Wage earners and welfare beneficiaries are the sorry losers and big corporations are the lucky winners through the last financial year. And Treasury’s final budget outcome, released this week, enables us to measure by how much.
Spending more than earning
The 2016-17 deficit came in at $33.15 billion. This was lauded by the government because it was lower than recent pessimistic predictions. It is, however, evidence of monumental failure.
Before the 2013 election, the heads of Treasury and the Finance Department issued their best estimates of future deficits had Labor’s fiscal policies continued.
They forecast that with the recovery from the global financial crisis, 2016-17 would record a surplus of $4.2 billion. This week’s outcome is $37.35 billion worse.
In his first budget, former treasurer Joe Hockey confidently predicted a 2016-17 deficit of just -$10.6 billion with his policies. Scott Morrison’s outcome is $22.55 billion deeper than that.
In his second budget, Hockey revised his predicted 2016-17 deficit to -$25.8 billion. This result is $7.35 billion worse than that.
Of course, the deficit would have been deeper still had Turnbull and Morrison not succeeded admirably in slashing support for the most vulnerable Australians.
Social security and housing squeezed
The social security spend in 2015-16 of $152.1 billion should have increased to $157.5 billion just to keep pace with population and cost of living increases. These were 1.61% and 1.9% respectively. In fact, the 2016-17 outlays were a meagre $153.2 billion, a real cut per person of around 3.0%.
Allocations to housing and community amenities were slashed by $117 million, an effective percentage cut of 6.0%.
Assistance to families with children
Using similar arithmetic, to continue last year’s support, an increase from $38.3 billion to $39.7 billion was required. This allocation was cut dramatically to $36.0, a real decline of 9.6%.
Assistance to others in need
Allocations to the unemployed and the sick increased by less than 0.13%, a real decrease of 3.4%. That’s if we assume the percentage of people unemployed was constant. In fact, we know total hours worked per person declined over the year. So this outcome is worse than a 3.4% rip-off.
Student assistance plummeted from $4.05 billion to below $3.10 billion, a real decline of 27.0%.
The line item “other welfare programs” also collapsed 14.2% in real terms from $1.5 billion to $1.3 billion.
Other allocations down in both dollars and percentages include assistance for indigenous Australians and for veterans and their dependents.
So a fair whack of the so-called “savings” on the spending side was clearly snatched from those least able to afford income cuts.
Assistance to business
In contrast, support for the mining, manufacturing and construction sectors was up 4.8%, for the grains industry up 6.9%, for fishing up 8.6%, for the wool industry up 17.2%, and for “natural resources development” up 36.3%.
Company taxes
For the third year in a row, company tax was a fraction of what should have been collected. This week’s final budget outcome confirms evidence in the transparency report and other data from the Australian Taxation Office that evasion is rife.
Over the six final budget outcomes delivered by Labor’s Wayne Swan, company tax as a proportion of all income taxes ranged between 28.0% and 31.1%. The six-year average was 29.1%. The Howard period was similar, with the average for the last three budgets at 28.8%.
This has plummeted through the Coalition period, down to 25.3% last year. Over the last three years, the average is 24.9%. That is despite record company profits and dividends, and all-time high executive salaries and bonuses.
This is the single greatest cause of the record run of deficits worse than $33 billion and the ballooning debt. If company taxes had been collected at the historic rate of 29% over the last four years, the extra revenue would have been around $40 billion. Had efforts been made to ensure corporations declare actual profits rather than pick-a-number-any-number, the extra could have been near $60 billion.
Net debt
This came in at $322.3 billion, an increase over the year of $18.8 billion. That’s a blow-out since the 2013 election of $161.1 billion, almost exactly double. But whereas Labor’s debt was accumulated in five years and nine months of the most devastating global recession in 80 years, the Coalition stacked on its debt in just three years and 10 months — much of which has been a global trade and profits boom.
Interest paid on the debt
Total annual interest clicked over $16 billion for the first time, which is $44.5 million paid every day. The Coalition should be reminded of the daily rate because that was important back in May 2012.
Joe Hockey told the National Press Club at the time: “Net debt continues to rise … to $8.2 billion a year. That would fully fund the NDIS or would be enough to build eight new teaching hospitals a year. It is $22 million a day in interest alone.”
Only the most generous interpretation of selected parts of the latest data — along with steadfast refusal to examine other parts — allows the government to get away with the trashing of this once-great economy.
Fortunately for Morrison and his colleagues, the mainstream media are more than happy to do just that.
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