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Things to think about as the federal budget approaches

By Tristan Ewins - posted Monday, 14 April 2014


And indeed there ARE better solutions. Superannuation Concessions could be wound back – and income tax increased on the basis of a progressive restructuring. Tens of billions could be saved here alone.

To elaborate: It is true that tax cuts delivered overwhelmingly to upper and middle income Australians during the Howard years were recently estimated as costing the Budget around $40 billion a year alone. And as Richard Denniss has argued on several occasions – superannuation concessions have been of benefit largely to the top 5 per cent income demographic (millionaires basically), a well as the 'upper middle class'; and more broadly are estimated by the Treasury as costing "$45 billion a year by 2015."

To summarise: The Government has several potential alternatives on the table they could consider – and the Shorten Opposition should be pursuing these progressive options also.

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First: Wind back superannuation concessions for the wealthy and the upper middle class, saving tens of billions.

Second: Restructure personal income tax. Perhaps allow bracket creep in the higher brackets – but INDEX the lower two brackets. And perhaps add a bracket for the highest income earners.

Third: Increase the GST – but only as part of a 'total package' which includes increased welfare, tax credits or other tax cuts for lower income Australians, maintenance of exemptions on food and health, and extension of GST exemptions to funerals as well. Calibrate the overall 'tax mix', here, to deliver more progressive outcomes.

Fourth: Embrace the necessity of 'larger government' if 'the Australian way of life' is to be preserved – including a fair age of retirement and protection of the most vulnerable from grinding poverty. In this acknowledge that 'the size of government' in Australia is already low by international standards.

Fifth: If the Government is concerned there is an 'incentive' for pensioners to apply for the Disability Pension because of the extraordinarily low Newstart unemployment benefit – then INCREASE NEWSTART to respectable and socially sustainable levels – and acknowledge that while the Disability and Aged Pensions are higher – disability and aged pensioners are still living in poverty!

Sixth: Reconsider spending priorities with 'upper middle class welfare'. Specifically, reconsider the structure of 'Paid Parental Leave', and impose tighter means tests of Private Health Insurance Rebate payments.

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Budget pressures also need to be considered in the context of a growing infrastructure crisis.

Federal and State Liberal Governments are at odds with construction unions – not only because of alleged criminality – but more crucially because there IS an infrastructure deficit – which when combined with robust conditions for workers in the Construction industry make it harder to maintain 'small government' alongside basic transport, communications and education infrastructure demands. And construction workers should not have to pay the price for a right-wing Ideological fixation on reducing the size of government.

Regrettably, there is also an Ideological opposition to public housing at the same time as the dream of home ownership has drifted out of the reach of so many young Australian families since the Howard-era housing boom.

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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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