Budgets reveal a government's priorities.
On 3 April, Treasurer Wayne Swan and Superannuation Minister Bill Shorten said Labor would no longer give priority to providing over $438,000 a year in government assistance to retirees with an annual tax free income of $1 million from super while an age pensioner gets $21,000. Instead, Labor will not tax the first $100,000 of this retiree's income, and apply a highly concessional rate of 15 per cent to the other $900,000.
The ministers did not say so, but their new priority would assist this retiree with tax concessions worth about $330,000 a year — a little under 16 times the size of the age pension, rather than 20 times as it was previously.
This might seem a strange priority for a Labor government that is trying the stop the budget sliding further into deficit. But Labor won't even introduce the enabling legislation before the September election. As a result, a new Coalition government will almost certainly continue to give this retiree $438,000 a year in budget support.
As it finalises the 14 May Budget, Labor is struggling with a $12 billion write down in anticipated revenue for 2012–13 after Treasury bungled the forecasts. The ensuing deficits will be even bigger because what Labor has committed to spending exceeds even the wildly overblown forecasts for the carbon and mining taxes. The expanding deficit, although still relatively small, can't be justified while normal economic growth is occurring.
Labor could make huge saving by cutting back on government assistance to those who can fend for themselves. But it has chosen to switch large numbers of single parents off the parenting payment of $341.70 a week and onto Newstart (the dole) at $268.90 a week for those with dependent children. Most single parents have part time jobs, yet the government has cut their relatively low payment to give others an incentive to follow suit.
The Business Council of Australia has observed, 'Entrenching people in poverty is not a pathway back into employment.'
The maximum rent assistance for single parents on Newstart is $72 a week. Yet a recent Anglicare survey found that steep rises in rent mean that less than one per cent of rental properties are affordable for singles on social security benefits. Again, this is a matter of priorities.
But no increase in rent assistance is expected in the Budget; nor any change in tax policy to lift the subdued growth in the supply