Fairness is a matter of opinion, but one that should be informed by facts and analysis.
Opponents of the budget have done a great job of branding it as "unfair" through repetition of assertions rather than by appeal to facts and analysis. Here are a few relevant facts.
Australia's system of tax and social benefits is one of the strongest in the world in ameliorating the unequal distribution of market incomes through highly targeted social benefits and a strongly progressive personal income tax that concentrates the burden on a small slice of those at the top.
Even if all the 2014-15 budget measures are implemented, the Australian system of tax and social benefits will remain highly redistributive. The changes are so small relative to the inherited structure that they would hardly make a dent in the redistributive system.
Critics of budget measures appear to believe that social benefits both individually and in aggregate should only ever go one way (up) and that the desirability of more redistribution is a given.
The reality is that there are limits to redistribution and progressivity, and it is legitimate to question the design and affordability of social benefits.
Higher income groups are in fact contributing to the budget repair task. Quite apart from the temporary budget repair levy imposed by the present government, the Gillard and Rudd governments introduced many belt-tightening measures in budgets and mini-budgets, the bulk of which are affecting higher income earners – for example, the one-third increase in the Medicare levy that took effect just last month, means-testing of the private health insurance rebate, tightening of various other means tests, doubling of the superannuation contributions tax for high income earners, and so on.
None of these changes were 2014-15 budget measures, but they are all part of the mix of policy adjustments designed to take money away from people to reduce the budget deficit, and they are now costing many better-off households thousands of dollars a year. They are being overlooked in the furore over the current budget.
Robin Hood is alive and well in Australia and we don't need more of him.
Robert Carling is a Senior Fellow at The Centre for Independent Studies.
Home > Commentary > Opinion > Robin Hood is alive and well in Australia
Robin Hood is alive and well in Australia
Opponents of the budget have done a great job of branding it as "unfair" through repetition of assertions rather than by appeal to facts and analysis. Here are a few relevant facts.
Australia's system of tax and social benefits is one of the strongest in the world in ameliorating the unequal distribution of market incomes through highly targeted social benefits and a strongly progressive personal income tax that concentrates the burden on a small slice of those at the top.
Even if all the 2014-15 budget measures are implemented, the Australian system of tax and social benefits will remain highly redistributive. The changes are so small relative to the inherited structure that they would hardly make a dent in the redistributive system.
Critics of budget measures appear to believe that social benefits both individually and in aggregate should only ever go one way (up) and that the desirability of more redistribution is a given.
The reality is that there are limits to redistribution and progressivity, and it is legitimate to question the design and affordability of social benefits.
Higher income groups are in fact contributing to the budget repair task. Quite apart from the temporary budget repair levy imposed by the present government, the Gillard and Rudd governments introduced many belt-tightening measures in budgets and mini-budgets, the bulk of which are affecting higher income earners – for example, the one-third increase in the Medicare levy that took effect just last month, means-testing of the private health insurance rebate, tightening of various other means tests, doubling of the superannuation contributions tax for high income earners, and so on.
None of these changes were 2014-15 budget measures, but they are all part of the mix of policy adjustments designed to take money away from people to reduce the budget deficit, and they are now costing many better-off households thousands of dollars a year. They are being overlooked in the furore over the current budget.
Robin Hood is alive and well in Australia and we don't need more of him.
Robert Carling is a Senior Fellow at The Centre for Independent Studies.
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