Is the federal budget on track?
Is the Treasurer, Wayne Swan, on the right track or is the middle class carrying too much of the savings burden ahead of Tuesday's federal budget?
Is the Treasurer, Wayne Swan, on the right track or is the middle class carrying too much of the savings burden ahead of Tuesday's federal budget? Middle faring wellIan McAuley, University of CanberraTo achieve budget savings, cuts will have to be made to welfare payments or from government services, such as education, healthcare and infrastructure. Cutting middle-class welfare will raise squeals of protest, based on the notions that ''families are already doing it tough'' and that ''the cost of living just keeps rising''. Independent researchers can find no evidence to support these notions. For most Australians, incomes are still rising faster than prices. There are many reasons for this perception about rising living costs, including media beat-ups, assumptions that higher utility bills mean higher prices (rather than higher consumption) and failures to notice falling prices of clothing as well as other necessities. Also there are rising expectations: private schools and private health insurance seem to have become the new ''normal''. If savings on welfare are directed to improving public education and healthcare, people will feel less need to opt out of these shared services. Maximise the axeGerry Redmond, Flinders University and Peter Whiteford, University of NSWMiddle-class welfare suggests well-off people, who can easily support themselves, are enjoying over-generous benefits or concessions. However, it is important to distinguish between different types of programs from which the middle class benefit. Some supports, such as superannuation concessions for people with higher living standards, disproportionately benefit high-income households who receive greater assistance than low-income taxpayers. Universal services such as Medicare benefit everybody, on the basis of need, not income. Family tax benefits, in contrast, provide the greatest support to low-income families, but are not as tightly targeted as pensions or income support payments, so some assistance ''leaks'' upward to the middle class. With programs of this sort, it is difficult to cut payments to the middle without disadvantaging the poor. So long as the Treasurer targets his axe on programs that disproportionately benefit people with the highest living standards, he will be on the right track.We, the sacrificial martyr middle class, cry foul, imagining ourselves squeezed fast and helpless in an imagined in-between space. Above us, the super-rich octopus-moguls with their whispered corruption, tangling influence in dark rooms, spitting greed-toxic venom down through the classes while below seethes the rude multitude of the Centrelink self-oppressed.Europe lurches to the right in financial fear. The Middle East springs dissidence against cruel oppression and Africa continues its slow-waltz war-implosion.With our cafe latte complaints and iPhone inconveniences we are rich and bloated beyond measure. There is a disconnect somewhere in the system. When the loss of privileged, gifted-windfall comfort perks becomes our biggest cause for alarm, financial comfort has won out over empathy, insatiable greed taken precedence over reason.We've allowed ourselves to become a self-entitled armchair-army of Clive Palmers and Gina Rineharts a swollen, wet-eyed grievance-mongering generation of oblivious six-figured battlers.Dan Watson Chippendale The one group who is not talked about by the media or either of the major political parties with much conviction is the self-funded super group.For anyone who retired before 2007, what a disaster it has been. We put as much of our free cash as we could into super and we have since lost at least half of it. And costs such as rates and taxes, utilities and medical bills keep rising. We are the one group who saved for our retirement. We cost the government nothing but if things keep going the way they are then many of us will soon be on all the benefits.And as many more begin to retire and hold a greater percentage of the vote I hope we see payback for past inaction.Peter V Faddy Drummoyne Instead of making the economy more efficient and attracting more of the middle-class family to spend, our government is trying to squeeze more money out of them. Our retail industry is suffering and the outlook of the global economy is still uncertain. Our government should implement a more efficient economy model by encouraging the middle-class family to spend, which will help many industries to survive, rather than making some very unreasonable tax cuts. The government is trying to take money away from the middle-class family to cover the budget deficit, which was created by the government's mismanagement of the economy. Let's take the opportunity of the mining boom and put the money to where it belongs.Jacky Lo Sydney When it comes to the middle class you are talking about two separate groups: those with children and those without.I don't mind some distribution of wealth but not when my taxes are being given to other dual-income average-wage earners just because they make the lifestyle choice to have children. Fully fund health and education and provide a safety net for those who need it but let's have people pay for the cost of raising their own children.Robert Thompson North Sydney I feel so disenfranchised as a middle-class person. I'm happy to pay taxes as a part of the community. However, I see the tax dollars I pay squandered by governments not for the benefit of the community, but to preserve their positions in power. While the current government may be worse than ever, it is not unique in its abuses. I feel unrepresented even though I pay so much money to the government. I believe that the more tax I pay the government considers me less of an Australian.Dave Margon Chatswood Dear Swannie,As a single, middle-aged, healthy, white, childless male on reasonable money I get nothing from you except an unavoidable tax bill and the promise of larger hands in my apparently bottomless pockets further down the track.I didn't get a sniff of the $$$ in the great post-global-financial-crisis handout even though I'm precisely the sort of person who would have blown that if I'd been given the chance.But I'm happy to now fund 100 per cent my own private healthcare as well as everyone else's after all, I rarely get sick, so why waste the public's money on a service I don't use much?However, I'm a little concerned that after all the taxes I now pay, there's only about 40 per cent left to give. I'm terrified about what will happen to the vast number of Australian welfare recipients out there when my taxable income finally runs out.Perhaps I could work longer hours. I only do 50 a week at the moment.Please let me know how I can help out.Cheers.David Fingret Sydney I believe the government is on the right track in attacking middle-class welfare. I am one of the middle class and I will be affected by the government's changes to the private health insurance rebate. However, I support this. The savings should come from people who can afford them.Households earning $150,000 will say that after paying mortgage and running costs and various schools and sporting fees they find it hard to make ends meet. How do people on half this income make ends meet? If households earning $150,000 are finding it hard to make ends meet maybe they should look at their lifestyle. If they have an expensive mortgage it is because they choose to live in that area. Do they have luxuries like pay TV and several cars in the household? Sporting and other fees they pay are their choice.The government is definitely on the right track in seeking its savings from those that can afford it.John Bertacco Sydney I'm not sure what ''class'' my wife and I are in but we are both working professionals, never had or wanted children (we do have a cat). Our combined income is just over $140,000 per annum. We do have a mortgage, two cars, live on the northern beaches and we have private medical insurance. We are far from rich yet we are not entitled to the perks, rebates etc given by the government. We are paying for others to have those perks. It is grossly unfair.Steve Barnett Newport Yes, we are. Swan forgets how much the middle class contributes to the economy. We are more likely to employ people to, say, do our gardening, cleaning, ironing, even work as nannies. He forgets that we pay lots of GST as we buy higher-end items. He forgets that we will not be a burden to the Australian social security system upon our retirement, as we'll be self-funded (another dirty phrase, according to this government) and not reliant on the age pension. But keep taxing us and we won't contribute as much in the aforementioned areas - see where that will take the budget. Most of us in this position didn't get here by winning Lotto. We worked damn hard to get here.Patricia Miller Homebush Join the debate: email email@example.comWe will post next week's explosive topic on smh.com.au on Wednesday
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free