Treasury hides corporate welfare data, hits social welfare & pensioners

by | Jan 2, 2018 | Finance & Tax, Government

There it was right on cue, at the cusp of the New Year weekend, a government press release about the cost of welfare bludgers trumpeted loudly across the press and the TV news bulletins.

Murdoch tabloids: “Painful price of welfare costs revealed by Federal Treasury”.

SBS: “Working Australians are forking out roughly $83 per week to fund the nation’s welfare bill”.

Nine News: “The average Australian worker is handing over $83 per week to pay for the nation’s welfare bill”. Seven’s clip was eerily similar.

No matter if they have worked hard all their lives, the intended narrative of the government’s media “drop” is that aged pensioners and the disabled are welfare bludgers.

“Average taxpayers are handing over $35 every week to prop up aged pensioners,” said the Daily Telegraph in high indignation. “Prop up”? Do these pensioners really deserve to be propped up or shall we just put them out on the streets?

This “prop up” language from an organisation which was ranked as the number one “Tax Risk” in Australia by the Tax Office, an organisation whose pay TV outfit Foxtel pocketed a cool $30 million hand-out from government last year and has paid zero tax for three years on $8.4 billion in income.

ATO data dump: naming and shaming the nation’s biggest tax cheats

When they released the tax transparency data before Christmas, showing many of the biggest companies in the world pay little or no tax here, the government snuck the release out half an hour before the denouement in the same sex marriage vote. The media dutifully missed the story.

This year, the Tax Office data showed 354 of Australia’s biggest companies have now paid zero tax in three consecutive years on a combined total income of $911 billion. It should be said that some of these have a bona fide reason for not paying tax, an industry downturn or large tax losses. Most don’t.

As it is the season, we can only hope these media organisations make this New Year’s resolution, “We will give up drinking, smoking and republishing tendentious government press releases”.

Breaking down the numbers in this assault on the most vulnerable, we are “propping up” aged pensioners by $35 a week, family benefits schemes $20 a week, the disabled $17 a week and the unemployed $6 a week.

The big number however in this roll-call of welfare bludgers is healthcare where, as Nine puts it, “We also hand over about $42 a week”. You could be forgiven for thinking the folks in these media organisations don’t use the healthcare system, they just fund it.

Unless something radical is done about the delivery of healthcare, this $42 a week is going to shoot up. Australia will run out of money.

When former Treasurer Joe Hockey unfurled the Intergenerational Report, the most meaningful bit was buried on page 101 in the Appendices.

Here we find that every item slated for an increase in government spending – besides an extra $1,100 per head on defence spending – is healthcare related.

How can Australia afford a 72 per cent increase in health costs in the face of a falling workforce participation rate (more retirees, less workers)? The report shows we go from one million people needing some form of aged care now to 3.5 million people in 2050.

All sorts of things need to be done to rein in healthcare costs but the unsung story is about those who benefit most from the increase in government spending, foreign multinational drug companies who benefit from Australia’s $10 billion Pharmaceutical Benefits Scheme PBS). That $10 billion figure could be $12 billion by now. Who knows?

Department of Health data about the cost of the PBS is hard to find. If you can find it it is routinely old – just like the political donations disclosures. And it is rarely reported about, which is just the way government and Big Pharma like it.

According to the 2014–15 Department of Health annual report, the PBS cost the Australian Government $9.1 billion in 2014–15. It will likely have shot through $10 billion over the past two years, and this week there were media reports the “government will spend just over $2 billion on subsidising new medicines, and reducing the cost of some already covered on the Pharmaceutical Benefits Scheme”.

This thing is going through the roof.

While the drug companies are the major financial beneficiaries of the soaring PBS they are also big tax avoiders; mostly via transfer pricing (manipulating their product prices in deals with foreign related companies to siphon profits offshore).

Excusez-nous: French giant Sanofi takes Australia to the cleaners

Some are better than others, Johnson & Johnson has been a comparably good taxpayer while Pfizer and Sanofi-Aventis have paid nothing in the past two years on billions in income. The typical profile though is for the drug company to pay just enough income tax so as to not stick out, schmooze the medical fraternity and bureaucrats, keep a low profile in its dealings with government and make political donations to both major parties.

A final point to be made about corporate welfare recipients versus social welfare recipients, the majority of Australia’s tax take comes from PAYG taxpayers. Corporate and resources rent tax at $71 billion is dwarfed by the $194 billion paid by individual PAYG taxpayers.

Moral of the story? You pensioners and disabled had better start making political donations, then government will prop you up with nary a word of complaint.

Bottom of the canal: Pfizer’s billion-dollar tax rort

ABOUT THE AUTHOR

Michael West

Michael West

Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

6 Comments

  1. Avatar

    Australia is a sovereign currency nation it is impossible for the country to run out of money as the Federal Government is the monopoly creator and issuer of the AUD… TAXATION DOES NOT FUND FEDERAL GOVERNMENT SPENDING!
    It is about time people understood this very basic macroeconomic fact… Taxes destroys (extinguishes) money, it goes no where and funds nothing at the Federal level…. the Federal government spends money into existence, (it isn’t sitting in some account anywhere it is simply keystrokes in a computer, created out of thin air) and destroys it via taxation to stop the market from overheating… eg. they create it via spending it into existence say $200 into the economy, they tax $50, that leaves $150 in the economy… that $50 simply ceases to exist.

    https://www.youtube.com/watch?v=3SpJ8UT6y7Y&index=8&list=PLZJAgo9FgHWZzhpkjtMxIwZns26A0OdFz

    • Avatar

      Wow. So, the government doesn’t get money from tax revenue, borrowing, savings, selling or leasing assets, etc. That would explain why they waste it. /S

  2. Avatar

    Government in a democracy is there to help us all live together without strife. Equality and a fair distribution of a society’s resources and wealth should be the main aim of all politicians. Taxation laws that work to redistribute wealth are essential to head us towards equality, peace and social cohesion. When, as Michael West reports, they don’t work and favour some groups over others our democracy suffers.
    Taxation does not only “fail”by chance. Special interests and greed subvert government and weaken society in order to benefit the powerful. To attack pensioners who have kept their part of the social contract, or welfare recipients, who we assist not just out of kindness or a sense of fairness, but also to maintain the strength of our society, is sort sighted, mean, greedy and dangerous.
    Today’s neoliberal fiction – the idea that we all compete and any one who falls behind has only themselves to blame, has form. Every society in history has had to deal with the greedy wanting to disregard others.
    We need better more equal Taxation Laws that constantly, quickly and effectively redress imbalances in our resource and wealth distribution. The article shows we have wandered a long way from good, government. In fact the greedy have been allowed to take control.

    • Avatar

      The fact is that many people are born with more opportunities than others, whether that is through having good parents, good connections, good health, good education, good skills or whatever. The rich were usually just lucky. The plutocracy have developed a system to get richer through tax avoidance.
      Projection and blaming their victims is old but still works.

  3. Avatar

    I think the headline should be Australia would pay $8.30 if MUltinationals paid their fair share

  4. Avatar

    We live in a neoliberal agenda or should I say disease!
    What has happened since Margaret Thatcher and Ronald Reagan introduced Neoliberalism, followed by the Clintons, by Tony Blair in England, and by most of Europe and the world today.
    A free market now means a market free for the landlords to charge whatever they want. Free for the monopolists to charge whatever they want. Free from regulation.

    The Neoliberals with their brand of casino capitalism have been steadily eating away dismantling the entire welfare state.
    The reason Governments do not deliver, especially this one, is because they support :

    1. A cheap, obedient, docile, uncritical workforce who will work to support the upper-class’s lifestyle and the economy.
    2.Keeping wages low, or debt pressure high, means workers will be
    less likely to complain or make demands. As workers struggle to provide their families with all the temptations that a capitalist society offers, they become far less likely to risk their employment, and less able to improve their situation.
    3. Corporate feudalism They have taken this corrosive social vision and dressed it up with a “respectable” sounding ideology which all boils down to the cheap labor they depend on to make their fortunes.
    4. A larger labour supply, the cheaper it is. The more desperately you need a job, the cheaper you’ll work, and the more power those “corporate lords” have over you.
    5. No minimum wage, or other improvements in wages and working conditions. Why? These reforms undo all of their efforts to keep you “over a barrel”.
    6. Using the public purse for corporate interests! 11 billion dollars propping up private health insurance as one example!

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