A new normal - yeah right

I bought some milk at my local Supermarket yesterday. It cost me $3.59. The checkout operator didn’t ask me about my ability to pay for the milk in comparison to the person in front or behind me as the sale price is based on the ability of Coles to arrange for the milk to be produced and transported to my local supermarket for a specific cost — and they make some money for themselves in the process. If I’m on $577 per week (or $30,000 per annum), the milk cost me about 0.6% of my weekly income, if I’m on $3,846.00 per week (or $200,000 per annum), the milk cost me about 0.09% of my weekly income.

Unlike most retailers, the federal government doesn’t theoretically believe in ‘one size fits all’. The progressive taxation system is supposed to ensure that the rate of taxation, plus levies, rises as your income increases. And that’s a good thing as those that can afford to pay a bit more to provide services to our society are theoretically doing so. As demonstrated above, if you are on a lower income, a fixed price for a necessity is proportionally more of your income than someone who is on a larger income. So by the time someone on a low salary pays the fixed costs for the food, utilities, rent or mortgage, transport costs and all the other commitments involved in keeping body and soul together for another week, they have far less money left over to stick in the bank, go to the movies, buy the new car or afford the bigger mortgage on the larger house in what the real estate agents will tell us is in a more ‘exclusive’ area.

Taxation is the mechanism whereby the Government keeps control of monetary policy and creates demand for the Australian dollar. The taxation revenue received into the Treasury is recycled across government to enable services to be provided — be they roads, defence, childcare, health and so on. It stands to reason that what money they can’t recycle, they have to create. Recent events have destroyed forever the claim by the Abbott/Turnbull/Morrison Government that because they can’t create money, we must live within our means. History shows they were attempting to justify insufficient money in the ‘bank’ as the reason for the lack of funding for programs that create equity and equality across the country. Maybe the real reason is an ideological indifference for equity and equality.

So while Frydenberg claims that having a 30% income tax rate from around $30,000 annual income up to $200,000 is fair and reasonable, mathematics would suggest otherwise. Someone on $30,000 would be liable for $9,000 per annum in income tax, leaving $21,000 to spend each year in keeping body and soul together. Someone on $200,000 would have a liability of $60,000 and have $140,000 to spend each year in keeping body and soul together, which leaves a lot more for the new car, the expensive holiday or the bigger mortgage. Certainly those on lower incomes also are generally eligible for other government support payments but these wouldn’t go anywhere near matching the gap in after tax income or the purchasing power the extra $120,000 or so per annum gives.

The legal principle of ‘equal pay for equal work’, first established in 1912, was endorsed again in 1969. But the ‘definition’ of ‘equal pay for equal work’ isn’t explicitly what it seems,
The underlying presumption that a woman didn't need to be paid as much as a man was confirmed by Justice Henry Bourne Higgins, the president of the Court of Conciliation and Arbitration, in the Fruit Pickers Case of 1912.

In this, the court’s first explicit ruling on women’s pay, Justice Higgins declared women should be paid the same as men — but only when they did jobs predominantly performed by men (such as blacksmiths) or were “in competition” with men (such as fruit-picking). This was out of concern that allowing a lower pay rate for women could put men out of work.
A century later, and regardless of the assumptions of equity and fairness in industrial relations legislation made over the past century, the reality in Australia today is generally ‘care’ based professions such as child or aged care are at the lower end of income expectations. These ‘trades’ are dominated by females, unlike the male dominated and higher paid ‘trades’ such as electrician and plumber.

It is the lived experience of most women in Australia who are over 50 that they (or women that they know) had to give up secure and moderately well paid work when they either married or became pregnant, limiting them to offer their services for work not traditionally done by men, such as nursing, child care, receptionists or aged care. As there was no ‘male competition’ there appears to have been no appetite for payment of wages that would enable women to support a family. The wage inequality continues to exist.

During 2020, we all discovered who the really essential workers were. The economists tell us that people (including essential workers such as aged and child care workers) on lower incomes have a propensity to spend a greater percentage of their wages because they have people to shelter, mouths to feed and bodies to clothe, regardless of the gender of the wage earner. If the tax cuts promoted by Morrison and Frydenberg have no effect on your lifestyle except bringing forward your next ski trip to Aspen, the tax cuts are really not doing what they are supposed to do — help the Australian economy recover from the ‘Rona Recession’.

If the Coalition was serious about helping those who have a go, they would be giving larger tax cuts to those who would value the extra $20 or thereabouts a week and spend it on fixing the car, paying the outstanding bills or going away for the weekend for the first time in years, rather than those who really won’t even notice the extra $20 a week in their bank accounts. Morrison and Frydenberg had the perfect opportunity to make a real change for the better. Did they take it? — nope, of course they didn’t.

What do you think?

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How many umbrellas are there if I start with two and take 2 away?