Andrew Leigh

Treasurer Joe Hockey and the 47 per cent, Fairfax Online, 13 June 2014

You know Joe Hockey is in trouble when he starts sounding like Mitt Romney. As the multi-millionaire Republican presidential candidate hit the skids in 2012, he gave a speech to a $50,000-a-head fundraiser in which he claimed that 47 percent of Americans ‘are dependent upon government’ and ‘believe they are victims’.

This week, Mr Hockey stepped into the same desperate territory, bemoaning that ‘over half of Australian households receive a taxpayer funded payment from the government’. We must, he said, ‘discourage the leaners’. In effect, Mr Hockey is arguing that half the Australian population are leaners, not lifters.

Let’s put aside for a moment the fact that Mr Hockey’s signature social policy is a new taxpayer funded parental leave payment, and think about who Mr Hockey’s ‘leaners’ are. Some are retirees, like my grandfather, a boilermaker who left school at age 14. Others are people who lost their jobs when the local car plant shut down. There’s the woman I met recently who walked out on her abusive husband, and relies on government assistance to feed and house her children. Or the woman in a wheelchair who worries that without public housing, she would be homeless.

For a group of ‘leaners’, these people have done a surprising amount of heavy lifting. And yet what Mr Hockey’s unfair budget does is to shift resources from their wallets into the bank accounts of multinational corporations. At the same time as he’s taking one dollar in ten from the poorest single mothers, Mr Hockey has given $1.1 billion back to multinationals by failing to pursue reasonable Labor measures to prevent profit-shifting. For all his big talk on fair company taxation, the only thing the government has done since coming to office is to backslide on multinational profit-shifting.

At the heart of Mr Hockey’s speech to the Sydney Institute is the belief that success is due to hard work, and failure to a lack of effort. This Ayn Rand philosophy misses the role that luck – good and bad – plays in all our lives.

Like Mr Hockey, my income places me in the top 1 percent of individual income earners (the cutoff is around $230,000). But it would be ludicrous to suggest that this is due to effort alone. I’m fortunate to have been born into a family that valued education, in a relatively affluent nation, and at a time in history when the ability to string a sentence together matters more than your ability to outrun a lion.

The moral obligation on those of us who have been lucky in life’s lottery is to help those less fortunate – not to make it harder to see a doctor, tougher to attend university, and impossible to get unemployment benefits for half a year.

This would be true at any moment in history, but it particularly matters today. Since the 1970s, earnings have grown three times as fast at the top than at the bottom. If cleaners and checkout workers had enjoyed the same wage growth as financial dealers and anaesthetists, they would now be $14,000 a year better off. Over the same period, the top 1 percent income share has doubled, and the top 0.1 percent income share has tripled. The richest 3 Australians now control more wealth than the poorest 1 million Australians. Inequality has stayed pretty flat over the past few years, but nonetheless remains at a 75-year high. 

It is in that environment that Mr Hockey has brought down a budget that breaks promises, leaves the budget deficit larger than it was in the Pre-Election Economic and Fiscal Outlook, and fails the fair go test. As independent NATSEM modelling has shown, the burden of the budget falls disproportionately on the poorest families. Even the income tax increase on high-income earners has little impact, with a senior Treasury official recently admitting that around half the revenue in the first year would be lost as high-income taxpayers shifted income into fringe benefits. The poor, alas, cannot go to their tax accountant to get back the SchoolKids bonus.

In his speech, Mr Hockey described critics of the budget as being engaged in ‘class warfare’. But if he wants to see class war in action, he might look at the family impact statement that he sneakily cut out of the budget papers. That table would clearly show that this is a budget that moves resources from the most vulnerable to the most affluent.

They’re not leaners, Mr Hockey.  They’re battlers. And don’t be surprised if they’re angry when you take money away from them to give it to billionaires.

Andrew Leigh is the Shadow Assistant Treasurer, and author of Battlers and Billionaires: The Story of Inequality in Australia.