Here’s Exactly How Bad The Budget’s Going To Screw Australia’s Poorest People
It's not gonna be pretty.
Remember the budget? That thing we were all very angry about before ISIS turned the Iraq War into the biggest trilogy no one asked for since The Matrix sequels?
With so much attention given over to the government’s “national security” legislation in recent weeks, it’s easy to forget that more than five months after it was first unveiled, the budget is quietly languishing in Parliament with no sign that it’s about to go anywhere. A couple of weeks ago the government was forced to split its welfare reform bill into little pieces to pass the few bits the Opposition or the crossbench aren’t opposing, and major budget policies like deregulated uni fees and the $7 GP co-payment remain unloved and unvoted on.
Now the budget’s being dragged back into the spotlight again, partly because it’s a budget and you can only ignore it for so long, but also because people have had enough time to really dig through it and work out just how awful it is. The National Centre for Social and Economic Modelling (NATSEM), a highly respected research institute based in Canberra, has been churning out papers on Australia’s social and economic outlook for more than twenty years. A couple of weeks ago they released their analysis of how the budget will impact household incomes over the next few years, and What They Found Will Shock You.
(I used that phrase solely so I could put this gif here.)
Anyway, the NATSEM study found that in terms of who loses the most money, the budget “falls most heavily on low and middle income families with children,” while “the impact on high income families with children is smaller in dollar terms and percent change terms”. Basically, the less you earn at the moment, the more the budget will cost you.
Take a look at this graph; I know graphs are boring, but they are also important because they are Science. It measures which familial groups — split here into “couples with children”, “couples without children” and “single people who are actually quite happy with their life choices, thanks very much” — will see their income shrink as a result of the budget, and by how much. ‘Q1’ represents the bottom 20 percent of income earners in their group, while ‘Q5’ represents the highest-earning 20 percent.
See that plunging blue line about a quarter of the way in? That’s the income of a Q1 family with no kids after the budget comes into effect, down 1.5 percent pretty much straight away. A childless couple earning a heap of money in Q5, by contrast, is only losing 0.3 percent; five times less than their poorer counterparts in percentage terms. A single person in Q1 will lose 1 percent of their income, ten times more than a single person in Q5. No matter what your family situation, if you have money you’re more likely to hold onto it than someone who has less — and if you have no money, soon you’ll have even more no-money to not-buy things with.
It’s difficult to imagine what losing that kind of money looks like in the abstract, so here’s a real-world breakdown: this the same graph in real-dollar terms, which makes the budget look less uneven until you pair up the dollar amounts each group is losing with their percentage change. The budget will make Q5 families with kids pay $721 more, which seems like a lot, but considering that’s only 0.4 percent of their household income — which a quick laptop calculation will tell you is around $180,000 — the $297 a Q1 family with kids is paying begins to look a lot harsher considering they only have around $37,000 to begin with.
That’s bad enough after a single year, but it gets worse; the NATSEM report also forecast what the budget is likely to be costing families by 2017/18, when its largest measures have had time to take effect and become permanent. Incredibly, the gap between rich and poor is set to get even wider; Q1 families with kids will be losing a massive 6.6 percent of their income, while Q5 families will actually be gaining money by 0.3 percent. Q1 single parents are set to be hit even harder, losing almost eleven percent of their income in just three years.
To really drive the point home, the study even mapped which suburbs will be most and least affected, with the biggest burden falling on low socio-economic suburbs like Greenacre and Bankstown in western Sydney, and Broadmeadows and Campbellfield in northern Melbourne. The suburbs that get off lightest, or scot-free? Good old Potts Point, Paddington, Erskineville and East Melbourne — some of the wealthiest ‘burbs in the country.
Here’s a groovy map of Sydney; the orange parts will be paying more for the budget, while the lighter spaces will be paying less. If you’ve ever looked at a map of Sydney detailing any kind of social or economic disparity — income, poverty, literacy, crime, university admission rates — the colours are the same; the southern and western suburbs lose out, while the wealthier eastern and northern suburbs get off easy. Households in Manly, Tony Abbott’s suburb and one of the wealthiest in the country, will lose $125 a year, on average. Households in St Marys, out near Penrith? $1,012 a year.
The upshot? As the report itself concludes, the big losers from the 2014 budget are “low income families with children”; by 2017/18 the impact of the budget will be “felt almost entirely by low income regions of Australia”; and high-income earners of all kinds will “be largely unaffected by this budget either in the short or longer term”. Basically, if you’re poor, you’re stuffed.