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So-Called 'Fair Go' Budget Far Better For Rich Than Poor

There was a little something for everyone in this scattergun election budget, but some groups got a far bigger serve from the Treasurer than others.

Josh Frydenberg proudly told the parliament that his government “wants Australians to have a go and to get a fair go”, echoing the prosaic turn of phrase Scott Morrison has been taking around the country in recent months. Coming on the eve of an election, predicted to be called as soon as this Friday, it was no surprise the government was inclined to splash a bit of cash around on practically everybody.

Like Oprah with the keys to the Federal Treasury, it was “you get a billion, and you get a billion, and everybody gets a billion” as the government talked up record spending on health, education, women’s safety and other fundamental areas, while also promising to bring the budget back into surplus within 12 months.

This was a budget aimed squarely at neutralising as many Labor lines of attack as possible. By boosting funding to schools, hospitals and apprenticeships, matching or just bettering the ALP’s already-announced promises, and doling out some cash in tax cuts, the government will look to take the fight to Labor on tax.

Frydenberg claimed taxes would be lower under the Coalition, or higher under Labor, or both, no less than 17 times in his speech. The government wants to fight this election on tax, and can’t resist decrying everything Labor does as a “tax” -- the “retiree tax”, the “carbon tax”, and even a new one on Tuesday, the “lunchbox tax”.

“We are back in the black”, Frydenberg and Morrison said on Tuesday, but a deeper look into the towering stack of dizzying financial papers provided to journalists in the budget lockup proved the government’s election eve plan wasn’t nearly as black-and-white as their monochromatic social media campaign made things out to be.

For one, their so-called $158 billion in tax cuts over coming years is little more than fanciful thinking, considering tax cuts planned in the last budget -- meant to take effect over the next half-decade -- have already been amended less than a year later, so planning such tax cuts beyond the forward estimates is true pie-in-the-sky thinking.

For another, while Frydenberg said his government believes that “everyone should pay their fair share” of tax, the biggest winners from his much-vaunted tax cuts are clearly those at the top end of town.

The treasurer has aimed to give everyone below $200,000 income a bit of help. Low and middle-income earners are to get up to $1080 in relief at their next tax return.

But hidden on the very last page of a small booklet on tax, is a table showing exactly how much each person will save.

Someone earning $30,000 would have paid $1797 in tax in 2017-18. In 2018-19, they will pay $1542, a drop of $255, and are forecast to pay that same amount -- that is, to get no further tax cuts -- each year until 2024-25.

Someone on $200,000, though, would have paid $67,232 in tax in 2017-18. In 2018-19, they will pay $135 less, and are due for a tax cut in 2022-23 and another larger one in 2024-25. By that time, the person earning $200,000 will pay just $55,592 in tax – that’s $11,640 less than they paid last year.

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To put that in perspective, the person on $30,000 got a tax cut this year of about 14 percent. They aren’t due to get another tax cut in the foreseeable future. In contrast, by 2024-25, the person on $200,000 will get a tax cut of $11,640, a 17 percent cut.

“The tax system will remain progressive,” the budget documents set out.

“An individual with taxable income of $200,000 in 2024-25 earns 4.4 times more income than an individual with taxable income of $45,000, but will pay around 10 times more tax.”

True, but on a per capita basis, the one on $200,000 is clearly getting a better deal here.

But of course, this is only dealing with people earning enough to be taxed in the first place. There’s little in the budget for those who aren’t working -- that is, people on Newstart or Youth Allowance, who have been pleading for a boost to their miserly pocket money for years. The Newstart rate hasn’t risen in real terms in decades, and now sits well below the poverty line, while the aged pension continues to rise.

The one-off payment of $75 for low-income earners, announced Sunday and said to be for power bills, won’t be extended to Newstart recipients – some of the poorest in our society. Frydenberg said in his speech said he wants people to “have a go” -- with the inference that, if you’re not working, you’re not going to “get a go”.

Considering the election on the horizon, and only a limited amount of cash to go around, it’s probably no coincidence that young people and the poor -- unlikely to vote Liberal anyway -- haven’t been showered in dollars this time around.

The budget is drenched in election vibes, with nothing super controversial in it – no drug tests for welfare recipients, no $4 an hour internships for the youngest unemployed workers. Indeed, many veteran journalists observed how bland and middle-of-the-road it was -- one even describing it as “bleh”.

This is a budget that is controversial for what it doesn’t include, and for how it is trying not to rock the boat, to shore up the government’s existing support and not annoy anyone it doesn’t need to.