Australian National University analysis shows lowest 20% of income earners lose 1.5% of disposable income and the highest 20% lose 0.2%
The latest budget hits poorer families harder than the wealthy, despite changes to superannuation. Photograph: Dave Hunt/AAP
The 2016 budget hit poor families hardest even though high income earners were slugged through tighter superannuation tax concessions, according to new modelling.
The analysis by Australian National University associate professor Ben Phillips found the main changes in the budget left Australian households $345 a year worse off, on average.
The modelling found households in the lowest 20% of income earners were $446 a year worse off, a loss of 1.5% of their disposable income, compared with the top 20% of households who were $434 a year worse off, just 0.2% of their income.
When superannuation changes are ignored, top-income households were actually $211 a year better off, showing the extent to which the tighter concessions were key to the government’s claim not only low-income earners were hit.
The ANU modelling considered the effect of nine major budget changes in the year 2018-19, when they would be fully implemented.
The changes measured included reductions in family tax benefit payments, increasing tobacco excise and personal income tax cuts for workers earning more than $80,0000.
The hardest hit by changes were single parents in the lowest 20% of income earners, who lost $1,407, or 3.6% of their income. Couples with children in the lowest bracket lost $1,146 or 2.7% of their income.
It concluded the modelling “clearly shows that the proposed measures in the 2016-17 budget would impact low-income families with children more significantly than other families”. “The losses for the middle and top income groups are proportionately much less than low income families.”
The largest measure in overall dollar impact terms are the welfare changes which have an average annual impact of taking $254 a year away from families in 2018-19. Those hit hardest by this measure were families in the second lowest income group, who lost $460 a year on average.
The next largest impact was from increases to tobacco excise, which caused families to lose on average $173. For those in the bottom income group, they lost 0.5% of their disposable income to higher tobacco tax, but for high income earners just 0.1% was lost on this measure.
Moving the 37% tax bracket from $80,000 to $87,000 had the third largest impact, with average gains of $118 for families, which almost entirely benefit the top 40% of income earners.
The report said “the superannuation changes do assist in providing a more progressive budget impact”.
The superannuation changes that were considered included reintroducing the low income superannuation tax offset, increased taxation on superannuation balances over $1.6m and restricting concessional annual contributions to $25,000 a year.
These cost households $92 a year on average. The top 20% were worse off by $645, due to superannuation changes, while the bottom 20% were better off by $34, thanks to the low-income superannuation tax offset.
“The superannuation changes, while significant, are not enough to alter the conclusion that this budget has a regressive impact,” the report concluded.
That was because superannuation changes were only $900m of the $3.4bn of changes modelled.
Despite the regressive impact, the report said “this budget has a lower impact on low-income families than the previous two budgets”.
“Analysis of the 2015 budget shows that budget to have an impact more than twice that of this budget for the lowest income families and a roughly similar impact [very little] for high- and middle-income families for 2018-19.”
The 2016 budget hit poor families hardest even though high income earners were slugged through tighter superannuation tax concessions, according to new modelling.
The analysis by Australian National University associate professor Ben Phillips found the main changes in the budget left Australian households $345 a year worse off, on average.
The modelling found households in the lowest 20% of income earners were $446 a year worse off, a loss of 1.5% of their disposable income, compared with the top 20% of households who were $434 a year worse off, just 0.2% of their income.
When superannuation changes are ignored, top-income households were actually $211 a year better off, showing the extent to which the tighter concessions were key to the government’s claim not only low-income earners were hit.
The ANU modelling considered the effect of nine major budget changes in the year 2018-19, when they would be fully implemented.
The changes measured included reductions in family tax benefit payments, increasing tobacco excise and personal income tax cuts for workers earning more than $80,0000.
The hardest hit by changes were single parents in the lowest 20% of income earners, who lost $1,407, or 3.6% of their income. Couples with children in the lowest bracket lost $1,146 or 2.7% of their income.
It concluded the modelling “clearly shows that the proposed measures in the 2016-17 budget would impact low-income families with children more significantly than other families”. “The losses for the middle and top income groups are proportionately much less than low income families.”
The largest measure in overall dollar impact terms are the welfare changes which have an average annual impact of taking $254 a year away from families in 2018-19. Those hit hardest by this measure were families in the second lowest income group, who lost $460 a year on average.
The next largest impact was from increases to tobacco excise, which caused families to lose on average $173. For those in the bottom income group, they lost 0.5% of their disposable income to higher tobacco tax, but for high income earners just 0.1% was lost on this measure.
Moving the 37% tax bracket from $80,000 to $87,000 had the third largest impact, with average gains of $118 for families, which almost entirely benefit the top 40% of income earners.
The report said “the superannuation changes do assist in providing a more progressive budget impact”.
The superannuation changes that were considered included reintroducing the low income superannuation tax offset, increased taxation on superannuation balances over $1.6m and restricting concessional annual contributions to $25,000 a year.
These cost households $92 a year on average. The top 20% were worse off by $645, due to superannuation changes, while the bottom 20% were better off by $34, thanks to the low-income superannuation tax offset.
“The superannuation changes, while significant, are not enough to alter the conclusion that this budget has a regressive impact,” the report concluded.
That was because superannuation changes were only $900m of the $3.4bn of changes modelled.
Despite the regressive impact, the report said “this budget has a lower impact on low-income families than the previous two budgets”.
“Analysis of the 2015 budget shows that budget to have an impact more than twice that of this budget for the lowest income families and a roughly similar impact [very little] for high- and middle-income families for 2018-19.”
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