Australia’s billionaire wealth swelled 61% over the course of the pandemic according to a new report, prompting renewed calls for a rethink on the government’s stage three tax cuts ahead of the May federal budget.
The analysis was published on Monday as part of Oxfam’s annual inequality report, which found there are 11 more billionaires in Australia today than there were in 2020, while Australia’s richest 1% in total pocketed more than $2500 per second, or $150,000 per minute, over the past decade.
Oxfam Australia program director Anthea Spinks told Crikey the findings should open the door to renewed debate over the introduction of the stage three tax cuts, set to take effect from July 2024, along with broader tax reform targeted at cauterising income inequality in Australia.
Researchers at Oxfam join a growing group of experts — and at least half of the 18 crossbenchers in federal Parliament — who have come out in opposition to the tax cuts since Labor took office in May last year.
The cuts, which are the final phase of the former Morrison government’s tax plan, will do away with the 37% tax bracket altogether, lower the 32.5% bracket to a flat 30%, and raise the threshold for the top tax bracket from $180,001 to $200,001.
In effect, the cuts will see those with an annual income of $200,000 end up paying the same rate of tax as someone earning little more than the minimum wage.
In December, more than 100 leading economists and tax experts signed an open letter, printed as a full-page advert in The Age and The Sydney Morning Herald, calling on Prime Minister Anthony Albanese to reconsider his position on the tax cuts.
Some of the letter’s high-profile signatories included Nobel Prize-winning economist professor Joseph Stiglitz, former Reserve Bank of Australia governor Bernie Fraser, former ACCC chair professor Allan Fels AO, and tax expert professor Miranda Stewart.
“Stage three of the previous government’s personal income tax changes was always unfair and unaffordable. It is even more so today and prospectively, on both counts,” Fraser said in December.
“The choice ahead for Labor could not be more clear-cut: it can stick with its [politically] ‘phoney’ commitment to stage three, or it can choose not to go down this path and channel the substantial savings involved to the many very valuable — but very expensive — social reforms promised in the lead-up to the last election.”
So far the government has shown no sign of walking back its support for the package, or of opening the floor to debate on a potential redesign of the suite of reforms.
Earlier this month, Treasurer Jim Chalmers doubled down on the government’s commitment to the cuts, just months after updated government forecasts reported a cost blowout of $11 billion, costing the budget $243 billion.
At a press conference, the treasurer said Labor was working with state and territory leaders to deliver further cost-of-living relief in May’s budget, but that a redesign of the cuts wouldn’t be part of the solution.
Australia Institute executive director Richard Denniss told Crikey that Oxfam’s analysis is the “clearest proof” available that inequality continues to rise in Australia, and that delivering reforms conceived under very different circumstances remains “absurd”.
“That said, Labor went to the election promising to deliver those tax cuts. But even since those promises were made, the world has changed radically,” Denniss said.
“The Reserve Bank governor was adamant that he wouldn’t increase interest rates until real wages started to fall, and since that promise was made, real wages have fallen faster than ever.
“It would be good politics and good economic policy for Labor to implement a tax agenda that suits our circumstances, not [one that] suits the circumstances imagined before the election.”
