Cost of Living Issues Paper

Every day, households around Australia grapple with cost-of-living pressures. Labor believes the Federal Government should do what it can to help ease those pressures. But last year's Federal Budget - the Abbott Government's first - contained measures that would make it even harder for people to maintain their living standards.

The changes to pensions, the cuts to family payments, the cuts to child care, family day care and outside school hours care, the proposal to uncap university fees, the petrol tax and the GP tax were all surprise measures in the Abbott Government's first Budget. And they were all measures that would affect middle-class and more vulnerable households' ability to meet their cost-of-living.

These surprise measures revealed the Abbott Liberal Government's priorities. At the same time they were asking households to shoulder a greater burden, they were dropping Labor measures aimed at making sure that multinational companies were paying their fair share of tax in Australia.

The sad consequence of the Abbott Liberal Government's first Budget has been to weaken the economy. Unemployment is at its worst in more than a decade. Wages growth is so slow that it is at its lowest since the current way that it's measured started in the 1990s. Consumer confidence has fallen ten points since the federal election. Business confidence is in the doldrums, and has been since the Abbott Government's first Budget.

Why has Labor's cost-of-living committee released this issues paper?

Labor's cost-of-living caucus committee has been calling for people to tell us their stories about the difficulties households face in meeting cost-of-living pressures. This issues paper is being released to invite further submissions, in advance of the Abbott Government's next Federal Budget. Federal Budgets matter to households because they reveal Government priorities, determine the services that will be available, and affect the economy's performance. A good Opposition listens, and creates opportunities for people to provide their views. Then, a good Opposition acts, by weighing differing opinions, using community input to inform responses to Government policy, and taking into account a broad range of views and firsthand experiences in forming policy to take to the next election. This issues paper is one way of asking you to take the time to tell us what you think in the lead up to the next Budget.

How can I tell the committee what I think?

To respond to this issues paper, you can write to us via our committee's website at www.alp.org.au/costofliving.  You can also send us a letter, to Terri Butler MP, PO Box 476, Morningside, Q 4170.

What if I want to tell the committee about issues not covered in this paper?

The committee welcomes all cost-of-living stories and submissions, even if the issue you want to raise isn't covered by this paper.

When should I send in my submission?

This issues paper is aimed at asking people to give us their views in advance of the Federal Budget. The Abbott Government's Budget is due on 12 May, 2015. However, the committee also welcomes stories and submissions at any time.

 

Issue: Pensions

In their first Budget, the Abbott Government wanted to make changes to pensions. They wanted to change the way that aged pensions are increased. In Government, Labor had decided that aged pensions should be increased by the greater of the standard inflation measure (the CPI) on the one hand, and the pensioners' and beneficiaries' inflation measure (the PBLCI) on the other. The pension would then be measured against male total average weekly earnings (MTAWE), to make sure it was keeping pace with improvements in standards of living for the community more generally.

In their first Budget the Abbott Government wanted to remove the pensioner and beneficiary inflation measure, and stop measuring against male total average weekly earnings.

The effect over a decade would be that pensioners would get around $80 a week less.

The Abbott Liberal Government also wanted to change the way that veterans' and disability pensions are indexed.

In responding to this issues paper you might like to tell us:

  • how important is this issue, and are you concerned about what the Abbott Liberal Government might announce in the Budget it is releasing in May?
  • should aged pensions increase to meet pensioners' specific cost-of-living needs?
  • should pensioners living standards increase if the community as a whole enjoys an increase in living standards?

 

Issue: superannuation

The Abbott Liberal Government announced freezes on increases to superannuation contributions, making it harder for people to save for their own retirement. Tony Abbott claimed, at the time, that the freezes would mean that businesses would pass on the "savings" to employees, giving them more take-home pay. In the same year, the Abbott Liberal Government moved to abolish the low income superannuation contribution, which was a way of giving low-income earners the same tax break on their super that higher income earners get.

In responding to this issues paper you might like to tell us:

  • how important is this issue, and are you concerned about what the Abbott Liberal Government might announce in the Budget it is releasing in May?
  • do you believe that, because of freezes on superannuation contributions, employees' take-home pay would go up by the amount that otherwise would have gone into their super?
  • should people on low incomes get similar tax breaks on their super to those that people on higher incomes get?

 

Issue: Out-of-pocket costs for healthcare

In their first Budget the Abbott Liberal Government planned to establish a new fee for bulk-billing. They also planned to reduce the Medicare payment that GPs received for consultations, which would likely mean higher prices for consultations that aren't bulk-billed. Since their first Budget, the Abbott Liberal Government has announced variations on those policies but their intention to increase out-of-pocket costs for GP services seems to remain. The Abbott Liberal Government also moved to increase the cost of medicine by more than the rate of inflation - in other words, a real increase in medicine costs.

The evidence shows that Australia's Medicare system is sound, and that getting people to visit the GP can keep people out of hospital. That's important for both health and financial reasons. Labor has always supported policies that are aimed at making sure everyone can get the healthcare they need. We opposed moves to dissuade people from going to the GP.

In responding to this issues paper you might like to tell us:

  • how important is this issue, and are you concerned about what the Abbott Liberal Government might announce in the Budget it is releasing in May?
  • how does the price of going to the GP affect your household's finances, and how does it affect your family members' willingness to go to the GP?
  • how does the price of medicine affect your household?

 

Issue: Families

The Abbott Government's first Budget included cuts to family payments that could leave a typical family $6,000 worse off a year. The Liberals also made around $1 billion in cuts to outside school hours care, family day care, and child care support. They moved to abolish the Schoolkids' bonus, which replaced tax concessions for education costs and was aimed at helping families. And in their first Budget they announced $80 billion in cuts to state funding for health and education over ten years - leading to fears of changes to the GST, including to apply it to private school fees.

In responding to this issues paper, you might like to tell us:

  • how important is this issue, and are you concerned about what the Abbott Liberal Government might announce in the Budget it is releasing in May?
  • how does your family manage work and care?
  • how does the costs involved in school education affect your household?

 

Issue: household debt

In their first Budget the Abbott Liberal Government wanted to allow universities to set their own fees, with no caps on fees. Modelling indicates that could lead to $100,000 uni degrees, meaning years and years of debt for young and mature-age students. Labor opposed those changes. The Government is still trying to get support to allow universities to set their own fees. The Abbott Liberal Government also took away "Tools of the Trade" support for apprentices and trainees.

Evidence indicates that households are carrying significant debt. Our committee has heard from experts who are worried about some households taking on more debt than they can manage, including through short-term, high-interest loans.

In responding to this issues paper you might like to tell us:

  • how important is this issue, and are you concerned about what the Abbott Liberal Government might announce in the Budget it is releasing in May?
  • should people go into decades of personal debt to go to uni?
  • is it important that skills training, like apprenticeships and traineeships, be affordable?

 

Other issues

A range of other issues affect cost-of-living, like housing costs, utilities, the cost of transport, the GST, and many others. All of those issues can be directly or indirectly affected by the Federal Government's Budget.

In responding to this issues paper you might like to tell us:

  • what other cost-of-living issues are most important to you?
  • for each of those other issues that are important to you, are you concerned about what the Abbott Liberal Government might announce in the Budget it is releasing in May?

 

Issue: the Federal Budget's effect on the economy

As we said at the beginning of this issues paper, the Abbott Liberal Government's first Budget has been bad for the economy. Even before their first Budget, they revealed themselves to be poor economic managers. Their first major report to the nation on the state of the Government's finances was the mid-year economic and fiscal outlook they published before Christmas back in 2013. That showed that the Abbott Liberal Government had doubled the deficit compared with the independent pre-election fiscal outlook.

The Abbott Liberal Government's most recent mid-year economic and fiscal outlook, published before Christmas in 2014, told a much worse story than their Federal Budget of May 2014.

In responding to this issues paper, you might like to tell us:

  • if you're an employee, how do slow wages growth and substantial unemployment affect you?
  • if you're in business, or if you hold shares in a business, how have the hits to consumer and business confidence affected you?
  • And if your business is small, how has the Government's decisions to take away tax assistance for small business, like their changes to the instant asset write-off arrangements, affected you?

 

Your response to this issues paper would be very welcome. To respond to this issues paper, you can write to us via our committee's website at www.alp.org.au/costofliving. You can also send us a letter, to Terri Butler MP, PO Box 476, Morningside, Q 4170.

We know that Governments can't fix every cost-of-living issue. But Governments should be mindful of the effect that the Federal Budget can have on cost-of-living. Labor wants to ease the pressure on households, and to make sure Governments listen. So, on behalf of our cost-of-living committee, thank you. We're really grateful for any response you might make.

 

Terri Butler MP                                                        Senator Sam Dastyari

Member for Griffith                                                     Senator for New South Wales

Committee Chair                                                        Committee Secretary

 

A pdf version of this Issues Paper is available here.

 

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