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Things to think about as the federal budget approaches

By Tristan Ewins - posted Monday, 14 April 2014


As the Federal Budget approaches for 2014-2015 there has been speculation to the effect that the Government may resort to PAYE income tax bracket creep or a GST hike in order to fund its spending. The ALP is rightly critical of any GST option that is not part of a broader progressive package (perhaps Shorten may not even support a GST increase in any form or context). Increasing the GST base - either generally, or by 'broadening its base' to apply to food and health - could be highly regressive. But the bracket creep option is also potentially regressive – as low income earners could see themselves pushed upward into higher brackets without any real increase in their disposable income. (Again: it depends on the 'overall package' of the tax/welfare mix)

Further, the Government is considering raising the age of retirement, or cutting back Aged Pension eligibility. Some are also agitating for a cut back in the Disability Support Pension rate – and possibly also eligibility. That includes the Treasurer himself, Joe Hockey.

The 'pension option' is deemed by some to be 'inescapable' because of the ageing population, and the 'incentive' for people to claim the DSP as opposed to NewStart.

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We are living longer, it is true – but it is not true for all of us. And indeed – while some are living longer – they are also living with loneliness, frailty, and sometimes indignity. This begs the question why higher Aged Care expenditure is not on the agenda – as opposed to pension austerity.

There is also the question of what matters most in life: the chronic capitalist commitment to endless economic growth regardless of the social cost – or the opportunity for older Australians to enjoy a retirement in comfort and dignity; enjoying opportunities for personal development not possible beforehand during their working life.

Finally – we need to maintain perspective.

'Deloitte Access Economics' claimed the Government could save $2.4 billion over four years by limiting increases in the disability pension to inflation. But when placed into perspective this is pittance to the Government when compared to the effects on the comfort, dignity and relative independence of the disabled. And even if this amount would grow as the aged population increases, according to 'Wikipedia': "the economy of Australia is one of the largest capitalist economies in the world with a GDP of US$1.57 trillion." Despite an ageing population – caring for those people will still be 'well within our means'.

So while the Disability Support Pension costs "$15 billion a year" and the Aged Pension currently costs $38 billion  - probably rising to $55 billion in 2050 - that needs to be considered in the context of a (current) GDP of approximately $1.6 TRILLION. (Aus dollars; and a much larger GDP by 2050 also).

And while the Government claims it will not attack existing disability pensioners – the cost over the years might be high in the form of attrition against new disability pensioners.

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Indeed, there is even the danger that the National Disability Insurance Scheme itself may come under threat; or that only those with the most profound physical disabilities will be considered worthy of support by a government trying to 'wriggle out' of previous (pre-election) disability commitments.

So while the Government could save some money through attacks on the living standards, dignity and relative independence on the disabled (linking the pension to inflation rather than wages growth), it should be honest that its real motive is not some 'budget emergency' – but an Ideological commitment to small government no matter the human cost.

'Pension austerity' needs to be considered in the context where all Australian families should benefit from the social insurance paid collectively by all of us – for the sake of our peace of mind – both for ourselves and our loved ones. And also hopefully because we care about each other as a society. This must include a robust disability pension alongside robust disability insurance.

For those who care about distributive justice, and compassion for the poor and vulnerable, surely there must be better solutions than what is apparently being considered by Hockey and the Liberal Cabinet.

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About the Author

Tristan Ewins has a PhD and is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP). He blogs at Left Focus, ALP Socialist Left Forum and the Movement for a Democratic Mixed Economy.
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