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The Howard government has given little real incentive to work

By Wayne Swan - posted Thursday, 23 January 2003

Hard-working Australians know all too well the diminishing financial returns that come from working a few extra hours or from a long-overdue pay rise.

The combined effect of tax and the clawback of social security or family benefits means there is little or no incentive to earn extra.

The latest research shows that 860,000 Australians are in this boat - losing more than 60 cents in each additional dollar earned in tax and the clawback of other benefits.


Three quarters of them are families, most on middle incomes earning between $30,000 and $60,000.

Among those losing the most - up to 87 cents in the dollar - are those on unemployment benefits moving from welfare to work.

The worst affected are families with older dependent children receiving the Howard Government's Youth Allowance. An estimated 40,000 lose up to $1.10 for each additional dollar earned - in other words, they go backwards.

This group of 860,000 who lose between 60 cents and $1.10 of each extra dollar earned as much as those who are on the top marginal tax rate losing 47 cents of each additional dollar earned.

With these figures you can see why low and middle-income earners are sick to death of having Mr Howard and Mr Costello digging into their pockets when they earn a bit extra.

Parents in particular, don't sacrifice family time to have the Howard Government pocket 60 per cent or more of their extra earnings.


Tony Abbott recently weighed into the debate and in the process brutally exposed the Howard Government's punishing tax record.

Desperate for political cover, he claimed all the problems date back decades.

The truth is they don't.

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This article was first published in The Australian on 17 January 2003.

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About the Author

Wayne Swan MP is the Member for Lilley (Qld). He is Federal Labor Shadow Treasurer and author of Postcode.

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