Well, the Coalition’s ginger group for tax reform should be happy with tonight’s budget. Below is the distribution of the tax cuts (based on data in the SMH), which I’ve prepared for a post-budget talk I’m doing for schoolkids at Parliament House tomorrow.*
Expect the biggest runup in inequality in the post-war era to continue.
As to welfare reform, I think the Coalition are right to see a need to reduce the number of people on welfare. But any solution should involve a combination of carrots and sticks, and here the carrots seem pretty trivial, while the sticks are hefty. A better solution would have involved a negative income tax for the poorest (Britain, Canada, the US, and many other developed countries have them; we don’t). At the very least, they might have raised the tax threshold from $6000, as the Centre for Independent Studies have advocated.
Three final thoughts.
1. Every time Costello talks about recession-induced borrowing as "Labor’s debt", and runs bare surpluses in good times, another nail is hammered into the coffin of sensible counter-cyclical fiscal policy.
2. The "future fund" clearly borrows from Clinton’s "social security lockbox" (I wouldn’t be surprised if they’ve borrowed some of the rhetoric too). Like the US lockbox, there’s nothing a parliament can do that the next parliament can’t undo.
3. If a politician uses the word "enhance" one more time, I’m going to scream.
* Note that this doesn’t take accout of the axing of the superannuation levy, which will also disproportionately benefit the rich.
This entry was originally posted on budget night. The graphs were added the next day.