Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Family tax benefits who?

By Mercurius Goldstein - posted Wednesday, 3 October 2007


If you had an unexpected windfall of $10,000, what would you do with it? Give half away to family and friends? Get your teeth fixed? Take a community college course? Put some aside for a rainy day?

What if you had that kind of money to play with every year? The question is worth thinking about, because in round figures the Commonwealth Government spends $220 billion - or $10,000 a year for every man, woman and child in Australia.

Here’s how Mr Costello spent your $10,000 last year:

Advertisement

2006-7 Commonwealth expenditure
Welfare and social security $4205
Health $1824
"Rainy day" money, legal costs, interest on borrowings, superannuation $960
Defence, domestic security $923
Education $772
Farming, mining, energy $430
Other, mostly "labour and employment affairs" $229
Transport, infrastructure, communications $151
Foreign aid $146
Public housing $132
Recreation and culture $114
General research $114

Table 1. Calculated from Federal Government Budget Outcomes papers 2006-7 and the ABS 2007 Yearbook based on a per-capita spend of $10,000.

See what a good neighbour you are? You did give away nearly half your windfall in the form of social security payments. Now before you spit your chips at all that welfare money, please contain your outrage for a few paragraphs when we take a closer look. Anyway, you’ll be glad to see that those parasites in “The Yarts” only got $114 of your hard-earned, and they had to share that with sportspeople anyway.

How closely does Mr Costello’s ladder of budget opportunity in Table 1 reflect your own personal survival priorities? Overall, it’s interesting to note that this list is a reasonable approximation of Maslow’s hierarchy of needs - welfare/survival first, followed by health and security, education, industry, then helping others and finally the pursuit of happiness and philosophical navel-gazing. Even though you might wish to question the specific amounts involved, if you were a contestant on The Price Is Right and had to guess the order of these items, you’d probably come pretty close to winning the car.

Also, you longhairs at the back waving the health and education placards, just settle down for a minute. Thanks to the GST and stamp duties there was an extra $3,000 per person spent by the state governments, and most of that went to public schools, public hospitals, roads and police, plus about $3.50 and a donut for public transport. So put your banners down and come back to this discussion about Commonwealth expenditure.

Advertisement

One big hitch is the $960 that’s lost in financial munging. That’s partly the impost of running a modern economy and being forced to run complex financial instruments and fiscal risk-management policies, as well as a tangible measure of the “dead hand” of bureaucracy at work. It’s an unwelcome intrusion into our windfall, but it’s hard to eliminate without losing the whole shebang.

OK, so what’s the problem?

The problem is that government spending (i.e. taxation) remains at a stubbornly high level as a percentage of GDP, yet there is also unprecedented cost-shifting to the private sector to pay for health and education.

To better understand whether your $10,000 was well spent by Mr Costello, think about the times in recent years when you’ve had to pay out of your own pocket for things you thought would be covered by taxes.

Effectively, many of us are paying for things three times over - once when we pay tax, again when we pay health insurance premiums or school fees, and a third time when we still have to cough up to pay for the things the insurer or the school doesn't cover.

But isn't paying for things once enough? Surely $10,000 a year for every man, woman and child can purchase a public education system to which we're happy to send our children, and a public health system that can keep us in reasonable fettle?

Well, they probably could, but to understand why they don’t, we need to take a closer look at that largest of budget items - the $4,205 of your windfall spent on welfare and social security:
 

Grandmas and soldiers Aged pension; aged care; veterans; widows and wives; seniors concession $1,773
The "deserving poor" (means-tested) Disability support, carers; allowances - $579; low-income family support - $342; student allowance - $96; Indigenous welfare - $55; sickness benefits - $4 $1,076
Middle-class welfare (no-assets test) Family tax benefit A and B; child care; baby bonus $956
The "undeserving poor" (i.e. people without jobs) Newstart; Job Network; Work for Dole $291
The dead hand Administration $109

Table 2. Calculated from 2006-7 Budget Outcomes papers showing $92 billion spent on welfare and social security.

From the above table, you can see that all the usual targets for welfare cuts (the dole, Indigenous programs, student allowances) are already cut to the bone - there simply isn’t much there to be saved.

So unless you’re willing to kick your grandmother, some war veterans or disabled people out on the streets, there’s really only one big-ticket item left. It’s that one-quarter of payments that face no asset-test - Family Tax Benefits, Child Care and Baby Bonuses. Considering that families in stately homes on annual incomes of over $100,000 can receive Family Tax Benefits, and low-income families have a separate Parenting Payment to help them out, the label “middle-class welfare” is apt. The total amount soaked up is $21 billion.

That $21 billion rides a wasteful merry-go-round out of and back into the pockets of middle-class families who don't need a handout in the first place, but could certainly be paying less tax.

That $21 billion is as much as Medicare and the PBS put together. If it were spent on healthcare instead of consumption, you’d never need to pay health insurance again.

That $21 billion is part of the reason why you’ve been paying more and more tax, and getting fewer and fewer services.

Consider these two alternative proposals:

  1. leave the $21 billion in taxpayers’ pockets in the first place. They’ll need it for all the health insurance premiums and school fees of the user-pays system;
  2. keep taxing the $21 billion, but reallocate the expenditure to capital works and essential services, so that Australians can enjoy the high standard of infrastructure, health and public education they deserve.

Surely these are both better options for taxpayers than the status quo?

  1. Pages:
  2. 1
  3. 2
  4. All


Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

15 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Mercurius Goldstein is Head Teacher at an International School and is retained as a consultant at The University of Sydney as a teacher educator for visiting English language teachers. He is a recipient of the 2007 Outstanding Graduate award from the Australian College of Educators, holding the Bachelor of Education (Hons.1st Class) from The University of Sydney. He teaches Japanese language and ESL. These views are his own.

Other articles by this Author

All articles by Mercurius Goldstein

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Mercurius Goldstein
Article Tools
Comment 15 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy