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Scott Morrison
Welfare cuts, which are on Scott Morrison’s radar as the incoming social services minister, are likely to be sold as ‘reforms’. Photograph: William West/AFP/Getty Images
Welfare cuts, which are on Scott Morrison’s radar as the incoming social services minister, are likely to be sold as ‘reforms’. Photograph: William West/AFP/Getty Images

The government has staked the key economic battlegrounds for 2015. And they seem to take aim at the poorest

This article is more than 9 years old
Greg Jericho

Welfare, GST and industrial relations are the big-ticket items on the Coalition’s agenda – all of which may reinforce the idea that their policies are unfair

The period over Christmas and New Years is generally a slow one for economics and politics. But over this holiday period there were a few signals on the key economic battlegrounds for the next 12 months. And oddly, these signals seem to reinforce the perception that the government’s policies are unfair.

1. Welfare

The big political and economic move over the summer was the cabinet reshuffle that moved Scott Morrison to social services. The appointment and commentary supplied by Tony Abbott suggests that the government view welfare cuts as a big-ticket item this year.

Of course it will be sold as “reform” – all cuts are packaged as reforms. Some lazy media outlets will parrot that term and others, like the Daily Telegraph, will even more lazily suggest the cuts are all about “stopping the bludgers”.

Thus the government’s response to attacks that the budget was unfair and hit the poorest hardest seems to be to target some of the poorest in society.

As Pepper Brooks might say: “It’s a bold strategy, Let’s see if it pays off for ‘em.”

At this point, it is worth remembering that growing welfare numbers are driven by age rather than bludgers. Moreover, the overall percentage of the population on welfare is less than it was a decade ago and recent increases were primarily due to the GFC, as the numbers of those on Newstart naturally increased with unemployment.

The most recent statistical release from the Department of Social Security showed that nearly 2.3m people in 2012 were on the age pension – up from 1.8m in 2002. But while this seems a large increase, the population has of course also increased in that time. And importantly, so too has the number of workers. This is important because the real concern about welfare is that there is an increase in the number of people receiving welfare compared to the number of people working (and thus paying income tax which helps pay for welfare).

As a ratio of people in the labour force, the increase in aged pensioners over the 10-year period only grew from 18.6 to 19.1:

Similarly, while there was a strong increase in the 1990s of people receiving the disability support pension (DSP), since 2002 the ratio of people on DSP to those in the labour force has remained relatively stable.

Also, the Gillard government’s changes to the eligibility of DSP in the 2011-12 budget appeared to have slowed the growth of DSP – especially for those under the age of 60:

The data for 2013 will be released later this month and it will be interesting to see if, as is expected, the growth of DSP recipients continues to slow, while the percentage of the population on the age pension continues to rise.

2. Workplace Relations

The start of every year inevitably brings with it debate over workplace relations. Mostly this is because the first half of the year sees submissions to the Fair Work Commission on the minimum wage. In late December, the issue was also given a boost by the government who asked the Productivity Commission to review the workplace relations framework.

Rather than focus on the actual minimum wage, the topic of choice by employer groups this year has been against penalty rates, whereby workers get paid higher wages for working on weekends and public holidays. This focus isn’t that unusual – it pretty much is an ongoing campaign. The government is notionally leaving the fight to the employer groups, but it is pretty clear the minister for employment, Senator Eric Abetz, is in agreement with them.

But while there is a good deal of logic to the argument that penalty rates for Saturday and Sunday should be equal, as always occurs with this debate, an employer has produced a dopey line about how working on the weekends is now standard fare.

The Sydney Morning Herald quoted Lindsay Partridge, the managing director of Australia’s biggest brick making company, Brickworks, saying that “for many employees, working weekends and nights was no longer considered unsociable, and taking midweek breaks was preferable for some working families”. Which is just bullshit.

The canard that Monday to Friday work is becoming less normal is one employers have long been trying to have us believe, but is rather resistant to facts.

In 1997, 69.7% of us had jobs from Monday to Friday; in 2012 so “abnormal” had working during the week become that this had fallen all the way to ... 68.9%.

Now maybe a less than one percentage point change in 12 years suggests a major cultural shift, but for me, I’m more inclined to suggest it means an overwhelming majority of people still think working Monday to Friday is the norm.

Sure 30.1% of us work both weekdays and weekends, but that is actually down from 30.3% in 2000. That figure includes those who work multiple jobs. Only 28.5% of those who have just one job work both weekdays and weekends, and only 1% of people only work on the weekends.

Partridge can have his days off in the middle of the week if he wants, but pretty much every other “working family” would like weekends for the parents to spend time with their kids, to go to the footy, or attend any other of the myriad of social activities which oddly seem to be scheduled for Saturday and Sunday.

3. GST

The calls for a change to the GST have also been around for a long time. Given that the government is soon to release its tax reform white paper, which will include discussion of the GST, it’s no surprise that the issue has cropped up over summer.

Government backbencher Dan Tehan has led the way, calling for GST to be broadened to be applied to food and education – a move supported by the minister for trade, Andrew Robb. The mid-year fiscal and economic outlook suggests that the GST exemption on food, education and health lost $14.15bn revenue in 2014-15.

As I have argued in the past, while a GST on food would be a regressive tax hitting the poorest hardest, taxing education would be progressive – wealthier families spend more of their income on private school fees than poorer families.

This position was echoed last week by The Australia Institute,which released a report arguing that GST on private education and private health insurance would “broaden the tax base, and do so in a way that does not overburden Australia’s poorest families”.

Broadening the tax to include these items would also be one way of overcoming the difficulty of increasing the GST espoused by Joe Hockey in late December. He noted, quite correctly, that after increasing the GST, income tax should be lowered to overcome the regressive impact. He noted that with declining revenue concerns, “We haven’t got the financial capacity to do that at the moment”.

Raising the GST, either by increasing the rate above 10% or by broadening its base without lowering income tax to cancel out the tax increase, would be an extremely politically courageous move – and not one that the current government with its low poll numbers is likely to be silly enough to make.

The summer months allows the government to tentatively float some thought bubbles at a time when they largely avoid the bright light of scrutiny as everyone is focused more on sport and holidays. But given these three areas have the potential to reinforce voters’ image of the government as unfair, expect the opposition parties to remind voters of them throughout 2015.

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