Major policy changes unveiled in the Turnbull government’s budget will likely hit middle-income families hardest, according to preliminary economic analysis.
The National Centre for Social and Economic Modelling (Natsem) has modelled the impact on households of key budget measures, and found families earning between $80,000 and $140,000 will lose the largest proportion of their pre-tax income.
The new analysis comes as the Labor leader, Bill Shorten, will use his budget reply speech on Thursday night to argue the deficit levy imposed on high-income earners should be retained beyond 30 June to ensure wealthy people shared the task of budget repair.
The major parties are now locked in a pitched political battle over fairness, with the Turnbull government asking most taxpayers to kick in to fund the National Disability Insurance Scheme, and Labor arguing the government should not tax middle and working-class Australians while giving a leg up to high-income earners and multinational companies.
The new Natsem analysis examined the distributional effects of four budget initiatives: the two-year pause in the indexation of family tax benefits, the family tax benefits part A taper change, the increase in the Medicare levy and the energy assistance payment for pensioners.
It found families earning between $80,000 and $140,000 will lose the largest proportion of their pre-tax income, worth between 0.66% and 0.82% of their household income, because they will be impacted by the family tax benefits freeze and have to pay the full Medicare levy increase.
Families earning less than $20,000 will see their income increase by 0.09%, while those earning more than $240,000 will lose just 0.60% of their income.
The government’s childcare subsidy, which will be available from July 2018, is not included in the modelling.
The new Natsem analysis comes as banking executives will meet treasury officials on Thursday to object to a new $6bn levy imposed on the industry.
The big banks are furious at the impost, and the Australian Bankers’ Association has warned the levy will be passed on to customers rather than absorbed by the banks.
But the government argues the banks will inflict more reputational damage on themselves if they go down that path.
The treasurer, Scott Morrison, said if the banks passed through the costs of the levy, “they’ll just be confirming in the minds of Australians why so many Australians are so angry with the banks”.
“Their profits this year are $30bn and this is a levy which goes to just $1.5bn.”
He said if banks wanted to slug their customers, customers might seek out a better deal. “I’d be taking my money to the Bendigo Bank or the IMB Bank or the Bank of Queensland or one of the smaller and regional banks who this evens up the playing field for, who’d be in the position to do the right thing by them.
“I think the banks have an opportunity right now to demonstrate for once, that they are not the big bad banks when it comes to those sorts of things. And I think they have an opportunity to step up.”
