Leigh Sales' interview with Labor Leader Bill Shorten on ABC730 on 5 May 2016 drew questions from an article in The Australian on 13 February:
The answer to those questions Leigh Sales asked was contained in the same article:
An article "Half of families pay no net tax if welfare benefits deducted, new figures reveal" published in May 2014 shortly before the Joe Hockey delivered his first budget alleged:
A set of charts published with the more recent article on 13 February 2016 shows these households targeted in the 2016 budget are mostly "single parent" working households and "older" households that aren't of working age.
Child care and other family allowances enable workforce participation for people who otherwise would not find it economic to work. This creates jobs in the child care industry, boosts economic output in the businesses in which they are employed, and increases revenue and profits for businesses where these families do their shopping.
Cutting transfer payments to these families disadvantages everyone: lowering workforce participation will reduce jobs and growth.
As children grow up, attend school and then leave home these families may well become net contributors of tax, that is used to help younger families just as they were once helped, and to help provide the age pension to others, until they themselves eventually retire and once again become net receivers of tax transfers.
It is simplistic and naive to ask whether such an arrangement is "fair" or "acceptable". An objective understanding is that it makes bloody good sense.
The Coalition Government made the same simplistic error with its thought bubble of imposing high tax rates on backpackers who generate income for Australian farmers. The likely effect will not be an increase in Government revenue at all. The backpackers will simply choose different holiday destinations, crops will go unharvested, farm income will fall and Government revenue will be slashed.
Such naive measures that haven't been thought through will reduce workforce participation.
They are destructive of jobs and growth.
"The one-third of working households receiving more in government benefits than they pay in tax — many of them families — will be targeted by the federal government...
There are 3.6 million households that are net beneficiaries of the tax and transfer system out of 8.8 million and among them 1.9 million are working age households."
The answer to those questions Leigh Sales asked was contained in the same article:
"As far as the objective of the system is lifetime income smoothing, the percentage of net taxpayers is to some extent a prisoner of demography.
If society wanted families to have children, this was part of the deal."That some number of households may be "net beneficiaries of the tax and transfer system" during part of their working lives is a sore point in the Abbott and Turnbull Coalition Government.
An article "Half of families pay no net tax if welfare benefits deducted, new figures reveal" published in May 2014 shortly before the Joe Hockey delivered his first budget alleged:
The exclusive modelling for News Corp Australia by the National Centre for Social and Economic Modelling at the University of Canberra reveals 48 per cent of Australia’s 12.2 million “income units” pay no net tax.What the real figure is remains unclear. Many of the 3.6 million households targeted by Scott Morrison's 2016 budget that are "net beneficiaries of the tax and transfer system" may in fact be retirees living on the age pension.
A set of charts published with the more recent article on 13 February 2016 shows these households targeted in the 2016 budget are mostly "single parent" working households and "older" households that aren't of working age.
Child care and other family allowances enable workforce participation for people who otherwise would not find it economic to work. This creates jobs in the child care industry, boosts economic output in the businesses in which they are employed, and increases revenue and profits for businesses where these families do their shopping.
Cutting transfer payments to these families disadvantages everyone: lowering workforce participation will reduce jobs and growth.
As children grow up, attend school and then leave home these families may well become net contributors of tax, that is used to help younger families just as they were once helped, and to help provide the age pension to others, until they themselves eventually retire and once again become net receivers of tax transfers.
It is simplistic and naive to ask whether such an arrangement is "fair" or "acceptable". An objective understanding is that it makes bloody good sense.
The Coalition Government made the same simplistic error with its thought bubble of imposing high tax rates on backpackers who generate income for Australian farmers. The likely effect will not be an increase in Government revenue at all. The backpackers will simply choose different holiday destinations, crops will go unharvested, farm income will fall and Government revenue will be slashed.
Such naive measures that haven't been thought through will reduce workforce participation.
They are destructive of jobs and growth.
Why the totally dumb #backpackertax idea in the first place? nothing but destruction and thought bubbles #auspol pic.twitter.com/DSC3vrZfoY— HRH Terry Australis (@AustralisTerry) May 17, 2016
Media release: #backpackertax delay announcement falls short @FinlayBrent https://t.co/JOYnheWSBx #accelerateag #ausvotes— National Farmers Fed (@NationalFarmers) May 17, 2016
Bill Shorten explains the opposition's response to the federal budget
Labor Leader Bill Shorten faced Leigh Sales on the ABC’s 7.30 Report last night on his budget reply speech.
Mr Shorten’s claims that a mother on $65,000 with high school aged children will be worse off under the budget plan faced scrutiny.
Leigh Sales claimed that about half of Australian taxpayers, or 3.6 million households, get more in benefits than they pay in tax and asked if Mr Shorten thought that's acceptable.
Sales: Let’s go straight to the Budget, you seem upset that the Budget isn’t giving every last Australian a direct handout. Is that your idea of responsible economic stewardship?
Shorten: Well, it’s a question of priorities, Leigh. What we believe is that the Government shouldn’t be giving millionaires a $17,000 tax cut whilst a working mum with two kids at high school on $65,000 is actually facing losing over $4,700...
...
Sales: Sure, but let’s stick for the moment with the low income earners that we’ve been talking about. Many people under $80,000 a year get more in Government handouts than they pay in tax.
Shorten: Oh, I think if you look at who does best out of the system it’s the very high net worth individuals.
Sales: But that’s true isn’t it what I just said.
Shorten: Well, actually, I don’t agree that Australians who get child care funding from the federal government are getting as much as the people who get the tax subsidies from negative gearing.
Sales: But the people who are getting tax subsidies are actually paying the taxes that pay for the other people who aren’t paying any tax to have child care.
Shorten: I think, if this country - if the argument that the Liberals are advancing is that because you’re rich and you pay the taxes you’re meant to pay, somehow you’re at a disadvantage to people who are poor...
Sales: With - just to return to my point about households. According to the ANU Center for Social Research, 3.6 million households get more in handouts than they pay in tax. That’s about a third of families. Do you think that’s acceptable?
3.6m households pay no net tax after churn
The Australian |
The one-third of working households receiving more in government benefits than they pay in tax — many of them families — will be targeted by the federal government [emphasis added] in a bid to make the system fairer, cut spending and rein in waste.
Scott Morrison, Social Services Minister Christian Porter and their departments are working on ways to untangle the tax-and-transfer system with a focus on the 3.6 million households who are net beneficiaries of government payments.
...
“We actually have an earnings problem in this country,” Mr Morrison told The Weekend Australian. “People are not earning enough. The country needs to earn more. And the tax burden on the earners in this economy is something that is a very high economic goal that we have to address. Fairness is a two-way street. You’ve got to look at the fairness to those who receive the benefits, but it’s got to be fair on those who are paying for it.”
...
Modelling by the Australian National University Centre for Social Research and Methods using 2013-14 ABS Survey of Income and Housing data paints a picture of these households, setting them squarely in the territory of “Howard’s battlers” who swept the conservative prime minister to victory in 1996.
There are 3.6 million households that are net beneficiaries of the tax and transfer system out of 8.8 million and among the 1.9 million working age households, 608,509 of these are couples with dependent children.
...
ANU Centre for Social Research and Methods research fellow Matthew Taylor said: “People get a bit excited about the lifters and leaners rhetoric but I would suggest, in as far as the objective of the system is lifetime income smoothing, the percentage of net taxpayers is to some extent a prisoner of demography.”
If society wanted families to have children, this was part of the deal, he said.
The one-third of working households receiving more in government benefits than they pay in tax — many of them families — will be targeted by the federal government [emphasis added] in a bid to make the system fairer, cut spending and rein in waste.
Scott Morrison, Social Services Minister Christian Porter and their departments are working on ways to untangle the tax-and-transfer system with a focus on the 3.6 million households who are net beneficiaries of government payments.
...
“We actually have an earnings problem in this country,” Mr Morrison told The Weekend Australian. “People are not earning enough. The country needs to earn more. And the tax burden on the earners in this economy is something that is a very high economic goal that we have to address. Fairness is a two-way street. You’ve got to look at the fairness to those who receive the benefits, but it’s got to be fair on those who are paying for it.”
...
Modelling by the Australian National University Centre for Social Research and Methods using 2013-14 ABS Survey of Income and Housing data paints a picture of these households, setting them squarely in the territory of “Howard’s battlers” who swept the conservative prime minister to victory in 1996.
There are 3.6 million households that are net beneficiaries of the tax and transfer system out of 8.8 million and among the 1.9 million working age households, 608,509 of these are couples with dependent children.
...
ANU Centre for Social Research and Methods research fellow Matthew Taylor said: “People get a bit excited about the lifters and leaners rhetoric but I would suggest, in as far as the objective of the system is lifetime income smoothing, the percentage of net taxpayers is to some extent a prisoner of demography.”
If society wanted families to have children, this was part of the deal, he said.
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