Extract from The Guardian
The Coalition’s ‘good news’ budget has some rather painful bad news hidden in the detail for those on lower incomes
It seems voters should not judge a budget by its glossy brochures.
The first question most households ask at budget time is what does it mean for their own bottom line. This year it was very hard for them to get that information. Like last year, there were no comprehensive “what it means for you” tables. There were plenty of good news stories about extra help for childcare costs, but little definitive information about how it all added up. As that detail filters out it appears the “good news” budget had some bad news hidden in its detail.
Modelling by Natsem – the national centre for social and economic modelling at the University of Canberra – and analysis by the Australian Council of Social Service (Acoss), both released at the weekend, came to similar conclusions, although it is still hard to get the full picture because Labor, which commissioned the Natsem research, has not yet released all its detail and tables.
What we can see so far is that the extra money many low- and middle-income families get in childcare assistance is more than taken away, especially by the cuts to family tax benefits (first outlined in last year’s budget) which the government now says are the only way it can pay for its childcare plan.
For many single-income families that was the point – the government was quite up front that they would lose the payment targeted at families with one income (family tax benefit part B) once their youngest child turned six, because by that time both parents could be working. The childcare changes were structured the same way.
But Natsem quantifies the losses, taking into account the 2015 budget and the surviving measures from last year, and they come in at more than $20,000 over four years for a low-income, single-parent or single-income family with two kids – one in primary school and one in high school. For a single-income family on $75,000 with one child at school and one at preschool age, the four-year loss is $6,000.
(The budget documents provide different “cameos”, also carefully selected. They do not include a “before and after the budget” family income comparison, but they do include a calculation of “disposable income” after receiving government benefits and paying tax. For a sole parent with two children under six and an income of $30,000, it calculates $38,838 in “government assistance” and a “disposable income” of $66,304. Acoss says this is highly misleading because it includes childcare assistance – available only if the parent uses childcare – but not the costs of the childcare itself. Taking childcare costs into account would leave an actual disposable income of $49,994, Acoss says.)
More surprisingly, Natsem finds low- and middle-income families with both parents working would also be worse off, by $10,000 or more over four years, apparently due to the freeze in the general family tax benefit, among other policies.
Acoss explains it a different way, calculating that of the $9bn in cuts to family payments, $6bn hit poor families.
These calculations are likely to weigh heavily on the crossbench in the Senate. Most remain deeply sceptical of the family tax benefit cuts, which they have refused to pass for a year now, although the Victorian senator Ricky Muir has requested modelling from the government about the impact of a plan to maintain payments until the youngest child turns 12, and also to test the impact of gradually removing payments from the time a child turns six, rather than immediately cutting them off.
But with the childcare changes not due to start until July 2017 there is no need for the government to push legislation through. And with a generally positive reception to the main budget messages about small business tax breaks and extra money for childcare, the Coalition seems keen to bank its post-budget improvement in the opinion polls and push the public conversation back to national security and the citizenship rights afforded to foreign fighters.
If that succeeds, the glossy brochures may have successfully glossed over the details, and the highly political budget 2015 will have served its primary purpose.
The first question most households ask at budget time is what does it mean for their own bottom line. This year it was very hard for them to get that information. Like last year, there were no comprehensive “what it means for you” tables. There were plenty of good news stories about extra help for childcare costs, but little definitive information about how it all added up. As that detail filters out it appears the “good news” budget had some bad news hidden in its detail.
Modelling by Natsem – the national centre for social and economic modelling at the University of Canberra – and analysis by the Australian Council of Social Service (Acoss), both released at the weekend, came to similar conclusions, although it is still hard to get the full picture because Labor, which commissioned the Natsem research, has not yet released all its detail and tables.
What we can see so far is that the extra money many low- and middle-income families get in childcare assistance is more than taken away, especially by the cuts to family tax benefits (first outlined in last year’s budget) which the government now says are the only way it can pay for its childcare plan.
For many single-income families that was the point – the government was quite up front that they would lose the payment targeted at families with one income (family tax benefit part B) once their youngest child turned six, because by that time both parents could be working. The childcare changes were structured the same way.
But Natsem quantifies the losses, taking into account the 2015 budget and the surviving measures from last year, and they come in at more than $20,000 over four years for a low-income, single-parent or single-income family with two kids – one in primary school and one in high school. For a single-income family on $75,000 with one child at school and one at preschool age, the four-year loss is $6,000.
(The budget documents provide different “cameos”, also carefully selected. They do not include a “before and after the budget” family income comparison, but they do include a calculation of “disposable income” after receiving government benefits and paying tax. For a sole parent with two children under six and an income of $30,000, it calculates $38,838 in “government assistance” and a “disposable income” of $66,304. Acoss says this is highly misleading because it includes childcare assistance – available only if the parent uses childcare – but not the costs of the childcare itself. Taking childcare costs into account would leave an actual disposable income of $49,994, Acoss says.)
More surprisingly, Natsem finds low- and middle-income families with both parents working would also be worse off, by $10,000 or more over four years, apparently due to the freeze in the general family tax benefit, among other policies.
Acoss explains it a different way, calculating that of the $9bn in cuts to family payments, $6bn hit poor families.
These calculations are likely to weigh heavily on the crossbench in the Senate. Most remain deeply sceptical of the family tax benefit cuts, which they have refused to pass for a year now, although the Victorian senator Ricky Muir has requested modelling from the government about the impact of a plan to maintain payments until the youngest child turns 12, and also to test the impact of gradually removing payments from the time a child turns six, rather than immediately cutting them off.
But with the childcare changes not due to start until July 2017 there is no need for the government to push legislation through. And with a generally positive reception to the main budget messages about small business tax breaks and extra money for childcare, the Coalition seems keen to bank its post-budget improvement in the opinion polls and push the public conversation back to national security and the citizenship rights afforded to foreign fighters.
If that succeeds, the glossy brochures may have successfully glossed over the details, and the highly political budget 2015 will have served its primary purpose.
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