If Joe Hockey's Budget is implemented, Australia is heading for more inequality as more people battle to cover their basic needs. Claudia Perry-Beltrame says that is not good for business.
SINCE THE ANNOUNCEMENT of Australia’s Federal Budget last week, frustration and disbelief continues to grow as more detailed news trickles through and sinks in.
We are heading for more inequality in our nation as more people will battle to cover their basic needs. And that is not good news for business, despite business being hailed as one of the winners in this budget.
It might be possible in the short term, but not the long term.
According to 2011 census data 1.8 million single and family households, or 12.8% of the population (2012 ACOSS data), were living under the poverty line. Reducing the number of Government employees will increase unemployment and hence the number of families and singles living either under or near the poverty line.
Data shows that a single mum with a child six to 12 years old will be about $1,500 per annum worse off due to reduction in Family Tax Benefits. This equates to around $30 per week. Combined with the increases in food due to the fuel excise, food might just become a rarity.
On the other hand, estimates show that a person earning $200,000 per annum will pay only an extra $400 in tax. They will have to do less heavy lifting by sacrificing one coffee per week. Increased unemployment and decreased spending by those on low incomes cannot be good for business.
Census data from 2011 also shows we have 300,000 unemployed people.
According to the new policy, they will either have to find employment or study. It is an insult to many unemployed people who want to work but cannot find work. So their only route is to study. Either this is already outside of their means or it will increase their debt threshold. Coupled with a tuition fee hike for tertiary education, this debt will be around 2 to 3 times higher than currently HELP debts.
We already know that a higher education does not guarantee a job, so studying could be keeping people permanently in low incomes and poverty. Those who will get a job will have higher loan repayments to the government. Higher study loans cannot be good for business:
- The property market will have to wait longer for young people entering the housing market.
- The construction industry will be impacted through reduced renovations or building approvals.
- Banks will have fewer saving dollars for investment and less loan approvals to make money.
- Health care providers will experience lower uptake as more people live on low incomes.
It is not just Australian student fees that increase, but international student fees as well, impacting on our ability to export education as a sector.
About 90,000 unemployed young people aged 20 to 29 will have to live on lower incomes as they stay on Youth Allowance instead of receiving Newstart, or have to wait longer to receive Newstart. This means mum and dad have to pitch in more.
The good middle class families will spend their discretionary money in supporting the kids instead of goods and services. This cannot be good for business!
To complete the picture, the states will be receiving $80 billion less in education and health if this Budget is passed.
The possibility of a GST hike is already debated and the Premiers are protesting — and rightly so. The reduction is impacting on the their ability to provide services to meet basic needs of education and healthy living. Both are needed to progress in life and become a responsible and active member of society. Both are needed to get a job and contribute to the economy. Both are needed for people to contribute to the common good of our society. Business is a part of society.
Clearly, the 2014 Budget’s inequality is bad for business.
Australia’s population mapped against the levels of human needs and values showing the possible shifts of increased inequality in society arising from the Federal Budget.
Claudia Perry-Beltrame is the Managing Director of Cultural Inspirations, a social business providing change management services to co-create change in organisations and society.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License