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Joe Hockey: release the fairness figures, if you dare

Date

Mr Hockey is misleading the public by producing red herrings, knowing full well that a more detailed analysis remains secret.

EDITORIAL

Treasurer Joe Hockey has used his budget to "slug the poorest more than the relatively well-off who should carry at least an equal burden of reform".

Treasurer Joe Hockey has used his budget to "slug the poorest more than the relatively well-off who should carry at least an equal burden of reform". Photo: Reuters

Treasurer Joe Hockey has once more sought to deny facts, obfuscate and keep the public in the dark over his unfair budget.

What’s more, he has blamed his failings on the messenger.

Fairfax Media this week published Treasury figures released under Freedom of Information laws. They showed how Mr Hockey's budget measures hit low-income  families harder than middle-income and high-income households.

Mr Hockey’s accused Fairfax Media of “deliberately misleading” the public.

In reality, Mr Hockey did the misleading by producing red herrings, knowing full well that a more detailed analysis remains secret.

Those detailed figures –  “the distributional and cameo analysis for the 2014-15 budget. And the assumptions behind the analysis” – are most likely to include the winners and losers information missing from Mr Hockey's budget.

Treasury has kept confidential two related reports on the basis they informed cabinet decisions before the budget was presented on May 13.

Mr Hockey should release them and thereby prove his budget is fair. He will not, because it is not.

All Treasury released was raw data used to prepare a graphic in the budget overview. That graphic showed virtually no change between before and after the budget on average cash transfers and average income tax paid for three income groups.

The figures used to create that graphic show a different story. An average low-income family loses $844 a year in disposable income (earnings after tax and government payments) due to the budget. Middle-income earners forgo $492. High-income families will be down $517 – assuming the Treasurer can get his budget through the Senate.

Granted, the data is simplistic. It covers working  people and their dependents aged 15-64 and it only groups families into three broad categories, earning less than $36,000, $36,000-$57,000 and over $57,000. 

Mr Hockey knows the secret reports go into greater detail and he should release them.

Instead, he attacked Fairfax Media and compared apples with oranges.

“Income households pay half their income in tax, low-income households pay virtually no tax,” he said. That is irrelevant. The Treasury table Fairfax Media reported shows how budget changes affect family disposable income. Most likely the figures under-represent that impact on low-income families because the data excludes the GP co-payment plan and covers only one year, 2016-17. The following year family payment cuts kick in, the deficit levy ends and the well-off do relatively better.

The Treasury figures do not purport to be giving an assessment of who pays more tax, either.  If Mr Hockey is suggesting that something is wrong when low-income households pay less tax and high-income ones fund some of social safety net, then he is out of step with Australian values.

The Treasurer also claimed the Fairfax Media report “fails to take into account pensions, which is not included in that table, which are a substantial payment” and myriad other benefits. Again, the table is not assessing who gets most benefits, but rather how the budget affects those who do.

The Herald believes Mr Hockey is trying to change Australia in ways not revealed to voters at the 2013 election.

It is one thing to outline a manifesto to end the age of entitlement as Mr Hockey did in London in 2012; it is altogether another to rewrite the safety net for vulnerable Australians and not explain why.

He has used his budget to slug the poorest more than the relatively well-off who should carry at least an equal burden of reform. The 2 per cent deficit levy on those earning more than $180,000 a year will last only three years. Mr Hockey has not reduced the lucrative tax breaks for high-income earners on superannuation, capital gains and negative gearing. He has failed to leverage his “good news” in the budget – more roads, infrastructure and  health research.

The Herald will support any government that outlines a fair plan to return the budget to surplus. So will most Australians.

As talks with senators finally gather pace, some things should be rejected outright: six months without income support for young jobless and reduced funding for education and health.

Compromises must be made to ensure worthwhile reforms pass: indexation of petrol excise; stricter means testing of family payments in the long term; tougher aged pension indexation; and privatisation to free up funds for infrastructure.

The GP co-payment should at least be staggered, offset by reduced co-payments elsewhere or removed from pensioners. Limits should also restrict the expansion of private health insurers into a US-style two-tier health system.

The university reforms should at least impose limits on course fee rises, greater regulation of private providers and exceptions for interest charged on income-contingent student loans.

The paid parental leave scheme should be scrapped or at least capped at six months’ pay at the average earnings, or about $57,000 a year. 

To offset any funding shortfall, Mr Hockey should target those who can afford to pay. That way he would go some way towards meeting his 2012 challenge to “convince the electorate of the need for fiscal pain and to ensure that the burden is equally shared”.

3 comments

  • Turns out that the waste and mismanagement of which Labor were accused comprised payments to the disadvantaged. Paying benefits to 25-30Yr for the full year as opposed the half the year. Bulk billing, Pensioner Concession cards and a raft of critical Government agencies. Then he turns around and just removes the budget tables ( introduced by John Howard ) to show the impact of the budget on various income a personal circumstance categories , what possible explanation could there be for that? Now he tells us that high income earners pay 50% of their income in Tax. I think he is in the wrong profession, I could suggest an alternative for him, but I doubt the paper would publish this comment.

    Commenter
    KIDDING
    Date and time
    August 06, 2014, 9:09AM
    • 'Higher-income households pay half their income in tax, low-income households pay virtually no tax' Joe Hockey.
      Dear Treasurer, please firstly, look at your budget's tax table, then secondly acknowledge the difference between marginal and average tax rates, and then thirdly calculate how high an income would have to be to have an average tax rate of 50% when the top marginal tax rate is 47%, plus debt levy, and cuts in at an average tax rate of 30% at an income of $180,001! An average tax rate of about 10% might seem substantial to someone earning $37,001!
      Dear Treasurer, were your comments fair or just favouring the very rich?

      Commenter
      Ted Kramer
      Location
      Hornsby Heights
      Date and time
      August 06, 2014, 10:22AM
      • Problem with Hockey's budget is that he mainly targets personal income tax, and ignores numerous tax dodge/minimizing things that are unfair. Negative gearing, super, capital gains, companies etc allow people to shift/minimize taxes (and still receive government pay out in some cases), while Hockey penalize people who work hard and save by making them pay top bracket tax 50+%.
        Australia needs real tax reforms, Hockey's budget hits the poor and the rich, but not the tax dodgers/minimizers.

        Commenter
        Bill
        Location
        Brisbane
        Date and time
        August 07, 2014, 4:53AM
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