Canberra-based progressive thinktank, The Australia Institute (TAI) has called for the Federal Governmentโs pathway to economic recovery to go through healthcare and education rather than personal income tax cuts.
TAI research shows implementing tax cuts previously slated for 2022/23 now would cost the budget $13 billion, which if spent on service industries like university, healthcare, aged care and the creative arts instead could create 162,000 jobs across Australia. Thatโs an estimated seven to 12 times more jobs.
Key findings from the TAI research show:
- 50% of the benefits would go to the highest 10% income earners;
- 79%-91% of the benefits to the top 20% of earners;
- 3%-4% of the benefit would go to the lower half of all income earners.
TAI senior economist Matt Grudnoff said spending public money wisely was both an โinvestmentโ in Australiaโs long-term prosperity and an extremely efficient way to create jobs.
โWe know that at least some of the tax cuts will go into peopleโs savings accounts or used to buy goods from overseas, providing very poor stimulus to the Australian economy in comparison to investment in services.โ
Federal Treasurer Josh Frydenberg said the Federal Government would deliver a โjobs focused budgetโ after spending $32 billion in income support during coronavirus.
โOur plan will create opportunity, our plan will drive investment, our plan will grow the economy and guarantee the essential services Australians need,โ Mr Frydenberg said.
TAI has put the early tax cuts through a gender analysis and found despite โrecession job lossesโ affecting women more than men, $2.19โ$2.28 of the tax cut would go to men for every $1 that goes to women.
โThis is the time when the government needs prompt, well targeted stimulus to reduce the economic damage,โ the TAI report reads.
โThis will lead to more gender inequality.
โPrevious TAI research has shown that bringing forward the tax cuts would be poor stimulus because it mostly benefits high income earners, who are more likely to save it than lower income earners.
โDespite women facing a bigger impact from the recession, the Governmentโs response has seemingly ignored them.
โThe Government removed JobKeeper from early childhood workers, an industry dominated by women, and at the same time they have chosen to stimulate male-dominated industries like construction through the HomeBuilder scheme.
โBringing forward tax cuts that mostly go to men is just another policy that will advantage men, while women are again left behind.โ
Treasurer Frydenberg said โwomen and young peopleโ were among the heaviest hit by the pandemic but โimportantlyโ more than half had now gone back to work.
He said โ54% of jobs that were lost were lost by women and 60% of jobs that have come back are jobs that are going to womenโ.
