Budget will worsen inequality

Scomo and Mathias Cormann celebrating making poor people's lives harder.

The wealthy and corporations got a visit from Santa Claus, but the rest of us got Scrooged again on Budget night.

A windfall in tax income — derived in part from higher than expected royalties and corporate taxes in the mining sector, owing to higher prices for iron ore, coal and oil — provided ideal conditions for the government’s pre-election budget.

There was never a chance that Treasurer Scott Morrison would use this windfall to boost social spending — that just wouldn’t accord with the Malcolm Turnbull government’s “trickle down” economics.

The government has chosen instead to prioritise “budget repair”, to introduce sweeping corporate and income tax changes. With $80 billion in corporate tax cuts now locked in, the government also announced a seven-year overhaul of income tax that will result in tax revenues dropping by up to $140 billion and a serious undermining of our progressive taxation system.

The government’s changes to income tax would mean that a worker on the minimum wage earning $41,000 would be on the same tax rate as a person with an income of $200,000.

Turnbull and Morrison are selling the tax policy with the message that working people will “keep more of what they earn”, rather than “giving it to the government”. They hope their Trump-style spin will work, but people aren’t stupid.

The tax cuts fail to compensate for low wage growth and budget cuts will mean more out of pocket expenses for workers to access basic services such as health and education.

Research by The Australia Institute released in February clearly showed that corporate tax cuts were unpopular and more people favoured government investment in public services as a way to support employment and economic growth.

No amount of government spin can hide the fact that this is a budget for big business and the rich.

In addition to the tax cuts, the government is budgeting for $41 billion in “savings”. The Federal public service will lose 1280 jobs in the Department of Human Services, in favour of outsourcing these jobs and services to the corporate sector.

The ABC, National Archives and the National Library will have massive funding cuts, with the ABC set to lose another $84 million.

Funding cuts to vocational education will continue and $2.2 billion will be cut from the university sector.

The government will also extend the failed Robo-debt program to unfairly chase people for fake Centrelink debts.

Labor’s Bill Shorten and Chris Bowen were falling over themselves to declare their support for the low-to-middle-income tax cuts, while ACTU secretary Sally McManus declared the tax measures as an attack on progressive taxation.

McManus said on May 8: “The Turnbull government has chosen to do the bidding of big business, offshore investors and the already wealthy, and neglect the needs of working people.”

“This evening’s budget relies on failed trickle-down economics to trick Australians into giving a failed government another term in power.”

McManus added: “In a transparent pitch for re-election the government has airbrushed wages growth figures over the forward year to fabricate a return to surplus, listing figures of up to 3.5%, while opposing efforts of working people to organise and negotiate fair pay rises.”

Australian Council of Social Service CEO Cassandra Goldie ripped into the failure of the government to raise Newstart, a position supported by Sally McManus on the ABC’s Budget night coverage.

Goldie told the media on May 8, “There is a seven-year plan for tax cuts, but where’s the seven-year plan for reducing poverty among adults and children, guaranteeing growth funding for health care and closing the gaps in essential services such as mental and dental health and affordable housing?”

The last time the base rate of NewStart was raised was in 1994, and unemployed workers are expected to survive on just $39 a day. Morrison wears as a badge of honour the fact that his government has achieved the “lowest level of welfare reliance in 25 years”, but this simply means that more and more people are slipping though the safety net into abject poverty.

To further punish those receiving welfare entitlements, Morrison also announced the government would withhold welfare payments from recipients who have outstanding fines.

From July 1, new migrants will have to wait for four years to access some welfare benefits and the freeze on foreign aid will continue.

According to the Australian Conservation Foundation's analysis, investment in cutting climate pollution will fall, there will be no further funding for the Emission Reduction Fund and the government will stick to its pathetic 2030 pollution reduction targets. Meanwhile, fossil fuel subsidies will continue.

Australian Greens leader, Richard Di Natale said: "This is the budget that gives the middle finger to anybody that cares about a safe and stable climate in Australia."

Low wage growth for workers also translates to stagnating age pensions. This impacts severely on pensioners who are renting, or have no other income or savings except for the equity in their home. But rather than increasing pensions to compensate for this, the government is expanding its Pension Work Bonus scheme, encouraging pensioners to work longer by raising the threshold at which income earned will affect pension payments.

The Labor opposition and Greens should block this budget. It continues the pro-business, pro-rich and anti-people agenda of the Coalition government. To borrow the words of British Labour Party leader Jeremy Corbyn it has "unfairness at its very core, paid for by those who can least afford it”.