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Who is rich if not them?

This week, Labor backbencher and head Gillard white-anter, Joel Fitzgibbon, tore open again the tired debate about what constitutes a ‘wealthy’ Australian. Why this is even a debate is beyond me. The main reason the topic is discussed is because the government is currently making budgetary decisions about who should be the beneficiaries of a tax break on super. In effect this tax break is a government subsidy. A tax-payer funded government subsidy on superannuation savings. Fitzgibbon, who seems to have forgotten what the Labor party stands for, or never knew in the first place, came out with this criticism of Gillard’s suggestion that high earners should have their superannuation savings taxed, with this ridiculous comment:

”In Sydney’s west you can be on a quarter of a million dollars family income a year and you’re still struggling.’’

The fact that Fitzgibbon used the short-hand way of saying ‘250,000’ is significant as it makes his comment look even more preposterous. A quarter of a million dollars. A million dollars over four years before tax. In the same sentence as the word ‘struggling’. What planet is Joel Fitzgibbon on?

I can probably take a guess at the answer to this question. Fitzgibbons is on planet ‘get me re-elected’ and will say and do anything he feels necessary so not to offend or concern anyone in his electorate, including the very rich. This is a cowardly way to campaign. Particularly since he represents the traditionally safe Labor seat of Hunter. Fitzgibbon has already proven with his behaviour in the Rudd camp that he is undeserving of membership of the Labor party, let alone a seat. But pandering to the wealthy, at the expense of tax revenue that could be used to level the playing field for the very poor, is totally unacceptable for a Labor MP.

In this article Dr Richard Denniss, executive director of the Australia Institute, makes a key point about the definition of what constitutes ‘wealthy’ in the Australian community:

In 1996, when Howard was elected, the top tax rate kicked in at $50,000 and by the time he left office it had risen to $150,000. Obviously you couldn’t be a high-income earner if you weren’t in the top tax bracket.

He used the same approach to welfare support, introducing a range of benefits that flowed to middle- and high-income earners. Again, how could families feel they were doing very well by community standards when the community saw them as being in need of financial support?

By giving wealthy people middle class welfare, such as super tax breaks, the baby bonus and the first-home-owner grant, all Howard achieved was to imbed a sense of entitlement in the very rich. This sense of entitlement remains today. In my view it’s time to turn the tap off. It’s time to remind people who earn a crap load of money that they have absolutely no right to receive welfare of any kind. They should also be reminded that they are not entitled to resent the high rates of tax they pay since the only reason they are rich in the first place is because of the opportunities afforded them by living in a well run society, which was built on the back of a fair government taxation system. Elizabeth Warren explains this best.

Let’s look closer at an income of $250,000. If Fitzgibbon is correct, and there really are people in Western Sydney earning this much money and struggling, then what has gone wrong in their lives to cause this situation? What sort of consuming addiction and predilection to spend outside their means must a family have developed to feel stretched on this income?

Breaking this down, let’s look at an example where a wife earns $150,000 as a sales manager, and her husband earns $100,000 as a plumber. Their after-tax weekly income is $3,492. Anyone who thinks their daily necessities of life cannot be met with $3,492 a week needs to see a financial counsellor. I don’t even care if the family has five children. Food, clothes, bills and a mortgage in Western Sydney are not so expensive that $250,000 is a modest income. Obviously if you spend all of this income, you will feel broke. Is this what Fitzgibbon means? That these people spend too much and that’s why they’re struggling? Look at this house for sale in Cecil Hills. The real estate agent is offering buyers to ‘Live like a king on 943 m2 block of land!’ This mansion has five bedrooms and is on the market for $1,450,000. Assuming the buyer had a 10% deposit, their weekly mortgage payment on this house fit for a king would be $1,886. So our $250,000 family could afford this mortgage if they didn’t mind ‘stretching’ themselves, with $1,606 left each week for life’s necessities. (And also things they want, but don’t need, like take away dinners, holidays and designer clothes, new cars and electronic equipment).

When you compare this family living like a king, to a couple who works full time on a minimum wage, who take home $558 each a week, it’s hard to imagine how their lifestyles could be further apart. And it’s also impossible to imagine that the wealthy family is struggling and in need of government tax subsidies on their superannuation. To put it simply, a family earning $250,000 might want government assistance, but it’s easy to see that there is absolutely no argument that they need government assistance.

To get another perspective on whether a family earning $250,000 is struggling, it’s interesting to look at this US example of wealth inequality. Ignoring for a moment the monumental disgrace of the reality of the gap between rich and poor, I instead draw your attention to the ‘ideal’ amount of inequality. 92% of the 5,000 people surveyed in this research selected their ‘ideal’ inequality as the richest 20% being ten to twenty times richer than the poorest 20%. If this ideal was the reality, and I convert it back to Australian figures, a couple receiving a dole payment of $448.70 a week (who would fall into the poorest 20% of Australians), are receiving just 13% of what someone on $250,000 a year earns. In other words, families earning $250,000 a year earn eight to twenty times more than a family on the dole. So is Joel Fitzgibbon saying that the ideal top 20% of earners in our country are struggling? My question then for Fitzgibbon is – if our top 20% of earners are struggling, what words could we possibly use to describe the conditions of our lowest 20%? Here’s a suggestion: in desperate and immediate need of as much government assistance as the government can possibly afford. And if the government can afford to help these people more effectively by cancelling welfare for the very rich, then this should be done, and it should be done now.

 

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25 comments

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  1. Joy Cooper

    Excellent article, Victoria. Joel Fitzgibbon is a surrogate Liberal cut from the same cloth as Graham Richardson. They noth have long forgotten the true Labor ethos, that is if they ever understood it in the first place.

    My sister & her husband have absolutely no need for middle class welfare at all, but she eagerly puts her hand out for whatever she can get. It makes my blood boil, especially when they swan off for yet another O/S trip. I was so pleased when the Medicare offices were placed into Centrelink premses so that the recipients of middle class welfare, previously obtained (under Howard’s orders so they did not feel as though they were getting “welfare”), from Medicare offices, now have to visit Centrelink along with the great unwashed. 😆

  2. Joy Cooper

    *both* not noth 😆

  3. Bob Fawcett

    Outstanding exposition, Victoria. I will show it to my Economics class.

  4. Heather

    They take on a huge mortgage to buy one of those ghastly monoliths and then have the gall to whinge about their circumstances. (Oh and don’t forget their 4-wheel drives and their mini-yuppies all in private schools).
    Over privileged, over paid and over indulged.

  5. Fed up

    What I love, is the way they squeal when they are in danger of losing their benefits. The truth is, this nation cannot continue to with the benefits. They achieve nothing for the economy.

  6. Joy Cooper

    Another way the taxpayer subsides the wealthier of our community is that some of their “perks” come from before tax by way of salary sacrificing. Essentials such as private health insurance, private school fees, leased cars, etc.

  7. Crash Skeptic

    1awansbeck wrote:

    Poor Joel, he’s just an automotive electrician. Don’t be too hard on him, he’s not used to dealing with bright sparks….

    Anything wrong with being an electrician?

    Martin Ferguson and many others have written ALP essays/reviews lamenting the fact that the ALP seems to have precious few “traditional workers” in it’s ranks anymore, but huge numbers of arts/law graduates…

    I’ve observed first-hand how the sort of people who staff and run the ALP actually seem to have venomous contempt for much of their traditional working-class base.

  8. 1awansbeck

    Poor Joel, he’s just an automotive electrician. Don’t be too hard on him, he’s not used to dealing with bright sparks….

  9. simonm01

    Good timely article. Re tax payer subsidies for the well off, to quote Mr Denson from Twitter: “If you pull super savings incentives from the low paid, it’s prudential management. If you take subsidies off the high paid it’s class war”

  10. Joy Cooper

    So true, Simonmo1. Typical LNP spin & weaselwords but I’d be happy to man the tumbrels if that’s what they want. Now that was real class warfare. 😆

  11. Angela

    Maybe Fitzgibbon’s wife is an overspender to keep up with the Joneses and he feels like he’s struggling because she’s spent all the money! hehe

  12. born with a wooden spoon

    Crash Skeptic
    March 30, 2013

    1awansbeck wrote:

    Poor Joel, he’s just an automotive electrician. Don’t be too hard on him, he’s not used to dealing with bright sparks….

    Anything wrong with being an electrician?

    Martin Ferguson and many others have written ALP essays/reviews lamenting the fact that the ALP seems to have precious few “traditional workers” in it’s ranks anymore, but huge numbers of arts/law graduates…

    I’ve observed first-hand how the sort of people who staff and run the ALP actually seem to have venomous contempt for much of their traditional working-class base.

    Being an arts or law graduate doesn’t make you have ‘venomous contempt’ of the working class either. Im a single mum struggling on welfare and have been for the last 4 years, I grew up in a working class family, however, by the end of the year I will be an arts graduate, and in another 4 and half years Ill hopefully be a law graduate as well. My experiences through childhood and young adulthood will never leave me, so I do object to the implication that you have made here of graduates not having lived in the real world. Granted there are many like that but not all.

  13. lmrh5

    Reblogged this on lmrh5.

  14. Crash Skeptic

    born with a wooden spoon wrote:

    Being an arts or law graduate doesn’t make you have ‘venomous contempt’ of the working class either.

    I never said it did.

    But when a third of the ALP caucus are lawyers, that does suggest a lack of diversity and it is understandable that party elders worry that they are losing touch with their base.

    I suspect the proportion of lawyers in the LP caucus is even higher, but at least they are actually closer to their “base”.

    Im a single mum struggling on welfare and have been for the last 4 years, I grew up in a working class family, however, by the end of the year I will be an arts graduate, and in another 4 and half years Ill hopefully be a law graduate as well. My experiences through childhood and young adulthood will never leave me, so I do object to the implication that you have made here of graduates not having lived in the real world. Granted there are many like that but not all.

    Object all you want BWAWS, but several points:
    1 – I did not say “all”. And my comments were actually a comment on ALP staffers, not on law graduates.
    2 – You essentially agree with me (“Granted there are many like that but not all.”)
    3 – My comments are from first-hand experience. An old aquaintance was once a staffer for Anthony Albanese and I have never heard such hate for the working class as expressed in that circle of friends. (“Racist, sexist, uneducated, homophobic redneck bogans” was pretty much the standard description.)
    4 – If activists for a “worker’s party” think it’s cool to mock a “parliamentarian for a worker’s party” on the grounds that he apparently has (shock! horror!) a “working class background”, you should find that concerning…

    Oh, and lastly – the fact that a Conservative and a white-collar worker seems to find this more distasteful than you is a bit of a worry!

  15. Nancy

    This is an overpriced taxed country. Why should there be a tax on super? I have paid tax and worked all my life, so when I retire, I will have MY MONEY that I have done without as I will not be given the pension etc, so my money should be just that, mine. Mind you, I don’t trust super companies any way. I’d like to point out too whilst people carry on about the welfare poor, that I have quite a few friends on welfare, I don’t begrudge that, but funny how they can afford an iPad, huge TV, tattoos, dermals etc, and then go to charities because they can’t afford the electricity. Being a teacher, I see also where baby bonus money goes. To make tax fairer, perhaps they need to look at closing the loop hole so the extremely wealthy do pay tax in this country.

  16. Fed up

    There appears to be many lawyers on the other side of the fence. Most, I would give wide berth to if in trouble.

    A few political apparatus, including Mr. Abbott who do not appear to have achieve much before entering politics.

  17. rossleighbrisbane

    I think it’s quite simple really – if you remember that the definition of an alcoholic is the person who drinks more than I do! They are rich because they have more money than me; I am poor because I’d like more money than the arsehole I work for. The arsehole I work for thinks I should just be grateful that he’s paying me anything at all, given he’s the one whose hard work has provided the job. Gina is poor from paying the mining tax; the mining tax didn’t raise enough to make it worthwhile.
    Give me the $126 million the mining tax raised in the first six months, and I promise I’ll never complain about middle class welfare again!

  18. Stew

    Everyone thinks anyone who earns more than they do is rich. And that only people who earn the same as they do or less should get any form of support.

  19. Alison White

    I’m one of those “welfare poor”, we have a big screen television, my daughter has an Ipad, never had tattoos or dermal thingies though, I don’t smoke nor drink and I’m always strapped for cash. I’m a ‘single’ mum on a carer’s pension of around $650 a fortnight.

    My daughter as well as having congenital Muscular dystrophy also has an IQ of just 54 and the Ipad has been absolutely brilliant for her. I didn’t buy it new but second hand off ebay – it has been the best thing I could have spent $250 on.

    I cannot ever afford to take my children to the movies – so please don’t begrudge them a big television screen.

    If it makes you feel less offended they won’t be getting any Easter eggs because their welfare mum couldn’t afford it this year – but I did buy 2 packets of Easter buns

    You see Nancy, there may be reasons that you are not aware of that force people to gain help in order to pay their electricity. Until you walk a mile in someone else’s shoes you cannot understand what they go through. I’d be perfectly happy to try walking a mile in the shoes of somebody earning $250,000 a year though, anybody want to swap?

  20. Joy Cooper

    Nancy, most super comes from compulsory employer contributions not from the worker’s pockets. Do not know but I strongly suspect any topping up of super by the employee would have some tax benefits in the way of deductions. Surely, this is how the wealthy tax minimise & get subsidised by the average taxpayer who doesn’t have access to these type of benefits due to their lower income.

    Cannot really understand your argument as what the the Federal Government is supposedly proposing to do, according to the MSM twaddle, is to end the taxpayer-funded subsidies being given to the top % of superannuation contributions, most of which are tax avoidance schemes, aren’t they?

  21. Joy Cooper

    Also, I resent the blanket shock jock categorisation of welfare recipients as being tattooed & pierced with the subtle implication that they are all drug taking, smoking “grogmonsters” who expect charities to provide them with the rest of life’s necessities, while they laze about watching daytime TV on their “huge TVs”, unless they are down at the club mindlessly putting the taxpayers’ hard-earned into poker machines.

    That is all LNP & MSM hardline propaganda designed to make welfare recipients second class citizens unworthy of any empathy or sympathy. All the better to encourage the “hard working” community these people do not deserve any of their tax money. Bah humbug!!

  22. Jason Cheung

    Well said Victoria. You are say ‘Effem’ so articulately!

  23. Jason Cheung

    delete ‘are’ 🙂

  24. Buff McMenis

    I’ve just read all the comments and really, the ones which say “reduce high income subsidisation” are the only ones making sense. Joy Cooper has the right idea .. perfect. The way I’d say it. Perfect! 😀

  25. PeterF

    IF the idea behind tax relief on super is to increase savings of as many people as possible to the level where they are self supporting in retirement, I can see some sense in it: If on the other hand it increases the wealth of those who will never need to rely on the government pension then it is a waste of taxpayer’s money.

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