It’s been a big year for federal Treasurer Josh Frydenberg, who has been tasked with keeping Australia afloat in unprecedented times.
So this budget, needless to say, was always going to be one of the most important budgets in the nation’s history.
Important in that it needed to be designed to cope with unprecedented government spending on welfare and on propping up businesses. Important in that it would show we could turn the proverbial poop into clay and mould a strong future.
It had the potential to be an actual game changer beyond that word being used as party rhetoric, one that could have steered the nation out of the pandemic and set us up for a future beyond a couple of big puddles and some new streetlights.
Instead, we got what The Guardian referred to as ‘the Afterpay budget’. That is, we buy debt now and pay it back later.
Sure, there are some good points and measures, but let’s start with you.
What’s in it for you?
Honestly, to answer that question, this could easily have been a two-word opinion piece.
Pensioners already know they didn’t get an Age Pension increase at the usual September indexation.
And to appease the masses of struggling pensioners deprived of their typical $3-$4 a week increase, the government spruiked that it would do something to help older Aussies cope with the increased costs of living in retirement.
And it did, in the form of two $250 payments – one in December and one in March 2021.
The cash payments totalling $500 will hit the bank accounts of around 5.1 million pensioners and eligible recipients.
Some will welcome this, and some will say it’s insulting.
But let’s do the maths on this.
If we divided that $500 by the weeks between now and 20 March 2021, when the next indexation occurs, pensioners would have had a weekly increase of around $16.
Not bad.
So, age pensioners could be considered winners of sorts.
Working older Australians, too, could be considered winners, especially if they fall into the high income tax bracket and will sup on the fruits of the government’s budget ‘centrepiece’ – fast-tracked tax cuts.
Just under 12 million Australians will like the tax cuts, especially the seven million or so who’ll get $2000 or more this year compared to the 2017-18 financial year.
The new changes mean upper income limits for the 19 per cent and 32.5 per cent brackets will increase from $37,000 to $45,000 per year and from $90,000 to $120,000 per year respectively and will be backdated to 1 July 2020.
If you ask the government, the tax cuts will somehow stimulate the economy and create 50,000 new jobs. If you ask 10 of Australia’s 49 leading economists, they might agree, but the remaining 39 are yet to be convinced.
And our friends at The Australia Institute have shown that investing $13 billion into services such as healthcare and education would have created 162,000 jobs across Australia – between seven and 12 times the number of jobs that are likely to be created by bringing forward the income tax cuts by a year.
Tax cuts only stimulate the economy if the money saved is then spent.
The real benefit of tax cuts for the government is political popularity, says political and economic journalist Ross Gittins, not pulling the country out of a recession.
And the only people who benefit are those who have jobs, says Australian Council of Social Service chief Dr Cassandra Goldie.
“People without paid work will see no benefit from the income tax cuts brought forward in today’s budget, which mainly go to people who are lucky enough to have jobs,” she said.
“The government will need to do more to ensure that we are all in the recovery together.”
Still, working older Australians may also be considered winners.
But, what of the myriad older Australians who have lost jobs, had heavily reduced hours and now make up the majority of JobSeeker recipients?
On the top line, the Morrison government has done nothing for them.
The JobMaker scheme focuses on getting young Australians a job. The cut-off age for the JobMaker Hiring Credit is 35. The $1.2 billion apprentice wage subsidy scheme also focuses on young people.
When asked why the JobMaker Hiring Credit scheme was capped at 35, Mr Frydenberg said: “We settled on 35, because young people have been particularly impacted by this crisis, and also because of the history of previous recessions in Australia; in the 1980s and `90s, it took a while for jobs to come back.”
It seems the Treasurer doesn’t believe older people have been sufficiently impacted by the crisis to warrant support.
There is no measure to create jobs or training support for older people. Not even a permanent increase to the JobSeeker payment they will now rely on until they are eligible for the Age Pension.
In all fairness, Senator Anne Ruston said there would be more announcements about this. Unemployed older Aussies wait with bated breath.
Council of the Ageing Australia (COTA) chief Ian Yates is concerned about this lack of support for older workers.
“They are often the first made redundant, they find it very hard after economic crises to get back into the workforce at a time when they’re trying to support themselves and pay for their retirement,” he said.
“So we are concerned that having supplements for supporting young people without a parallel for older people will price older workers out and make their task in the economic recovery even harder.”
In the meantime, they can go fund themselves by accessing their own super, right?
What about self-funded retirees? Did they come out with anything?
The short answer is no. Certainly nothing that inspires. But please, prove me wrong.
“Retirees who partly or fully fund their own retirement have suffered significant income reductions as a result of the adverse economic impact COVID-19,” said President of the Association of Independent Retirees Wayne Strandquist.
“These retirees rely on income from investments in the share market, property and fixed interest either through superannuation or private investment for their living expenses. They have been overlooked by the government as billions of dollars have been allocated to programs to stimulate employment and the economy.”
What else is in the budget for you?
There will be an additional 23,000 home care places over four years to help chip away at the 100,000-plus waiting list (remember, 30,000 people on that list died last year waiting for a care), $11.3 million will be spent on dementia services and another $10.3m on improving the aged care workforce.
“The Australian Government is spending $1.6 billion on 23,000 new Home Care Packages for the next four financial years,” said the Combined Pensioners and Superannuants Association, which called the budget a “disappointing one for older people”.
“This will bring the total number of available packages to 188,000. Unfortunately, the number of people without packages is around 59,000. This means that, based on current figures, 36,000 people assessed as needing care will remain without it in four years’ time.”
Even superannuation reforms will only help younger people. Workers who switch jobs will now have their fund follow them to their new job, and a comparison tool will help members find the best fund for their needs.
Women, who have been most affected by the pandemic according to the statistics, will gain very little.
People who have lost their homes will join an ever-increasing wait list for public housing, and that list looks set to lengthen, with no mention of investment in public housing.
Investment in social housing would have killed two birds with one stone – delivering high-efficiency homes and creating desperately needed jobs for young and old.
“Our pre-Budget submission proposal, the Social Housing Acceleration and Renovation Program (SHARP), would have delivered 30,000 high quality energy-efficient homes for people in need, and secured great jobs for thousands in regions and towns across Australia.” said Community Housing Industry Association chief Wendy Hayhurst.
On a side note, the majority of those 49 leading economists referred to earlier said that increasing the JobSeeker payment by $40 a day and creating more public housing were the two items at the top of their Budget wishlists. Neither eventuated.
Overall, the Budget does a little bit for a few, looks after businesses and those with a job, will create jobs for younger people, assuming businesses spend on employees and don’t pocket their gains and will give an ailing economy a jab in the arm. But, many fear, it will not do nearly enough to get us out of the hole we’re in.
But let’s end this on a positive note. Should we have a vaccine in 2021 and should everything go to plan and, as Adam Creighton writes, because it is a ‘self-imposed recession’, we could quickly bounce back once restrictions are lifted and confidence returns.
What do you think of the budget? Are you happy about the $500 handout? Has the government done enough to support you? Do you think it is a responsible budget?
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Related articles:
https://www.yourlifechoices.com.au/government/pension/new-preage-pension-payments-report
https://www.yourlifechoices.com.au/finance/property/granny-flat-tax-cut
https://www.yourlifechoices.com.au/age-pension/news/help-poorest-pensioners-first
