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Taxes versus benefits and other observations

The first Abbott/Hockey budget certainly stirred up a storm of controversy.  Not just in the mainstream media, but everywhere. There is a very interesting stream of comments on “Benefit scrounging scum in the news again. Disability is fake, right?” The same author wrote a little flash fiction worth considering on “For The Good Of The Country is a lie we were sold“.

Last week I spoke to many people, many of them traditional Liberal voters. One couple run a small business, the heart land of the Liberal support base. Are they happy? Definitely not. Their main concern is superannuation and the raised pension age. The wife told me her Dad died before 70. “We’ll never get a rest”, she said.

Another I spoke to is, like me, an ex-Liberal. We’d had a discussion at a Christmas Party in December. I’d already declined to renew my membership, he was still carrying his card. Six months later, he tells me he has actually burnt his card. Not a happy chappy. Another person in this particular conversation was a swinging voter. She had been seriously considering voting Liberal but in the end was very happy to discover as she was in hospital at the time of the election, she didn’t have to vote which suited her down to the ground: she really didn’t want to vote for anyone!

Both these people are over forty and single. As such they pay plenty of tax and receive no benefits of any kind. The woman tells me her health bills are $12,000 a year. These two receive no Family Tax Benefit A or B, no school kids bonus, no paid parental leave: they just pay tax. Both are happy to pay tax because both believe in a civilised nation there is “no reason anyone should die because they can’t afford to live”.

I felt I’d said all I wanted to say about the budget until I read Miranda Devine today in the Daily Telegraph. Like Miranda, I recognise full well that unless Australia collects enough revenue, we can’t continue to pay out benefits to people. However, like my acquaintances from last night, I believe we should have universal health care and education. I don’t think we should be funding elite breeding schemes or wasting money on school chaplains and marriage counselling vouchers. The Liberal government seems to have very strange ideas of what constitutes value for money when it comes to spending MY money.

Miranda shared a little beer story with us.

Every day, ten men go out for beer and the bill comes to $100. They pay their bill the way progressive taxes work. The poorest four pay nothing. The fifth pays $1. The sixth $3. The seventh $7. The eighth $12. The ninth $18. The tenth man (the richest) pays $59.

The story goes on. The bartender, happy for their regular patronage, decided to only charge them $80 from this day forth. How to split this reduction in cost fairly becomes the question of the night. Ultimately, the richest man ends up with a higher reduction in absolute dollar terms although a much lower reduction in percentage terms and the others beat him up on the basis of the dollars not the percentage. The next day he doesn’t arrive and together the remaining nine can’t even foot half the bill for their beer.

As a lesson in the collection of taxation, this is not a bad little parable. There is an interesting analysis of the history of this parable on Snopes.com for those with an interest in human behaviour in relation to taxation. Thanks to Stephen Spencer for the tip!

The problem with Miranda’s use of this parable is it doesn’t really fit the situation. While Miranda quite rightly points out an income earned by working is not the same as a benefit received from the taxes I and others contribute to a national pool to provide for the less fortunate, the real question here is that old fundamental psychological theory, Maslow’s Hierarchy of Needs. Right down the bottom are the basic physiological needs of air, water, food, sex, homeostasis and excretion.  This is where Miranda’s parable crumbles in real life. Let’s assume for a moment I am unemployed and under thirty. Under the new budget I would not receive a benefit for six months. May I remind people of my personal real life situation. I am an orphan. I have NO parents or other relatives to fall back on. My brother lives overseas and my sister lives in Tasmania and is in no financial situation to feed me.

I am sure if I went to Coles and said to them I am not receiving any benefit, so I need you to reduce the cost of food for me to a similar level, I be rushed out of the store by their security guards! Where am I supposed to live? Would my landlady just happily forgo rent for six months or the bank forgo mortgage repayments? Just how, exactly, would I survive? Of course, not eating properly and having no roof over my head, I’d probably fall ill and need medical treatment. Hopefully I might see a doctor who was prepared to waive the $7 co-payment.

As my fellow ex-Liberal said last night, Australia should not be a country where we die because we can’t afford to live.

At the other end of the scale, of course, poor Frances Abbott coped a canning in the media for receiving a $60,000 “scholarship”. I don’t believe Frances personally did anything wrong, but I think her father was bloody stupid. The details that have come out around this scholarship clearly indicate to me it was an exercise in lobbying by Whitehouse.  Tony Abbott should have recognised he was being buttered up to make red tape easier for Whitehouse, not to mention the Prime Minister’s daughter as a student is probably a good marketing ploy. Tony Abbott should have advised his daughter to decline this rather curious offer of a scholarship. Noely on YaThink.com asks should we corner the father or the daughter for answers.

This issue with Frances Abbott just makes me very very uncomfortable. I don’t like seeing her name being bandied about all over Social Media & Morning News Shows. I am the mother of a young adult daughter and it seriously makes me cringe. I also know that if I was ever to embark on some sort of public campaign that my daughter would back me in that and I would hate for her to get backlash because of who I was.

The problem is Tony Abbott has a history of that great “What’s in it for ME?” attitude running riot, as documented so wonderfully by the brilliantly acerbic John Birmingham on “This is what privilege looks like“.

A Prime Minister who is paid as much as the American President, nearly a quarter of a million dollars more than his Canadian counterpart, and probably about eight or nine times as much as you, who refuses to pay his own way, to carry his own burden, to take his thin, bloodless lips from the sore and swollen public tit at which they suck and bite each day.

Back to the unemployed, under thirty, fictional me. At under thirty I also had two young children. If I was at that life stage under this new budget, would Whitehouse be offering either of my kids a design scholarship? Actually, I DO have a daughter in her thirties now who would love that scholarship, so Leanne, happy to hear from you!

We talk about the growing chasm between the haves and the have-nots. There is a limit to how much it is safe to reduce a benefit that is already hard to live on, that is below the poverty line. The lack of understanding by senior Liberals on who would and would not pay the $7 co-payment is a classic example of the haves having no bloody idea about living on the edge of a fiscal precipice. Just because $7 isn’t much to them doesn’t mean it isn’t a lot to a single mother with two young children who just lost her job because, as Hockey tells us, we all have to get used to the new paradigm of contract and casual work. No security of tenure in our futures.

I don’t really worry if the fifth man in Miranda’s parable doesn’t get his beer. I DO care if five of the ten men can no longer obtain, other than through crime, basic physiological needs for survival. Let alone any clothes for job interviews or a hair cut to look presentable or an address other than their car – IF they still have a car, of course. As a nation we do have to be responsible with our taxes: not just how we spend them, but how we collect them. Yes, the richest should pay the most – yet in Australia certain categories of business seem to receive the most rebates.

While I don’t agree with all of David Leyonhjelm’s article in the Financial Review, I do agree with this.

Tax cuts must be linked with spending cuts. In Australia every year, nearly $200 billion is taken from workers and then given back to the same families in the form of ­government handouts or subsidies. This is wasteful, inefficient and unnecessary. Below I outline various ways to reduce middle class access to government handouts, but the quid pro quo of that must be income tax cuts so that productive people can keep the rewards of their hard work.

I’ve written before about the money carousels we have in Australia, all of which cost money, taxpayers’ money, to run. There is a big difference between this and leaving people to starve or steal.

There is no reason anyone should die because they can’t afford to live.

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11 comments on “Taxes versus benefits and other observations

  1. I would just like to re-write Miranda’s story.
    Every day, ten men go for medical treatment and the bill comes to $10,000. They pay their bill the way progressive taxes work. The poorest four pay nothing. The fifth pays $100. The sixth $300. The seventh $700. The eighth $1,200. The ninth $1,800. The tenth man (the richest) pays $5,900.
    And I would like to add more to this story. I would take into consideration the annual income of each man and calculate how much each man had left after the hospital bill had been paid. I am certain that we would find that the men who paid nothing would still have less, even though they paid nothing, than the ones who earned more and had to pay something.
    BTW, Miranda Using beer as her example was pretty manipulating. Why not food or medical treatment or clothing?

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  2. […] paying student there is a reduced fee place for the bright kids from less advantaged backgrounds? Real scholarships? Maybe we need fewer universities, reduce costs, economies of scale. Let us not end up in a […]

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  3. Proof positive that you don’t have to be a ‘left wing loonie’ to find the 2014 Budget, neither sensitive or sensible.

    Originally a swing voter, I want my choice back. I want the Liberal & National parties to represent middle Australia, encourage the less privileged and asks those who have an advantage to carry a fair share. I can’t support any group that systematically harms our society on any level. The current government are not only doing this, but also encouraging some rather strange alternative micro parties to splinter our consensus.

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  4. So glad you wrote this Robyn, I have been wanting to do similar but kept tying myself up in knots & getting too angry. Can’t stand how all this has been done on a bloody lie to start with, we are not exactly bankrupt, but might be if everyone is shit-scared & stops spending any money. The fact that we are kicking the most vulnerable in the guts whilst giving backhanders to help support religious groups with dodgy counselling & chaplains just rubs salt in the wound. I would love to shove all those bloody chaplains, counsellors & Kevin bloody Andrews can join them onto their ridiculous shiny new joint strike fighter jets and shoot them off into space on a one way journey, the world would actually be more ‘christian & caring’ without them ARGGGGGGGGGGGGGH! Better stop before I really lose my temper & rant 😦

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    • Why don’t you tell us how you really feel, as they say! 🙂 Yes, there is a lot to be cross about and I haven’t even started on education yet, but after Amanda Vanstone’s rant today and given I have four kids wanting an education, I just might be tempted to write on the topic, I think!

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    • I had seen it reported in several places, Jo. Thanks for the link! Veronica highlighted the situation and I linked to her, you see.

      Very bad journalism indeed, Jo. The editors would defend use on the basis of “illustrative purposes”, but that SHOULD have been made clear!

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  5. Thank you for your perspective Robyn, and for the links to my pieces.

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