Natsem modelling finds lowest-income families could lose up to 7.1% of their total disposable income by 2018-19 as a result of changes in 2015 budget

This article is more than 5 years old

This article is more than 5 years old

Low-income families will be the biggest losers from the Abbott government’s latest budget, according to modelling by the National Centre for Social and Economic Modelling (Natsem) at the University of Canberra.

The Natsem research, commissioned by the Labor party, found the lowest-income families could lose up to 7.1% of their total disposable income by 2018-19 as a result of budget changes.

The research found low-income families could lose $3,734 per year in 2015-16, equating to more than $70 a week, under the budget measures which include family tax benefit cuts as well as the boost to childcare benefits. The cuts increased to $6,165 per year by 2018-19, equating to a loss of $118.50 per week as a result of the budget changes.

Yet the report showed families on incomes of more than $120,000 (approximately the top 30% of families) were marginally better off than those on lower incomes, with a 0.2% increase in their disposable income.



Facebook Twitter Pinterest The income range for the first quintile is up to $47,000 a year; second is $47,000-$59,000; third is $59,000-$83,000; fourth is $83,000-$119,000 and the fifth quintile is made up of families with income over $119,000.

The Abbott government was keen to sell its second budget as fairer than the 2014 budget, which attracted widespread criticism for disproportionately hitting people on lower incomes.



Bill Shorten said the findings revealed the “true impact on Australian families”.



“It’s proof that Tony Abbott’s promise not to hurt families was only ever a desperate lie to save his own job,” Shorten said.



“This budget has all the same unfairness and pain for families hidden in the fine print. Tony Abbott promised to make things better, but for Australian families he just keeps making things worse. It proves that this budget just isn’t fair.”



Natsem modelled the effect of budget measures for a number of different families.



For example, a couple with a single income of $40,000 with two school children (one in primary and one in high school) could lose a total of $19,521.54 over four years, equating to $68.59 a week in 2015-16 to up to $110.45 in 2018-19.



A couple on a single income of $50,000 with two children (one in primary, one in high school) would lose $18,927.70 over four years under the budget changes. This would equate to $68.44 a week in 2015-16, sliding up to $105.64 in 2018-19.



A sole parent family on $55,000 a year with two school children (one in primary, one in high school) could be $20,647.76 worse off over the next four years as a result of budget measures. This equates to losing $71.44 a week in 2015-16 to up to $117.46 in 2018-19.



A couple on a single income of $75,000 with two children (one in primary school and one not yet at school), could lose from $12.90 a week in 2015-16 to up to $38.75 a week by 2018-19 – a total of $6,049.24 over four years.



The same modelling showed a dual-income family on $120,000 with two high-school children could lose $42.23 a week in 2015-16 to up to $62.92 in 2018-19 – a total of $11,575 worse off over four years.



Natsem modelled measures from the 2014 and 2015 budgets affecting households over the next four years, although it did not include those policies the government abandoned after they were blocked by the Senate.



Natsem took into account household measures such as the increase in childcare benefits, the return to indexation of petrol and the changes to family tax benefits. But it did not take into account the government’s planned changes to higher education, which has been stalled in the Senate.



Ben Phillips, principal research fellow, said the main finding was that although the 2015 budget childcare package was more generous, it typically benefited middle- to high-income families which use childcare.

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The childcare package offered more benefits to working families but removed benefits from those parents who were not working.

“Those families who would lose from the tough measures of last budget are not typically those who are compensated by the [childcare] family package in this budget,” Phillips said. “It may have skewed things a little more.”

The Natsem findings come two days after the Australian Council of Social Service (Acoss) found the budget measures will cost Australian families and low-income earners $15bn.



The Acoss report found by keeping last year’s savings measures and introducing new cuts, the 2015 budget cut an estimated $15bn over four years from basic services.

