The treasurer has an economic recovery plan, for some not all
Dashing faint hopes of a permanent increase to income support for welfare recipients, Treasurer Josh Frydenberg has budgeted to force some 2.2 million Australians currently receiving the coronavirus supplement ($250 per fortnight) back below the poverty line just a week after Christmas. Tonight’s statement confirms the nation’s finances are so deep in the red as a result of the pandemic – the deficit is predicted to peak at $214 billion in 2020–21, while net debt will peak at $966 billion in 2023–24 – that the cost of the extra support to the budget would be a side issue. Unemployment is still rising, expected to peak at 8 per cent this quarter. The government is splashing around plenty of money tonight: the stage-two personal income tax cuts have been brought forward as predicted, and the $1080 tax credit for low- and middle-income earners extended, at a cost of $18 billion over the forward estimates. Business gets a whopping $27 billion to allow immediate expensing of capital assets, and a multibillion “loss carry-back” scheme, which sounds like a veritable giveaway. There is $14 billion for infrastructure, including new and brought-forward spending. There are more cash splashes for seniors, with two $250 payments for pensioners slated for the first half of calendar 2021. And the treasurer sought tonight to reassure Australians that our debt levels were still better than comparable countries and our economy was “fighting back”. Given all that, it is hard to understand why the Morrison government has been unable to find the money to either extend the coronavirus supplement – at the very least to the end of March, the same as the JobKeeper wage subsidy, at a notional cost under $4 billion – or to announce a permanent increase.
The government’s language has been steadfastly non-committal for months now, with Prime Minister Scott Morrison flagging in July that a decision on JobSeeker would be made closer to the end of the year, “or potentially even in the budget”. The PM then said that he was “leaning heavily into the notion” of an extension or increase, adding: “We would expect that there would be likely a need to continue those supplements post-December.”
Tonight, however, the most vulnerable Australians remain in limbo and they are each looking at a personal fiscal cliff on New Year’s Eve. It’s understood that the government is waiting for more economic data – particularly on unemployment, which surprised by being on the upside last month – but three months is a long time to suffer cruel uncertainty and the prospect of being dumped back onto $40 a day. That’s a level of payment that all sides of politics, including some government MPs, as well as business, union and welfare groups say is utterly inadequate to live on.
To drive young people into work, the government has announced another wage-subsidy program, offering $4 billion in “JobMaker hiring credits” to employers who employ a 16–35 year-old who has worked for a minimum of 20 hours per week and received either the JobSeeker payment, Youth Allowance or a parenting payment for at least one month out of the three months prior to when they are hired. Payable for 12 months, from tomorrow until the end of 2022–23, the credits will be worth $200 a week for 16–29 year-olds and $100 a week for 30–35 year-olds. All businesses except the major banks will be eligible, and Treasury estimates that the policy will create 450,000 jobs. On past form, it seems highly likely that the JobMaker hiring credits will fall short of its targets, or be widely rorted, or both.
Thankfully, the government has resisted the right-winger calling for an immediate, radical flattening of the tax scales, deciding against a mooted pull-forward of the stage-three tax cuts slated for 2024, which abolish the 32.5 per cent tax rate altogether, heavily favouring upper-income earners and permanently undermining Commonwealth revenue – not a good idea when the country’s finances are suddenly in a hole. Labor opposes the stage-three tax cuts, at least in theory, so at least Australians will get to vote on it before the next election.
President Donald Trump has told Americans not to let COVID-19 “dominate” them and says he is “better” after being treated for the disease.
Jacqui Lambie fires up
The future of Australia’s universities hangs in the balance, with radical
reforms to funding and student fees due to be voted this week. The government has been negotiating furiously behind closed doors to pass its legislation through the Senate.
Education spokesperson Rebekha Sharkie confirms that the South Australian-based Centre Alliance has thrown its support behind the Coalition’s university funding changes, which will see future university students in disciplines such as law and the humanities pay up to 113 per cent more than current students.
“Poet and songwriter Kev Carmody and I have been friends for more than 30 years. We’ve written songs together and meet up from time to time, but due to geography – he lives in country Queensland, I in Melbourne – much of our friendship is conducted over the phone. Every couple of months one of us calls the other. The start of our conversation is ritual. ‘Hello, it’s Kev from Queensland here,’ he says. ‘Hello, it’s Paul from Melbourne, here,’ I reply.”
“If there’s a disease whose symptoms are a complete lack of social energy coupled with a complete lack of knowing what the hell to do with yourself, you definitely have that disease. The weary days just keep on coming. You wonder if it’s just a variety of laziness in a darkish disguise. You wonder this thought out loud to your brother, a panelbeater who has worked at least 70 hours a week since the day he became an apprentice and who says, ‘Kaz, any mildly evolved human being has a tendency towards laziness.’ That distracts you for a few minutes.”
“More than 10,000 wealthy foreign investors have won special concessions to come to Australia during the COVID-19 pandemic, leapfrogging other visa-holders and potentially pushing stranded Australians further back in the ‘queue’. The Home Affairs Department recently added business investor visa-holders to the categories of people who qualify for automatic exemptions from the inbound travel ban on non-Australians.”
Paddy Manning is contributing editor (politics) at The Monthly and has worked for the ABC, Fairfax, Crikey and The Australian. He is the author of Body Count: How Climate Change Is Killing Us, Inside the Greens and Born To Rule: The Unauthorised Biography of Malcolm Turnbull.
Dashing faint hopes of a permanent increase to income support for welfare recipients, Treasurer Josh Frydenberg has budgeted to force some 2.2 million Australians currently receiving the coronavirus supplement ($250 per fortnight) back below the poverty line just a week after Christmas. Tonight’s statement confirms the nation’s finances are so deep in the red as a result of the pandemic – the deficit is predicted to peak at $214 billion in 2020–21, while net debt will peak at $966 billion in 2023–24 – that the cost of the extra support to the budget would be a side issue. Unemployment is still rising, expected to peak at 8 per cent this quarter. The government is splashing around plenty of money tonight: the stage-two personal income tax cuts have been...
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