ACT Treasurer Andrew Barr has rebuffed a question from Liberal backbencher Giulia Jones about how a young Canberra family budget would survive the latest rates hike with advice to get a “strong union rep” and a decent pay rise.
Mrs Jones on Monday presented a family budget she said was the budget of a real family of her acquaintance, who live in Spence. He works as a school teacher, earning $65,000 a year after tax; she is at home with two children. They get $9000 a year in family tax benefit, although their situation has recently changed, with a new baby now in the mix.
Mrs Jones said they paid $26,000 a year on their mortgage after buying their home four years ago. She said it wasn’t fair that they were forced to pay stamp duty when they bought their house, so were not getting the benefit of the government’s cuts to stamp duty for new home buyers. But they were being slugged by the rates increases now being imposed year on year to pay for the cuts to stamp duty.
On July 1, they were expected to find more money to pay their rates (now $1400), which will increase an average 10 per cent across the city, and 9.4 per cent in Spence, amounting to $130 for the family. Electricity and gas are also rising a combined average of $300 and water bills will increase as well.
Mrs Jones told budget estimates hearings the family was already struggling to survive, their household budget short $57 a year ($74,000 income, $74,057 expenses) and asked how they were expected to pay for the July 1 price hikes.
Mr Barr said their wages would rise with CPI – and he hoped they had a strong union representative to ensure a decent pay rise. His suggestion ignores the fact that CPI is a measure of the increase in the cost of living, so you’re factoring in a CPI wage increase, you would also need to factor in a CPI increase in the cost of living across the board for Mrs Jones’ family, separate from big increase in rates. CPI is running at just under 3 per cent.
Mr Barr also said they would get 10 per cent reduction on insurance tax, which he asserted would amount to $500 off their insurance, based on Mrs Jones’ figures for their insurance bill – health insurance $3250, car insurance $1000 and home insurance $1200. In fact, the cut to insurance tax is only 2 per cent a year and the tax doesn’t apply to health insurance, so their saving is just $44 a year. The 10 per cent reduction referred to by Mr Barr is over five years since 2011-12.
Mrs Jones did not release the names or other details of the family to which she referred but she insisted they were a real family and it was an accurate budget.
If he breadwinner earns $65,000 after tax, he is probably earning about $85,000 in gross income. The ACT budget papers suggest that is much lower than the median family income for Canberrans of $160,000.
Because the husband is a teacher, the union rep for the family is the Australian Education Union. Teachers are yet to settle a pay deal but ACT public servants are finalising agreements that will see their pay increase 1.5 per cent every six months for four years (with an upfront flat payment that benefits lower income earners), roughly in line with CPI.
Mr Barr said the parents received about $10,000 of spending each year from the ACT government. He was referring to the government's breakdown of its overall spending per capita, which shows about $10,000 a head is spent on services for people in mid-life. The amount is about double for children and rises steeply for people aged over 60.