Treasurer Jim Chalmers has unapologetically sold his budget as one for “middle Australia”, undoubtedly with an eye towards swing voters at the next election.
But in doing so, he continues a sorry tradition of Australian governments neglecting those not well off enough to qualify as middling.
What help there is for those on Struggle Street remains shamefully paltry.
Middle-class welfare?
Chalmers’ main pitch to “middle Australia” was his $300 energy payments, available to all Australian households. Some commentators, such as Rachel Withers, denounced this policy and the lack of targeted support for low-income earners as “middle-class welfare”.
I, however, find this particular insult irksome. Genuine “middle-class welfare”, like universal child payments and pensions, for instance, can reduce inequality, administrative burden and build a broad coalition of supporters. The Nordic countries, for instance, have entrenched generous welfare states in part by offering benefits to all classes, so they have a stake in defending said benefits from future cuts.
But not all “middle-class welfare” is created equal. These one-off energy handouts will hardly build long-term solidarity around structural egalitarian change. Rather, they provide a short-term, pre-election sugar hit, then kick the harder stuff down the road.
And in this case, universality does actually undercut the poor, as the interaction of their bill relief and Centrelink’s calculations will likely lead to lower welfare indexation.
Universal basic handouts
I doubt the payments will exert devastating inflationary pressure, as the more hysterical end of the business press are hyperventilating about — though they won’t help. But in finding fiscal room for this cash splash amid an otherwise tightened belt, the government has invited the question: why couldn’t room be found for more impactful changes at the bottom end?
If you could afford this handout that next to no one was calling for, what about the raise to JobSeeker that virtually every sensible economist, charity worker and compassionate individual has been requesting for decades? It’s difficult to cry poor when you’re giving everyone $300.
And if this was what they could afford, could they not have structured the payments differently to deliver more support to those doing it tough? The Australian Council of Social Service (ACOSS), for instance, suggested targeting $2,000 payments to the almost 90,000 households participating in “hardship programs” offered by energy retailers. The council estimates that would’ve cost $350 million per year — around 10% of what the government’s scheme will cost.
I usually detest means testing, but this was an odd instance to eschew it. The government chose to means-test its payments for tertiary students on placements — a miserly and pointless administrative hurdle. But it chose to embrace universalism on energy, of all things, where some inflationary impact is a higher risk, consumption habits vary across income levels, and added price signals for the wealthy could indeed be a good thing. High energy bills might be the push that Richard from Toorak needs to get solar panels.
There is little policy justification — only an electoral one. As Ross Gittins recently wrote, “any money Labor spends helping one of the most deserving groups in society is money it can’t spend trying to buy the votes of the less deserving”.
An extra $9 for renters
Albanese’s ministers might protest that they did offer one extra crutch for those struggling to afford housing, however. The budget included a 10% rise to Commonwealth Rent Assistance (CRA), off the back of a 15% rise last year.
This is a welcome relief, but insufficient. ACOSS estimates a single person receiving the maximum rate will be just $9.40 a week better off.
Last year the Grattan Institute proposed a raise of at least 40%. The two recent rises total 25% — still 15% under. And since then, rents have risen another 8.5%. By my reckoning, the government needs to double its prior raises, adding another 25% to the payment to play catch up.
Indexation of the payment has not kept pace with actual rent growth, and the maximum allowance has not kept pace with rents for low-income earning recipients.
Here a dose of universalism could be more helpful. Given most Australian renters have relatively short-term contracts, most have been affected by rising rents either in their hip pocket or via long stretches of home hunting and insecurity. Why not make CRA available to all renters, without the means tests? Any resulting inflation would be negligible and more readily justified on equity grounds.
Stunned silence on JobSeeker
Finally, Chalmers last week flagged that there would be “additional steps in the budget” to adopt some of the Economic Inclusion Advisory Committee’s (EIAC) recommendations. Baby steps, perhaps.
But the EIAC’s headline recommendation, that JobSeeker be increased by approximately $17 a day as a “first priority” in the budget, was conveniently ignored. The committee last month described JobSeeker as “seriously inadequate”. It still is.
In 1996, the dole was about 90% of the pension. The 90s were hardly some socialistic aberration; it was when Chalmers’ hero and PhD subject Paul Keating was dolling out otherwise tough economic medicine. They made their mistakes, but at least the Hawke and Keating governments had the reforming zeal to make sweeping changes instead of merely tinkering at the edges; and the social conscience to lift the bottom up instead of cynically playing to the median denominator.
Chalmers has had three fiscal outings now — more than enough time to show some backbone on addressing unwaged poverty. That they haven’t yet substantially increased JobSeeker (aside from one $20-a-week increase last year) is his government’s greatest failure of its first term.
Albanese might have a “three-term plan”, but due to decades of neglect, dole recipients measure their plans in days, even hours. They need immediate help — and with an election due next year, their patience with this government’s prevarication is understandably running out.
