was increased to a minimum of four weeks for those aged under 25 years and Youth Allowance age eligibility restricted in a federal government omnibus bill.
This bill also applied further eligibility restrictions to Family Tax Benefit payments, removed the pensioner education supplement, the annual education entry payment assisting with education expenses for eligible recipients, and and the requirement for employers to provide Government-funded parental leave pay to their eligible long-term employees and other measures.
Total savings were est. $2.37 billion over six years.
Exhibit Four
The federal government
has created a “false economy” by restoring the budget bottom line through cuts
to the disability support pension and potentially pushing more people into
homelessness, a leading economist has said.
Speaking at a budget
preview forum hosted by Industry Super Australia in Melbourne on Thursday, the
Industry Super chief economist, Stephen Anthony, said the federal budget
position had improved due to business receipts and cuts to personal benefit
payments, particularly the disability support pension.
“The problem here of
course is we’re seeing this spill out on to our streets in terms of
homelessness,” Anthony said. “I’d say there’s a bit of a false economy
occurring there and I’d ask the tax office to consider the models that they’re
using and their reliability because the flipside of what they’re doing is
causing a lot of social damage and social harm.”
The Turnbull government
has tightened the eligibility criteria for the disability support pension, which
the Australian Council of Social Services (Acoss) says resulted in a 63% drop
in successful claims for the the pension between 2010 and 20116.
People who are not
successful in claiming the disability support pension but are still unable to
work have been pushed on to unemployment benefit Newstart, which pays $170 less
per week…..
He said even a modest
surplus was dependent on the government resisting the temptation to spend money
in what is likely to be the last budget before the next federal election, saying
“we don’t want to see tax cuts … we need tax reform, not necessarily tax cuts”.
The government has also
telegraphed a personal income tax cut to address cost-of-living pressures in an
environment of stagnant wage growth.
Anthony said the current
budget parametres anticipate that annual wages growth will return to more than
3%, a projection that he said is unlikely to be met.
