Pensioners and families: who is worse off under Coalition budgets?



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Robert Tanton, University of Canberra; Hai Anh La, University of Canberra, and Jinjing Li, University of Canberra

Sole parent families have suffered most from the Coalition government’s recent tax and welfare changes, our analysis shows. We compared the impact of taxes and welfare in the Coalition and Labor budgets on different families over eight years.

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The impact of Coalition tax and welfare changes on sole parent families can mainly be attributed to the various tweaks in the rules for Family Tax Benefit A since 2014, and the Single Income Family Supplement becoming unavailable to new families from 2017. Other measures that affected these families were the removal of the Family Tax Benefit B indexation, and a reduction (after inflation is taken into account) in the childcare rebate.




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The families we have chosen for our analysis are typical of those we might see in our community. We have also assumed they earn the national average income if they work. Our calculations adjust living costs to 2017 levels so that the incomes are comparable.

It’s clear from our analysis that governments have used taxes and welfare spending to entice voters. Increases in welfare are common just before an election and cuts after governments are elected.

Our analysis also shows Coalition governments tend to be much more fiscally conservative in their tax and welfare policies than Labor governments. This is interesting given the Labor leader Bill Shorten’s pledge for budget repair, while the Turnbull government looks set to cut personal income taxes (although this is just before an election).

Under the previous Labor government, all families benefited from the tax and welfare system. In all years we looked at, sole parent families benefited the least and retirees benefited the most.

Budget impacts over time

What we see from the results of our modelling is that the Labor party increased welfare payments to families in the two budgets before the election in September 2013. All family types benefited from these changes, although retirees benefited the most in terms of the percent increase compared to their average income.

These changes consisted of an increase in the income limit before Youth Allowance payments start to reduce (2011 budget) and the Household Assistance Package. Also included was the start of the Clean Energy (Carbon Tax) Compensation Payment and an increase in the tax free threshold from A$6,000 to A$18,200 in 2012. The clean energy compensation package had a large effect on the retiree benefits.

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In the 2014 and 2015 budgets, the Coalition government cut spending, arguing it had inherited a high spending regime from the Labor party. This meant welfare cuts saw many families worse off.

Interestingly, while most average earning families were worse off after the 2014 budget, retirees were still better off. This was due to the indexation for pensions being greater than inflation, and supplements paid to pensioners, including the clean energy supplement.




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The 2014 budget had some of the largest cuts to welfare payments. These included various changes to Family Tax Benefit A and B, imposing a temporary budget repair levy and introducing a Medicare levy increase from 1.5% to 2%.

In 2016 sole parent families were the losers in tax and welfare changes due to cessation of the Large Family Supplement; and the abolition of the Income Support Bonus and the Schoolkids Bonus. This budget was leading up to the election in July 2016.

Then last year’s budget showed lower welfare for families, with sole parents and retirees being worse off. For retirees, we found the impact of a slow pension rate increase and the non-indexed energy supplement means their living standards are stagnating.

Based on this historical data, and the fact that 2019 is an election year, we might expect to see welfare to families increased. We have already heard that there may be tax cuts in this budget.

The ConversationOne thing the Coalition might want to consider is how the different families are affected by any change in the tax and welfare system. We need to get a fairer allocation toward more vulnerable families.

Robert Tanton, Professor, University of Canberra; Hai Anh La, Senior Research Fellow, University of Canberra, and Jinjing Li, Associate Professor, NATSEM, University of Canberra

This article was originally published on The Conversation. Read the original article.

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Pensioners would retain cash refunds on franked dividends under Labor backdown


Michelle Grattan, University of Canberra

Labor has capitulated to pressure to exempt pensioners from its plan to end cash refunds for dividend imputation credits – a concession that would shave only A$700 million off its large projected savings over the forward estimates.

The “pensioner guarantee” would mean more than 300,000 full and part-pensioners, and people on government allowances, would be excluded, as would 13,000 self-managed superannuation funds with at least one pensioner or allowance recipient before Wednesday this week.

The decision follows a government scare campaign and some sharp public reaction through the media. Monday’s Newspoll found 50% were opposed when people were asked about Labor’s policy “to abolish franking credit cash refunds for retirees”. Only 33% were in favour. But Labor’s 53-47% two-party’s lead was not hit.

On figures costed by the Parliamentary Budget Office (PBO), the revised crackdown on cash refunds – currently paid when the person does not have taxable income against which to offset the dividend imputation – would save $10.7 billion over the forward estimates and $55.7 billion over a decade. This is $700 million less over the forward estimates than before the exemption, and $3.3 billion less over a decade.

Even with the revisions, the policy leaves Labor with a massive amount of money to offer income tax cuts and use for other purposes.

The opposition initially said it would not change its plan but would ensure pensioners were protected in other ways. It decided on the rework to deal with the reaction and when it became clear the exemption would be relatively cheap.

In a statement, Bill Shorten, Shadow Treasurer Chris Bowen and Shadow Social Services Minister Jenny Macklin said Labor knew pensioners were struggling with their cost of living. “That’s why Labor is making sure pensioners will still be able to access cash refunds from excess dividends imputation credits,” they said. “Labor has always protected pensioners – and we always will.”

If Labor wins the election the policy would start on July 1, 2019.

According to PBO forecasts, in 2019-20 there would then be 45,000 full pensioners with franked shares, 232,000 on part-pensions, 29,000 people on allowances with shares, and 13,000 relevant self-managed funds. These are higher numbers than Labor used initially, which were based on Australian Tax Office data for 2014-15.

Labor stressed that “the vast majority of working Australians do not receive cash refunds for excess imputation credits. Analysis from the PBO shows that 92% of taxpayers in Australia did not receive any cash refunds for excess imputation credits in their 2014-15 tax return.

“Recipients of cash refunds are typically wealthier retirees who aren’t paying income tax. These are people who typically own their own home and also have other tax-free superannuation assets, and don’t pay tax on their superannuation income,” the ALP statement said.

It said 80% of the present benefit accrued to the wealthiest 20% of retirees, and the top 1% of self-managed superannuation funds received an average cash refund of $83,000.

The ALP accused the government of running a “dishonest scare campaign … using ‘taxable income’ data to indicate that Labor’s policy was targeting people on very low incomes”. But a lot of income that retirees had was out of super funds and so tax-free – meaning some people had low taxable income but high disposable income.

Labor gave the example of a self-funded retiree couple with a $3.2 million super balance, a home, and $200,000 in Australian shares outside their superannuation. After receiving annually $130,000 in superannuation income, and $15,000 in dividends, they would have a taxable income of only $15,000 – but pay no income tax.

The ConversationTreasurer Scott Morrison told parliament that the opposition’s policy “announced just two weeks ago … has turned to custard in a matter of days”.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Christian Official’s Death in India Called Divine Punishment


Hindu nationalists say Andhra Pradesh chief’s ‘conversion agenda’ led to copter crash.

NEW DELHI, September 14 (CDN) — Hindu nationalists are calling the helicopter-crash death of Andhra Pradesh state’s chief minister, a Christian, divine punishment for his so-called conversion agenda. The same allegation of a “conversion agenda” fueled persecution in the state for more than five years.

Yeduguri Sandinti Rajasekhara Reddy, a second-generation Christian in the Church of South India, and four officials were confirmed dead when their helicopter was found on Sept. 3 in the state’s dense forest area of Nallamalla.

Since Reddy, an official with the left-of-center Congress Party, became chief minister of the southern state in 2004, right-wing Hindu groups had been accusing him of helping Western missionaries to convert economically poor Hindus in the state. Hindu nationalists have been flooding the Internet with extremist comments saying the death of the 60-year-old Reddy, popularly known as YSR, was divine retribution.

“This is divine justice by Lord Srinivasa [One of the names of Hindu god Venkateshwara, an incarnation of Lord Vishnu],” commented Jayakumar on the Express Buzz news website. “It is good that it happened so swiftly. Obviously, [Congress Party President] Sonia Gandhi is worried that her plans of completely converting India into a Christian country have received a setback. Let all Hindu-baiters of this country perish like this. Very, very soon.”

A person who identified himself only as Prakash on the website of The Indian Express daily wrote, “Anti-god demons like YSR need to be punished like this.” Another writer identified as Kumar chimed in, “YSR is the ringleader for Christian conversions in Andhra Pradesh.” Enthused a writer identified only as Ravi, “It’s the best thing that happened to Andhra Pradesh in a long time, and Andhra Pradesh people must celebrate,” and Suman Malu exclaimed, “Thankfully our country has been spared of one anti-national, anti-Hindu chief minister. Thank God for that!”

Right-wing groups also have accused Sonia Gandhi, a Catholic born in Italy, of having a “conversion agenda” since she became president of the Congress Party in 1998. The rise of Christian persecution in India coincided with her appointment as party chief.

Dr. Sam Paul, national secretary for public affairs of the All India Christian Council, said two years ago that Hindu nationalists launched a massive campaign in 2004 to raise fears that Christian conversions would skyrocket in Andhra Pradesh due to the appointment of a Christian chief minister.

“Six years later, it is fully proven that those allegations were part of a political agenda to belittle the chief minister and his party,” Paul told Compass, adding that Reddy never preached his faith, “not even once.”

He pointed out, though, that the Indian Constitution permits all people to practice and propagate their faith.

Calling the extreme comments “very unfortunate,” Paul recalled that Reddy attended Muslim and Hindu functions and participated in ceremonial traditions such as offering Pattu Vastrams (silk dresses) to Lord Venkateshwara in Tirupati every year, a long-time tradition in the state.

In addition, in June 2007, the Reddy administration enacted a law prohibiting the propagation of any non-Hindu religion in the temple town of Tirupati-Tirumala, believed to be the abode of Lord Venkateshwara. At the same time, however, he had faced criticism for tightening government controls on the state’s numerous temples.

Official Condolences

Reddy had led his party to a second successive victory in Andhra Pradesh in May 2009. He was seen as a leader catering to the masses thanks to populist measures such as financial and power programs for farmers.

In stark contrast to the hostile sentiment voiced in the cyber-world, more than 60 admirers died of shock or committed suicide following news of his death. Indo-Asian News Service reported that the deaths of Reddy’s supporters occurred in 19 of the state’s 23 districts. While most of them suffered cardiac arrest after watching the news of his death on television, others committed suicide.

“Reddy dedicated his life to people, I am dedicating my life to him,” a young man wrote in his suicide note before consuming poison, reported the news service. A physically handicapped couple, pensioners under a welfare scheme, jumped into a river to try to end their lives, but fishermen saved them.

Officially, even Hindu nationalist groups offered their condolences, including the Rashtriya Swayamsevak Sangh (RSS), India’s largest conglomerate of right-wing groups, and the Bharatiya Janata Party (BJP), seen as the political arm of the RSS.

“We all share this unbearable pain with his family members, people of Andhra Pradesh and workers of the Congress Party,” the RSS announced in its weekly mouthpiece, the Organiser. “All the BJP-ruled state governments declared a two-day state mourning as a mark of respect to the departed soul.”

Reddy, along with his special secretary P. Subramanyam, the chief secretary ASC Wesley and Indian Air Force pilots S.K. Bhatia and M.S. Reddy, died in the crash as they flew from the state capital of Hyderabad to Chittoor district for a political function.

Hot-bed

Anti-Christian sentiment has fueled persecution in Andhra Pradesh for the last five years.

Most recently, suspected Hindu extremists burned down a newly built church building of the Best Friends Church in Mahasamudram area in Chittoor district on Aug. 20. On Aug. 1, the Vishwa Hindu Parishad (World Hindu Council or VHP) attacked Christians in Mahabubnagar district, accusing them of forceful conversion; they forced the Christians to wear tilak, a Hindu symbol on the forehead, and threatened to kill them if they went ahead with church construction.

Andhra Pradesh has witnessed three brutal murders of Christian workers since 2005. The body of a 29-year old pastor, Goda Israel, was found with stab wounds on Feb. 20, 2007 in a canal near his house in Pedapallparru village in Krishna district. In May 2005, two pastors, K. Daniel and K. Isaac Raju, were killed near Hyderabad, the state capital. Daniel went missing on May 21 and Raju on May 24. Their bodies were found on June 2 of that year.

The New Indian Express on June 27, 2005 quoted a man identified only as Goverdhan claiming that he and two friends had murdered the two preachers.

“I am not against Christianity, but Raju and Daniel converted hundreds of Hindu families,” Goverdhan said. “They enticed them with money. We have done this to prevent further conversions. This act should be a lesson for others.”

According to the Census of India 2001, Andhra Pradesh has a population of more than 76.2 million, of which only 1.18 million are Christian.

Report from Compass Direct News