Election sweeteners a family affair
Joe Zabar, Deputy CEO, Catholic Social Services Australia
As published in Eureka Street 21 February 2019
After a tumultuous 2018 for the federal Parliament, the early months of 2019 are likely to move into hyperdrive as the major parties begin positioning themselves for the upcoming election.
Each of the major parties has access to a war chest to fund their many promises. Labor's funding will come primarily from proposed tax changes. The Coalition is relying on additional tax receipts from a bumper year of company profits. Both will make big spending promises while pledging to bring the budget back to surplus.
The cooling of the housing market in Sydney and Melbourne will make Labor's capital gains and negative gearing policy changes tricky to implement. Talk of a US recession and some uncertainty around the Chinese economy may affect the government's expected tax receipts beyond 2019, making the Coalition's likely tax cuts and budget surplus harder to deliver.
Despite the softening housing market in Sydney and Melbourne, house prices there are still more than ten times the average salary. For those families renting, the news is no better. Rent in these cities remain high, with the average rental price for a house in Sydney sitting at $540 per week — or just over $28,000 per year.
Despite a $51 billion Christmas spending spree, up almost three per cent on 2017, many Australian families remain anxious about cost-of-living pressures, especially those in Sydney and Melbourne who are also facing a slide in the value of their homes. Wages growth remains relatively low, which is exacerbating a sense of financial unease for many Australian families. For those families on welfare or with single incomes, the outlook for 2019 may be even bleaker.
The problem for many families is that they have no capacity to increase their earnings. We have almost 1.8 million Australians without work or looking for more work. Despite strong profits, businesses are yet to share the spoils of the recent gains with their employees.
Disturbingly, the Fair Work Commission, our independent industrial relations body, accepts that its 2018 National Minimum Wage (NMW) decision will leave some NMW and award-reliant employees in poverty. Single-income families dependent on a NMW or award-reliant employee are experiencing working poverty.
"As the election nears, our politicians will bring forward a raft of sweeteners aimed at securing their base and encouraging others to move their vote. Let's hope they include relief for low-income households with children."
While the Fair Work Commission concedes that the minimum wage is not a living wage for workers with families, they are neither willing nor able to address the financial realities of those sole parents and single-earner couples with children who are struggling to meet the increasing costs of living.
So if the market and an independent arbiter are unable or unwilling to address the cost-of-living pressures, especially for low-income households, should that be the end of the story?
The hip pocket nerve is twitching, sending signals to both the major parties that families need a break from the relentless imposition of fees and charges from financial, health, insurance, phone and energy companies. Both Prime Minister Scott Morrison and Opposition Leader Bill Shorten will be carefully weighing up options in the hope of wooing voters their way.
While regulators such as the ACCC and ASIC pursuing competition policy should in theory dampen excessive and unreasonable increases to the cost of services, their actions have not yet addressed this very live issue for low-income families.
Both sides would be wise to consider revisiting the Howard-era initiative of Family Tax Benefits (FTB) as a means to provide targeted relief to families. Both Labor and the Coalition have taken their fair share out of the FTB bucket as a way to balance the budget. By doing so, they have left many families worse off. The restoration of some of the cuts to FTB would be a good a start.
Critics will argue that revisiting FTB is simply adding to middle-class welfare. But the critics need to concede three things.
First, it's a problem when our industrial relations system fails to address the issue of poverty for some working families. Second, it's a policy failure when economists and the Business Council of Australia agree that the Newstart payment is so woefully inadequate that it is a barrier to employment. Third, it is a national disgrace when we have more than 700,000 children living in poverty.
As the election horizon nears, our politicians will bring forward a raft of sweeteners aimed at securing their base and encouraging others to move their vote. Let's hope that the coming election sweeteners include relief for low-income households with children.
Joe Zabar is the deputy CEO of Catholic Social Services Australia.