Fighting fund: Intergenerational theft is real

March 20, 2015
Treasurer Joe Hockey presenting the Intergenerational Report.

The latest buzzword the government is tossing around to try to scare people into supporting its grossly unfair budget is “intergenerational theft”. It recently released an Intergenerational Report, which looks at the budget over the next 40 years to back up this campaign.

The report says that in the future we will all live much longer and spend more of our lives in retirement. There will be a lower proportion of working people whose taxes pay for pensions and health care, so “we” have to start paying for it now.

In its latest budget, the government departed from the previous standard format for the budget papers by removing the comparative tables that show the effect of the budget on different households with different income levels.

Researchers at the Australian National University produced the tables themselves and found that the burden of the budget fell disproportionately on the poor. A single parent on parenting payment would lose 10% of their income. A single person earning three times the average wage would lose just 1%.

This follows tax cuts that the Australia Institute estimated to be worth $170 billion, where the richest 10% received more than the bottom 80%.

When times were good, government revenue was siphoned by the wealthy. Now that times are not so good and government coffers are empty, it’s the poor who have to fill them — effectively a multi-billion dollar theft of wealth from the poor by the rich.

The Australia Institute’s Richard Denniss examined the Intergenerational Report and discovered that, far from showing that we should panic about catastrophic future budget deficits, the projected 77% increase in real incomes by 2055 should tip huge sums of money into the budget.

But hidden in the report’s appendices is the assumption that future governments will regularly legislate to reduce revenue by indexing tax scales to the increase in real incomes. This is not merely a matter of eliminating “bracket creep” as wages keep pace with inflation.

It means that someone who earns an inflation-adjusted wage in forty years will pay far less tax than someone on that same wage today. It also means that the revenue forgone by future governments will be far more generous to the wealthy than to the poor.

Don’t be surprised if it is still the poor who are expected to make up the shortfall when the budget runs into difficulties. The Intergenerational Report expects the same sort of theft from the poor to continue into future generations.

Green Left Weekly stands for stopping this transfer of wealth from the poor to the rich. It stands for a fairer distribution of wealth so we can all live longer, enjoy longer retirements and comfortably afford it.

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