Joe Hockey has condemned a “crippling” welfare culture that weighs down the federal budget, and warned that government benefits will not be treated as a right when the nation faces a $50 billion deficit.
The Treasurer told The Australian some benefits had soared to the point where it required tax revenue from three average workers to keep payments flowing to a single welfare recipient.
Predicting new burdens on taxpayers unless the payments were curbed, he urged Australians to accept there was no longer an “endless supply of money” to support government benefits. “The suggestion somehow that payments from government are a right is not correct — and governments themselves have been guilty of creating that culture over many years,” he said.
The warnings are based on government analysis that reveals some single parents are receiving $55,000 a year in tax-free benefits, including a pension, family tax benefits and study assistance. The calculations show that three workers on average salaries would pay about $17,000 in tax each to cover the sole parent’s benefits. Hitting back at claims his budget was unfair, the Treasurer countered the idea that taxes should be raised to match more than $7bn in welfare cuts so that every group carried the same share of the budget burden.
Mr Hockey said he “totally” rejected the parallel between taxes and benefits in some of the criticism of the budget, given that one took money away from workers while the other did not.
“When I increase revenue I’m taking money out of people’s pockets — and they’ve earned that money,” he said. “Whereas when you freeze the increase in the amount the government is paying, we’re saying ‘we’re just not giving you more than what you’re getting’. That is exactly what I’m trying to do.”
The remarks, in an interview yesterday, are another sign of the government’s hard line in the political fight over the federal budget when it is being urged to compromise to get controversial reforms through the Senate.
A day after Communications Minister Malcolm Turnbull dined with Clive Palmer in an attempt to smooth relations, Mr Hockey appeared to mock the Palmer United Party leader by calling him “Professor Palmer” during question time.
Labor escalated its attacks on the budget, including a change in 2017 to slow the growth of the age pension, although the payments to 2.4 million age pensioners will continue to rise in line with the consumer price index.
Labor finance spokesman Tony Burke yesterday rejected changes to the pension, welfare, Medicare and university fees.
“The fight is very simple — it’s not like they’ve wedged Labor with this budget,” he told ABC TV.
“They’ve drawn the line exactly against our core values and, in terms of issues to fight on, we are on the strongest ground and on the issues that define us.”
Behind Mr Hockey’s warning on welfare is the government’s analysis of the benefits paid to sole parents such as a single mother who complained to the Treasurer about the budget. The exchange with the woman, who said she was voting Labor as a result of the spending cuts, prompted advisers to examine the benefits going to those in her situation. The Treasurer’s office estimated she would receive $54,417 in government payments including the Parenting Payment, both forms of Family Tax Benefit, several supplements, rent assistance and education supplements.
The calculations include the Jobs, Education and Training Child Care Fee Assistance, which would be $15,120 a year assuming she was using the help to put her children in care for 40 weeks each year when she worked about 27 hours a week.
Only two of the payments would be reduced as a result of the budget, the government said: the Pensioner Education Supplement, worth $1622, and the Income Support Bonus, worth $214.
According to the government’s analysis, the sole parent would receive $53,581 a year tax-free after the budget, compared with $54,417 before the budget.
The government’s calculations do not include looming changes to family tax benefits, where rates will be frozen and families will lose payments once their children pass the age of six, as well as a freeze on increases in parenting payments.
Mr Hockey said Australians had to accept that family tax benefits were not meant to be income but were a “supplement” for workers.
“That is why the culture of entitlement is crippling, because people assume it is income,” he said. “But family tax benefits are not an income — they are a supplement to income, whereas a pension is an income replacement. And that’s why pensions will continue to increase with inflation. Pensions will always increase because they’re an income replacement.”
Central to the attacks on the budget is the argument that it takes $7.4bn in family tax benefits away from those on low incomes while extracting only $3.1bn from wealthier Australians with the deficit tax on earnings above $180,000 a year.
The Australian Council of Social Service estimates that more than half the budget savings come from low and middle-income earners, including cuts to family payments and higher costs to visit the doctor or get subsidised medicines.
National Centre for Social and Economic Modelling principal research fellow Ben Phillips has warned that those on lower incomes are doing the “heavy lifting” in reducing the deficit.
Mr Hockey argued that Australians had to give up their expectations fostered by previous governments, including the Howard government, when it designed the family tax benefits.
The Treasurer countered the idea that people “deserved” payments but he backed the role of the state in helping those in need.