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Thursday, May 12, 2011

Budget Cuts Hits Middle Class

Treasurer Wayne Swan says he doesn’t believe couples earning $150,000 are “rich” but everyone must pull their weight to return the budget to surplus. People earning $150,000 or more will no longer be eligible for family payments and other benefits because they are considered wealthy enough to go without them. The cuts include Family Tax Benefits A and B, the baby bonus and paid parental leave until 2014 which will save the government $1 billion over the next four years. The Treasurer said “What we do is pay generous benefits for families on modest incomes and it goes a long way up the income scale, but sometimes we have to tighten our belt a bit and that is what we are doing with family payment at the top end.”

Enter young couple from the top end, Mark Fowler and Tegan Hardcastle-Fowler who say they can’t save enough deposit to get them into the property market. They didn’t realise that statistics show they are in the richest 15 per cent of Australian households. Mr Fowler, a wine salesman, says high rent and electricity have hit them hard. He has no problem being called middle-class but rejects the notion he is wealthy. Tegan is halfway into her eighth month of maternity leave and would love to spend more time with her baby but says she must soon return to full-time work. Going back part-time isn’t an option because child care rates are around $100 per day.

These welfare changes will undoubtedly affect many women who work part time – she might think twice if her husband is earning more than $100,000, it could tip them over the $150,000 threshold. Treasurer Swan concedes that the numbers will rise with inflation over the years as the threshold falls further behind wages.

Another family man earning slightly over $150,000 said they are financially stressed. “We have no access to family benefits, pay extra for the flood tax, no baby bonus, no childcare benefit and possibly no private health insurance rebate. On top of my ever increasing mortgage payments, rising electricity, petrol and other costs of living, we are near breaking point.” He added “Perhaps I should give up my current job, take up teaching, spend more time with my family and live on government handouts – I would probably be better off overall”.