Extract from The Guardian
The treasurer’s determination to draw a thick
black line from promised extra payments on childcare to benefit cuts
is meeting resistance from single parents
We all know that what the government can afford to
spend is logically connected to everything else it spends money on,
and all the revenue it receives. Photograph: Dave Hunt/AAP
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Friday 20 November 2015 19.56 AEDT
Very occasionally, the real world forces its way
into the deliberations of federal policymakers, and when it does it’s
a mildly shocking thing, like an open window bringing breeze and car
horns and birdsong into a muzak-filled air-conditioned shopping mall.
This week it arrived in the form of Terese
Edwards, from the National Council for Single Mothers and their
Children,
who was giving evidence to a Senate inquiry about a government plan
to cut $4.8bn from family payments – which adds up to cuts in
payments to a single parent with two children between 13 and 18 of
about $3,000 a year, including axing a twice-a-year top-up payment.
The treasurer, Scott
Morrison, quite correctly says the top-up payment was introduced
because many families were finding themselves with a liability after
being accidentally overpaid by the government because they had
underestimated what their family earnings would be. Now that
technology has overcome that problem, the “Christmas and July bonus
payments have outlived their purpose”, the treasurer insists. The
government also argues that once children are in their teens mothers
can, and should, go back to work. Which, in an ideal world, is also
true.
But these arguments ignore one big thing. For
mothers who cannot find well-paid work, the current family payments –
even with the bonuses – are barely enough to get by on.
Edwards explained that low-wage jobs and
unemployment benefits left single parents with so little that they
now relied on the “bonuses” for pretty important purposes –
paying for any out-of-the-ordinary costs, such as car registration or
replacing an appliance.
She gave the results of a 2014 survey of single
parents, in which 74% said they had trouble paying utility bills,
almost 14% said utilities had been disconnected, 58% said their
children had given up sport or other activities because they couldn’t
afford the equipment or fees, 62% said they could not afford health
or household insurance and 57% said they struggled to keep their car
on the road.
And she read from stories the single mothers had
sent her to pass on to the inquiry.
“My son never passes on school notes regarding
anything that costs money. I’ve found them ripped up in his school
bag, hidden in this room, etc. I think he has noticed my hands
shaking so many times from monetary stress that he will do anything
to keep things like this from me. He’s 13 and has desperately
wanted to get a job since he was 11. He constantly asks why I hardly
ever eat dinner but, fortunately, he still seems to believe that I
absolutely love toast and two-minute noodles when I do eat.”
Or: “Please, please, please tell them ... all
the pollies … that we will go over the edge if there are any more
cuts. My luxury is our 18-year-old Corolla.”
Or: “Jack is great at sports, he pretended that
he was injured so he would not get picked for the inter-school
competition. It was $35. We just don’t have the spare cash.”
According to the government, the family benefit
cuts – first announced in its disastrous 2014 budget and recently
softened to try to win parliamentary approval – are the only
way it can pay for a plan to spend an extra $3.5bn on childcare.
Treasurers have always had a thing for “offsetting
savings” – focusing fellow ministers’ minds by demanding they
look for ways to save as much money as they want to spend.
Historically they have also used so-called “hypothecation” as
cover for tax increases. The Medicare
levy, for example, only pays for some of the costs of Medicare
and is really just a tax increase, as was the 0.5%
increase in the Medicare levy imposed by the Gillard government to
“help” pay for the national disability insurance scheme (NDIS).
But it is more unusual for treasurers to suggest
direct hypothecation of spending cuts – the fiction that the only
possible way to find the money for one important thing is by cutting
other specified type of spending. It’s a “we can only afford to
buy a new car if we stop buying milk” type of logic, but it is
indeed what the Abbott and Turnbull governments have been saying.
They argue that a proposed $3.5bn childcare revamp can only possibly
come from the pockets of the lowest-paid.In fact, Morrison is
suggesting hypothecation might
be used to justify cutting welfare payments even further, because
the social safety net won’t be sustainable once the government has
to pay for the NDIS.
“While the government is fully committed to [the
NDIS], the reality is that from 2019–20, the 0.5% increase in the
Medicare levy will cover less than half of the commonwealth’s
contribution,” he said this week, not mentioning that it was never
designed to cover the full cost of the scheme.
Meanwhile, on a different day in a different
parliamentary inquiry this week a different type of reality was
dawning.
Chevron was explaining that reports
it had paid just $248 in tax on an estimated $1.7bn Australian
profit rerouted through the low-tax US state of Delaware were wrong.
It had, in fact, paid nothing, because no tax was due – thanks to
the company’s advantageously structured international borrowing.
Neither Labor nor Liberal committee members were buying that
explanation. Labor called it a “rort” and the Liberal senator
said it was “immoral”.
BHP Billiton and Rio came under fire in the same
committee for similarly convoluted and tax-minimising “marketing
hubs”, which are under dispute with the tax office.
As former treasurer Wayne Swan said in parliament
recently, the inquiry has “drawn attention to the legally
questionable and ethically bankrupt tax practices of some Australia’s
most senior corporate citizens” and that “tax avoidance on such a
grand scale impoverishes us all” because there is not enough in the
government’s coffers to pay for essential services.
But at the same time as leading corporate lights
are defending practices that allow them to pay very little actual
tax, the Business Council of Australia (Chevron, BHP and Rio are all
members) and other groups are pressing for a corporate tax cut as
part of what policymakers like to call tax reform. (They really mean
tax “changes”, but change is so value-neutral – it can be good
or bad – whereas “reform” sounds like it really has to be a
positive thing.)
The government has said nothing definite, but a
higher goods and services tax that pays for personal and company tax
cuts seems likely.
But strangely, when it comes to this discussion,
with multiple billions of dollars in revenue at stake, no one
mentions hypothecation.
No one says, “Sure, we can manage a company tax
cut to boost investment just as soon as major corporations start
paying a reasonable amount of the tax they are already supposed to
pay – but not until then.”
In fact in the last sitting period the government
refused to pass its own legislation trying to force multinationals to
pay more tax because Labor, the Greens and the crossbenchers in the
Senate had banded together to insert into it a requirement that big
private companies be required to reveal what they pay in tax. As
I’ve argued before, that seemed an unwise place for the
government to take a stand.
Both these bills will be before parliament in the
final two sitting weeks of the year, which begin on Monday – the
cuts to low-income families and single-parents’ benefits and the
first small legislative step to try to force multinationals to pay a
fair amount of tax.
And despite Scott Morrison’s determination to
draw a thick black line from the promised extra payments on childcare
to benefit cuts, rather than anywhere else in his budget, we all know
that what the government can afford to spend is logically connected
to everything else it spends money on, and all the revenue it
receives.
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