Advance Australia Unfair: tax cuts to favour men over women, old over young, rich over poor

by | Sep 21, 2020 | Finance & Tax

Women and young people have borne the brunt of the Covid Crisis. They are set to lose again when the Government hands down its $158 billion tax cuts package. Elizabeth Minter reports on the unfairness of the government’s plan for economic recovery.

Tax cuts that benefit the nation’s most highly paid workers, the vast majority of whom are men, are going to be the key feature of the Coalition’s plan to get Australia on the road to recovery. Meanwhile, women and young people, two groups who have borne the brunt of the fallout of the pandemic, will pick up the crumbs. If it weren’t so serious the situation would be laughable.

 “Mr Frydenberg on Thursday made it clear that pulling forward previously legislated tax cuts … would underpin the government’s recovery plan to be revealed in the October 6 budget.” 

The tax cuts, costing a reported $158 billion, have been described in the following ways. 

“While part-time workers will score a measly $255 per year under the Stage 3 tax cuts, the wealthy, including Prime Minister Scott Morrison, will ultimately secure a windfall of $11,640-a-year.” 

Or: “Australia Institute analysis confirms that for every dollar of tax cut that women get, men get $2.28.”

Or: “If the tax cuts were divided between men and women, men get 70% of the tax cut cash while women get only 30%.”

Or: “More than 50% of the benefits will go to the top 10% of taxpayers, while 90% of the benefit will go to the top 20% of taxpayers.”

You get the picture. 

Reserve Bank analysis just released has also shown that the pandemic could hit the job prospects of young and older people more than those in their prime working years – the group most likely to benefit from the tax cuts. 

The government has also announced the budget will contain a big investment in infrastructure spending, which again benefits the male-dominated construction sector. Yet research from the Australia Institute has shown, spending on health and community services, sectors that employ predominantly women, create far more jobs per billion dollars spent.

Surely the government’s focus should be on groups that have paid the highest price?

Women

Employment has been destroyed in sectors that have traditionally employed women in large numbers: retail and food services and accommodation. Such employment is highly casualised and already low paid. The three sectors with the average lowest median wage are all female dominated. Analysis by Bankwest Curtin Economics Centre also found that more women than men were ineligible for the safety net of JobKeeper. 

Women also make up the overwhelming majority of workers in education and healthcare and social assistance. So not only has their paid workload become greater or more complex, but so too has their unpaid work: with the pressure of home-schooling children or looking after elderly parents they have taken out of aged care homes. 

Labour force statistics show that many women have dropped out of the workforce altogether, possibly as a result of the huge increase in demands on them, with the true rate of unemployment for women more than 10%. Experts are also predicting that sectors such as store-based retail, food services and accommodation may not return to pre-Covid levels, leaving women far more vulnerable. 

Youth

Younger Australians were already doing it tough before the pandemic — in February, the unemployment rate for 15- to 24-year-olds was 12.2 per cent. They are paying an even higher price now. Research by ANZ senior economist Catherine Birch, using ABS data, shows that three of the six industries that reduced work hours the most due to Covid-19 are hospitality, retail, and arts and recreation, which collectively employ 45% of young people compared to 27% of all other age groups.

Young people are also more likely to be in precarious employment, employed as casuals, contractors or in the gig economy. A 2018 Australian Industry Group report revealed that three-quarters of workers under 20 were employed casually. Of all casual workers, 42% were in their early 20s, with another 18% were in their late 20s or early 30s – all up, those born from late 1980s onwards make up 60% of the entire casual workforce

As Callam Pickering, an economist at jobs site Indeed, told the ABC: “History suggests that the impact of Covid-19 will stick with younger people for much of the next decade…That was certainly the case in the last recession of the early 1990s and in the global financial crisis of just 12 years ago.”

The scars cut deep. Many affected people have not seen their careers recover from the shock of the global financial crisis in 2008.

As the annual Graduate Outcomes Survey shows, 72.2% of people who graduated university in 2019 found a full-time job within four months of finishing their degree. Before the financial crisis that figure was 85.2%. The current crisis will likely have an even more severe effect. 

The unemployed and underemployed 

The Australian Bureau of Statistics reports there are currently 2.5 million Australians who are under- or unemployed. Add to that a further 375,000 who have temporarily stopped looking for work, most likely because they think there are no jobs to be found, or they have new caring responsibilities that make working difficult. Some 2.9 million Australians – 22% of the workforce – will get nothing from the tax cuts.

In fact, many of these people will be punished with the return of mutual obligation from September 28, when people receiving JobSeeker are expected to look for up to eight jobs a month and accept offers of “suitable work”. This, at a time when there are 13 unemployed people for every job that is available. 

Biggest bang for the buck 

As research from the Australia Institute and ACOSS has repeatedly noted, boosting welfare payments permanently would have a bigger impact per dollar spent because most recipients spend all of their income, while higher income earners receiving a tax cut are most likely to bank the money. Data from illion and AlphaBeta showed that lower-income earners who received stimulus payments increased their spending by 10% above pre-crisis levels during the lockdown, while higher-income earners cut their spending by more than a third (36%). 

Moreover, workers who are likely worried about job security are more likely to save the tax cuts than spend them, with data from earlier this month showing that the household savings rate jumped to nearly 20% – the highest level since 1974.

The proposed tax cuts benefit a small proportion of people – largely men and largely those who have been minimally affected by the pandemic and the recession that is just beginning. Australians deserve better. So much for “a fair go”, PM.  

Slush: how the Coalition ramped up grants rorts while freezes and funding cuts hit Australia’s needy

ABOUT THE AUTHOR

Elizabeth Minter

Elizabeth Minter

Liz began her career in journalism in 1990 and worked at The Age newspaper for two 10-year stints - as a reporter, sub-editor, layout sub, and Letters Editor for eight years. She also worked at The Guardian newspaper in London for more than seven years as a sports sub-editor and a production editor. In a former life, she was a professional tennis player for seven years, winning the US Open junior title in 1983 and representing Australia in the 1984 Fed Cup. She has a Bachelor of Arts and a Bachelor of Letters (Hons). Her Twitter handle is @LizMinter_

18 Comments

  1. Avatar

    Great article Liz!

  2. Avatar

    Love the analysis!

  3. Avatar

    Tax cuts which favour rich men, high income earners?

    It’s not an accident. That group is the real base of the Liberal Party.

    • Avatar

      I think you mean
      ‘real base of the tax system’

  4. Avatar

    What a load of rubbish, while I don’t agree with them myself, they certainly do NOT favour men over women, old over young, rich over poor.

    They simply reduce the tax paid. People who pay more tax, get a larger return. Simple.

    Just ask Gina Reinhart or Gladys Berejiklian if they get more back than the average man.

    Just ask Mike Canon Brooks or Jennifer Hawkins or Miranda Kerr how much they earn compared to the older generations.

    etc.

    Women and young people have BENEFITED the most from stimulus welfare handouts from the Covid Crisis, not borne the brunt of it!

    Maybe these welfare payments should have been loans instead of handouts? Its going the be the taxpayer (and high income earner) repaying all this stimulus over the next decades, not the young, females or poor.

    • Avatar

      Anecdotes don’t beat simple data analysis and insight. The tax cuts absolutely favour high income earners, who are statistically men. You can’t disagree with simple facts.

      It is a poor policy and does nothing to actually stimulate an economy on its knees. An actual policy that benefits the people would be raising the tax free threshold to above the poverty line and keeping JobSeeker at a live-able rate. Real stimulus. But that isn’t what the proposed policy is about, it is simply regressive and does absolutely nothing for a post-covid Australia.

      But hey, we can’t be surprised, the LNP are the worst economic managers…

      • Avatar

        yes the tax cuts favour high income earners, because they pay more tax, but you can’t say they favour men over women, old over young, rich over poor, because that is patently false, sexism and ageism, and nothing more than virtue signalling click bait. TBH, little more than jealousy.

        Its like saying the sun discriminates against women, because its women who get all the skin cancers. The fact that its women who spend all their youth burning their skins to a crisp seems to elude them.

      • Avatar

        Yes you can say they favour older men. It is a simple insight into the statistical representation of who this tax cut favours. Cause and effect.

        It isn’t false, nor is it ageist, sexist or virtue signalling. The data suggests exactly what the article states. It can’t be anything other than correct, unless you disagree with the data set which derived the insight. It can’t be ageist, the data set which the insight was derived is a neutral source. It also isn’t virtue signalling, the insight isn’t an opinion, it is simply a material observation of the consequences of the policy.

        It isn’t anything like saying the sun discriminates. What nonsense.

        This is a policy choice. You can disagree with the merit or need for such a tax policy, but you can’t disagree with who it will overwhelmingly affect. Quite ironic if you refer back to your original post about stimulus…

      • Avatar

        the tax cuts are not in any way targeted to a particular sex or age group. They are based on income.

        There are many older men who are not rich, and won’t get a cent from these tax cuts.

        I know many older men who won’t get a cent from these tax cuts.So its patently false saying they target older men

      • Avatar

        “… its women who get all the skin cancers. The fact that its women who spend all their youth burning their skins to a crisp seems to elude them.”

        You’re making up statistics to try to make a point!
        –Melanoma is more commonly diagnosed in men than women. The risk of being diagnosed with melanoma by age 85 is 1 in 13 for men compared to 1 in 21 for women. (https://www.cancer.org.au/cancer-information/types-of-cancer/melanoma)
        –Non-melanoma skin cancer is more common in men, with almost double the incidence compared to women. (https://www.cancer.org.au/cancer-information/types-of-cancer/skin-cancer)
        By your reasoning that must mean that men “spend all their youth burning their skins to a crisp [while the result] seems to elude them”.

        Making stuff up and pretending insults are arguments = trolling.

    • Avatar

      The tax cut’s stated goal is to achieve stimulus for the economy. Cutting taxes for the higher to highest earners has never stimulated any economy but rather allowed more wealth to accumulate in that wealth bracket at the expense of lower income earners and the economy. Think of it like the tyres on a car. If you want that car to travel as efficiently from point A to point B and beyond all tyres need to be inflated and functional for purpose. Developing a moral aversion to giving one particularly leaky tyre air because it doesn’t deserve it and instead giving more air than needed to another will only hinder rather than help this car metaphor for the economy from being able to take everyone to a preferable economic destination. Liking or not liking the rationale behind economic decisions by governments won’t change the outcomes in real life, and this current legislation will definitely not even remotely fulfill the stated objective of stimulating the economy. If you feel that those who get taxpayer hand outs for doing “nothing” don’t “deserve” something for nothing then that’s another matter, however, that argument isn’t related to creating economic stimulus to help the country, and by extension all Australians, recover economically post covid.

      • Avatar

        I agree with you, as I originally stated I don’t agree with them myself, those that pay more tax, get back more from the changes.

        The premise that they favour men over women, old over young, rich over poor, is what is patently false.

      • Avatar

        I’m not sure it’s that simple. I don’t think taxation bears a linear relationship with different demographics. And because of that variable relationship one can work out whom tax reforms will “favour” whether the benefits be explicitly stated or inevitable functional outcomes. Take slavery in the USA as an example: slavery explicitly targeted Africans for exploitation. But a valid argument can be made that slavery favoured white, rich southern men and greatly disadvantaged poor white people – this is because the innate outcomes of hijacking a whole sector of the labour market and flooding it with free labour did not favour poor white people in those regions who would otherwise have been paid an income to fill that employment market and/or gained more influence through unionism or other labour organisations. So in a very real way rich, white slave owners parasitised their society at the expense of their poorer brethren and the society that supported their ventures while making private profits off “free” labour, ie, their ventures were “favoured” over the needs of their community by laws endorsing slavery and lost tax revenue from poorer white people who would have paid income tax otherwise.
        So in regards to our latest round of high income tax breaks unless you follow the money trail to see who benefits from them it is a little premature to claim the assertion is patently false. History has shown that it will more than likely favour rich, white men via statistical analysis after application. So you would have to argue from a clear premise and data justifying why that wouldn’t be the case despite historical trends because what is patently obvious to you may not be patently obvious to me and vice versa without any actual evidence.

      • Avatar

        If you have an alternative data insight that refutes the observation quoted in the article feel free to share it.

    • Avatar

      Hmm……..not sure about your VOTW, however maybe some broader perspective could help: https://www.opendemocracy.net/en/poverty-and-activism-the-heart-of-global-civil-society/

      It’s been sometime since I left the Corporatisation and Plutocracy of every day life, however, the central issues that need to be revised are Governance, Taxes and the systemic abuse that has been allowed to flourish and ‘deliberately’ structured by none other than the very people who should have known better and have ignored that fact that taxes are the price you pay for a civil society.

      This nascent enigma commenced in 1970’s (Bottom of the Harbour Schemes) and galloped along with clear strategies that have been implemented and entrenched by Politics, Law and ascension of law, Regulatory, Financial, Legal and Accounting demagoguery.

      If in doubt, take a good look at Trump…..a bloodbath and a crime scene.

  5. Avatar

    I fail to see how this shows how the tax cuts target certain demographics. Comparing a part time income tax with the highest paid government position (prime minister) is not comparing apples with apples. More so Comparing peanuts with gold bullions. It appears the figure only seems high because the income received is probably 100x higher than a part time retail worker thus inflating percentage ratios. Taxation will vary from industry to industry, age demographic (pensioner ect.) and overall income earnt. Lower the income lower the ratio and the willing dispersion of gender through out industry, and time spent working ratio between genders has nothing to do with that. If you really wanna get taxation fair, start looking at the port of Brisbane and exports. Start pressuring reform for tax write offs on large business to constrained to unforeseeable expenses only, because I am tired of seeing booze ups as tax write offs. The taxation is there, just large corporates have a way around paying it. Oh and maybe start bringing public assets back into public ownership and not foreign private. We might generate more revenue for the government to allow generous tax cuts for all….

  6. Avatar

    This article is just dumb, she is playing the readers for fools. This is the same politics of envy trotted out before every budget season

    It works well, with an audience smart enough to read it, but not smart enough to add the context.

    Not much better than clickbait

  7. Avatar

    only so so

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