Tonight’s budget is a tacit admission from the government that last year’s personal tax cut package was too generous for the well off and did not do enough to assist low and middle income wage earners confronting sluggish pay packets as well as struggling with their food and electricity bills.
The decision to give priority to the less well off in the community in tonight’s tax program vindicates my decision to oppose Stages 2 and 3 of the original package.
On that score I am pleased that the Prime Minister has seen his way clear to double the maximum relief provided by the Low and Middle Income Tax Offset, which was part of Stage 1 of the original tax package.
However, I am disappointed that the revamping of Stages 2 and 3 will see significant benefit for people on higher income but little for the less well off.
I am even more disappointed that neither the government nor Labor have seen their way clear to increase the level of Newstart, which has now remained unchanged in real terms for fully a quarter of a century.
In as prosperous a nation as Australia this is simply a disgrace.
At its current level, Newstart and associated payments condemn many job seekers to a life of poverty without the means to seek work in a realistic fashion, which is, after all, their primary purpose.
I once again appeal to the major parties to support the call from ACOSS, supported by noted experts, including eminent economist Chris Richardson, to increase Newstart by $75 a week.
This would lift many jobseekers out of poverty and make it easier for them to gain a job.
While I am pleased that tax relief through the period of the Forward Estimates is concentrated on the less well off I am concerned that once again we run the risk of taking temporary improvements in revenue to add permanent costs to the budget bottom line.
As Treasury itself admits, current high prices for our coal and iron ore cannot be expected to continue and “are assumed to return to more sustainable levels” as well as retaining concerns about trade tensions, market debt vulnerabilities and Brexit.
If Treasury is right that will have an impact on revenue and on our ability to keep our budget in balance over time.
Treasury assumptions that the economy will pick up and wage growth rise appear optimistic given that it has again cut its forecasts for growth, inflation and wages for 2019/20 from its predictions at this time next year.
If the Senate gets the opportunity I will support the government’s energy supplement as well as the tax changes due to take effect this year, and oppose the longer term tax cuts, consistent with my opposition to the 2018 tax package and its bias towards the well off.
With the persistent risks to the economy and lower income earners still struggling is it right to be earmarking 158 million dollars for tax cuts over the next decade?