By Joe Montero
This year’s federal budget is coming up, and this time the details are being kept hidden from the public. In a budget just before an election there are usually sound bites promising a few handouts. Not up to now.
But the cost of living is on the rise and there is concern over how far this will go. The Morrison government is under pressure to respond, and this is coming by the way of pushing its long-term policy of introducing new income tax cuts, which will be sold as giving the battlers a helping hand by giving them more money in their pockets.
This is the centrepiece of the a “cost of living comprehensive package,” we are going to be hit by with a propaganda blitz. There might even be a cut in the tax on beer as a sweetener.
Australia must not fall for this con. Income tax cuts will not counter a rising cost of living. There are good reasons for saying this.
Most of the benefit will go to the wealthiest. Australia’s income tax system is designed to ensure this, and there is no talk of shifting the cuts to those on lower incomes, where the difficulties in managing income are most intense.
Worse still is that the government’s obsession with government withdrawal for market solutions, means that income tax delivered will be recouped by cuts in expenditure on important government services, which means higher user pay charges n health, education, and other areas. Most Australians will not be left better off.
Image from AFP/Getty
Calls are being made for more effective responses. A big one is petrol prices, which have now hit the $2 a litre mark and could top $3 a litre very soon. The average person needs relief from this, and there are two ways to deliver this. Free Australia from the world price and remove the 44.4 percent excise tax on petrol. This would give a considerable bonus to both consumers and business.
Cutting the rise of the cost of petrol is important because it adds to the rising price of just about everything we buy.
But cutting the cost of petrol is a short-term solution. A longer-term solution is to upgrade public transport and non-road delivery systems. This would reduce dependency on petrol. The federal government can contribute towards making this a reality.
Photo by Lukas Coch/AAP
Of even greater concern is the cost of housing. A government that genuinely wants to counter the rising cost of living will take on the main cause of the problem. The cost of housing is the single biggest part of a household’s expenditure. Tackling this must involve measures that counter the speculative rises in property prices, by cutting back on government feeding this through negative gearing provisions and stopping the corporate buy up of housing. A far more extensive program to build new public housing stock would add to lowering market prices. This can be taken further by imposing a ceiling on rents and protecting them from housing market pressures to keep on going up.
A lower cost of housing will enable considerably more spending on other needs and boost the economy.
The other big-ticket item pushing down the ability of households and individuals to make ends meet, is the drop in the wages share of national income. Supporting wage rises and increasing social security payments will reverse the trend. Actions must be taken to reverse the casualisation of work, which has put nearly 40 percent of the workforce into insecure and underpaid employment.
Another way to counter the rise in the cost of living is to invest in the provision of affordable childcare.
Without these measures, the cost of living is likely to keep on rising.
Don’t expect to see any of this is the budget. The Morrison government is committed to maintaining its course.
Now we have the added danger that everything will be blamed on the war in Ukraine. It might be a contributing factor. But over exaggerating this serves the interests of a government anxious to keep public attention off what it is really doing.
Australia must not fall for this trick either. The government has the means to act and solve the problem. If it doesn’t move, this is its own decision.