The government had a clear choice in this budget: it could spend $900 million to appease the so-called “squeeze bucket” or use it to act decisively to reduce child poverty.
Despite Treasury advice and in the face of growing evidence that the social fabric is rapidly tearing apart they chose the former.
The 2022 budget will award a paltry $350 over 12 weeks to anyone not receiving benefits and who can show a 2021 tax return of less than $70,000. Don’t expect it to stop in November, there will be a miraculous reduction in the cost of living and a political return of gratitude.
And too bad if you don’t have a tax return. But how lucky are those who have low taxable income and live in a high-income household? They do not need this handout and may well spend in ways that contribute to higher inflation.
This is not the case for the poorest families. They’re not even getting the $350 from the 2022 budget. But if they had enough money, they could relieve the supermarkets of their wasted unsold produce and withstand the pressure from the food banks. It’s not the kind of expense that would drive prices up, but Grant Robinson has hinted he can’t help poorer families because it would be “inflationary”. What immoral nonsense. Government policy has allowed the rich to get much, much richer with untaxed capital gains and accumulated savings during the Covid-19 shutdowns. Inflation does not affect them or their way of life: on the contrary, market prices are not a brake on their excessive spending on luxury, on travel or on hoarding scarce resources for their renovations in the midst of a housing crisis. .
Currently, many families who do not receive the full WFF must borrow just to survive. They fall further into this vicious poverty trap of repayments leading to less disposable income requiring even more borrowing. When families run out of money to feed their families and have to borrow, beg for extra help and/or request food parcels from charity, we can expect disease, crime, domestic violence , despair and even suicide develop.
The budget is clean child poverty report analysis in the welfare budget shows that child poverty targets will not be met with the current policy. The $900 million could have paid the Working Tax Credit, that part of the WFF that the worst-off are not currently receiving, to all families on benefits for two years. After that time, because it would be clear how important it is to make this payment permanent to achieve child poverty reduction goals.
That would mean $4,000 more per family per year for people so poor they need a benefit or a partial benefit. This would be very targeted spending that would only go to the poorest children. Go work – you have the political capital, just to do it!
Unfortunately, the political gamble of not doing what the Prime Minister promised on child poverty was found to be less damaging than ignoring the opposition’s phony concern about the ‘narrow middle’.
But the “restricted environment” requires further analysis. The main problem for many working families is high effective marginal tax rates, that is, when they earn extra income, after taxes and loss of welfare, they are little or no better off. Low-income working families were hit by an additional poverty trap in April when the government tightened the targeting of Working for Families with a 27% increased clawback above the unadjusted household income threshold of 42,700 $.
If the threshold were raised to at least $50,000, where it should be, families could earn $1,971 a year. Instead, this budget provides these families with an additional temporary payment of just $350 or $700 if there are two earning parents.
Shame on Labor who have just set up another WFF review to revisit the reform issues that are obviously obvious. The committee will present “options” for consideration by the end of the year. How much time and money will this unnecessarily delayed review take? Perhaps there will be changes announced in the 2023 budget for 2024? Oh wait, that’s assuming Labor gets re-elected. If ACT has any say at all, expect things to be even more dire for families who get Working for Families.