Rarely do you see as clear an example of a government being cruel to one group of people – lower-middle income earners – purely because it knows they have no political power

In the cold light of the day it is hard to go past the view that this is an unnecessarily malicious budget that leads Australia towards a much more divided nation.

The budget revealed there was never really a budget emergency, but rather an economy that is not growing as fast as in the past. To counter this, the Abbott government has sought to cut spending. But where it cut most was specifically targeted at the lower-middle income earners.

The one great thing about this budget is that it puts to rest the myth of middle-class welfare. The belief that there pounds of fat in the budget existed because above-average income families were getting family tax payments hasn’t been true since the ALP introduced thresholds to family tax benefit B in 2008 and froze those thresholds in 2011.

The reduction of the family tax benefit B threshold from $150,000 to $100,00 for the primary income earner saves just $371m in 2015-16. That’s it. In budgetary terms where total expenditure is $424,000m that is a rounding error. But of course for the households involved it is much more than that

So little is it that Joe Hockey has made bigger saving by freezing the indexation of both the end of year and regular payments for two years to find another $395m and $720m in 2015-16 savings.

The targeted nature of our welfare system is clear when you look at the breakdown of assistance by household income quintile:

The “fat” in middle class welfare was so meagre that Hockey had to target unemployed youth. Apparently youth under 25 need to realise they can’t sit around on the dole.

The only problem is they already realise this. The youth make up a smaller proportion of the total unemployed than ever before. People under 25 are already staying in school or attending Tafe or university.

This measure is designed to solve a problem that has already been solved, and will just kick those youth who are actually seeking work, not trying to bludge on the system.

The cuts to the states for education and health inevitably will increase calls to increase the GST. Now I have long been in favour of broadening the GST. But it has always come with the big caveat that doing so will make the tax system more regressive and the government will need to ensure payments to lower and middle class households are improved to account for this.

But this budget demonstrated that worrying about inequality is not high on the government’s list.

Perhaps the supreme example of this meanness is that the budget announced changes to the indexation of the aged pension, the disability support pension and the single parents' payments. The changes will see the benefits rise by smaller amounts each year. But only one of those changes will take effect from this year – the single parents' payments. All the rest will not change until 2017 (ie after the next election).

Rarely do you see as clear an example of a government being cruel to one group of people purely because it knows they have no political power.

So there are a lot of cuts but not really to welfare for people who don’t need it. That’s because in this country such welfare is provided through the tax system. There were no changes to the superannuation concessions that see $27bn in foregone revenue each year. No changes to negative gearing (in 2011-12 the average negative gearing loss was $10,895), no changes to the rorts over car leases that the Rudd government tried to introduce before the last election.

And for all the talk of budget emergency, the real fib was revealed when it turned out the GP co-payment was not to pay off the debt or rising health costs, but to fund a “medical research future fund”.

Why medical research? Why not IT, or energy efficiency, or any other research areas? Despite the apparent budget emergency, the government still found a way to pick winners. Talk of curing cancer sounds great, but so would have been talk of creating the “next silicon valley” or becoming the leading nation in sustainable energy technology. Both of those areas would be of great benefit for the future.

And finally, the meanness of the budget points to a broader picture – one where everyone is expected to pay.

Joe Hockey in his speech to the national press club made a point of noting many people already paid for GP visits. In the lead-up to the budget there was also a lot of talk about how 48% of people did not pay any net tax (ie they received more assistance than they paid in tax). And the implication was these people (who were actually all on less than the median income) level were lazy welfare slobs, just cruising along.

I have long been a champion of means testing welfare, but the problem with means testing services and payments is that the people who don’t receive them have no stake in their remaining in place.

Our current tax and transfer system is devised to improve equality – and it does it very well given the actual small amount the government taxes and spends compared to other nations:

The private income of the highest household income quintile is 13 times that of the lowest. After taxes and benefits it is five times the size. After “in kind benefits” such as public education and health the ratio is down to 3.1 times.

That makes for a very equal society but one where being rich still offers advantages.

But if the people who don’t receive the welfare are encouraged by sections of the media and by the government to think those receiving it are lazy and greedy, then such welfare will be cut (as in this budget), and public services will be cut (as in this budget).

And in the end that doesn’t make a richer Australia, it makes a more divided and unequal one. And that’s where this budget and this government is taking us.