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Labor's family package and Mr Peacock's shortfall



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TREASURER

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NO.

EMBARGO

STATEMENT BY THE TREASURER, THE HON P.J. KEATING, MP

LABOR’S FAMILY PACKAGE AND MR PEACOCK’S SHORTFALL

The Opposition has proposed a package of rebate changes which it has estimated will cost $2,020 million in a full year. The $835 million funding gap identified by the Department of Finance implies that in order to maintain the level of fiscal

discipline claimed last week (that is, an increase in the surplus of $140 million, excluding asset sales), the Opposition will now have to reduce the cost of its rebate package by $835 million.

There are two obvious options available to Mr Peacock if he wants to retrieve some credibility with his package. He can drop the proposed Child Care Tax Rebate (CCTR; which he has estimated will cost $820 million), or he can reduce the size

of all rebates proportionately to save the same amount of

The attached tables show the gains to families of different type and income level from the Government's recently introduced $5.7 billion family package, and compares these with the gains from a Peacock package redesigned to meet his

Budget surplus objective. In Table 1, the Peacock rebates have been scaled down (to 58.7 per cent of the levels originally announced by the Opposition). In Table 2, the CCTR has been dropped.

One thing which is clear from the tables is that Mr Peacock's so-called family package in fact benefits less than 40 per cent of Australian families. Another observation to be made is that a substantial proportion of the Peacock package goes to families with incomes in excess of average earnings. But the most obvious conclusion to be drawn from

the tables is that in terms of delivering real assistance to families the Peacock package, whichever way it is ultimately designed, is small by comparison with the historic family package introduced recently by the Government.

money

CANBERRA ACT 19 October 1989

COMMONWEALTH

PARLIAMENTARY LIBRARY MIC AH

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COMPARISON OF FAMILY PACKAGES; BENEFITS TO TYPICAL AUSTRALIAN FAMILIES: LABOR 1989 APHIL STATEMENT VS. LIBER» l POLICY (OCTOBER, 1989) WITH REBATES ADJUSTED TO SAVE $835 MILLION Income Single person Single income family Sole parent family Two income family (b)

level No children One child Two children One child No children One child Two children

% of (a) Labor Liberal (a) Labor Liberal (a) Labor Liberal (a) Labor Liberal (a)(c) Labor Liberal (a) Labor Liberal (a) Labor Liberal (a) Labor Liberal

AWE (Spw) (Spw) ($pw) (Spw) ($pw) (Spw) (Spw) (Spw) ($pw) (Spw) (Spw) (Spw) (Spw) (Spw) (Spw) (Spw)

soyt 22.7% $6.45 $0.00 1.5% $9-70 $0.00 0.6% $13.45 $2.80 0.6% $14.95 $5.05 2.5% $14.50 $14.55 4.4% $2.20 $3.20 0.4% $5.95 $13.45

75% 30.5% $14.45 $0.00 2.3% $17.70 $0.00 0.9% $21.45 $2.80 1.0% $22.95 $5.05 3.1% $21.30 $14.55 7.7% $8.50 $3.20 0.6% $12.25 $13.45

100% 38.2% $15.80 $0.00 3.7% $19.05 $0.00 1.8% $22.80 $2.80 2.2% $24.30 $5.05 3.7% $22.60 $14.55 8.7% $14.80 $0.00 0.9% $18.55 $15.15 0.3% $20.05 $17.40

125% 42.1% $17.15 $0.00 4.7% $20.40 $0.00 2.6% $24.15 $2.80 3.2% $25.65 $5.05 3.9% $23.95 $14 55 9.8% $18.05 $0.00 1.3% $21.80 $14.55 0.9% $23.30 $22.65

150% 44.2% $19.85 $0.00 5.2% $23.10 $0.00 3.0% $26.85 $2.80 3.9% $28.35 $5.05 4.0% $26.65 $14.55 11.2% $20.15 $0.00 2.1% $23.90 $14.55 1.9% $25.40 $22.65

175% 45.0% $22.50 $0.00 3.3% $29.55 $2.80 4.4% $31.05 $5.05 13.1% $23.60 $0.00 2.6% $27.35 $14.55 2.7% $26.85 $22.65

200% 45.5% $25.20 $0.00 5.3% $28.45 $0.00 14.4% $28.60 $0.00 3.2% $32.35 $14.55 3.4% $33.85 $22.65

Total 46.2% 5.8% 3.7% 5.1% 4.2% 18.0% 4.8% 5.7%

COMPARISON OF FAMILY PACKAGES; BENEFITS TO TYPICAL AUSTRALIAN FAMILIES: LABOR 1989 APRIL STATEMENT VS. LIBERA l POLICY (OCTOBER. 1989) BUT WITH NO CHILD CARE TAX REBATE Income Single person Single income family Sole parent family Two Income family (b)

level No children One child Two children One child No children One child Two children

% of (a) Labor Liberal (a) Labor Liberal (a) Labor Liberal (a) Labor Liberal (a)(c) Labor Liberal (a) Labor Liberal (a) Labor Liberal (a) Labor Liberal

AWE <$pw) ($pw) ($pw) <$pw) ($pw) ($pw) ($pw) ($P«) ($pw) (®pw) (Spw) ($PW) ($P«) (Spw) (Spw) (Spw)

50% 22.7% $6.45 $0.00 1.5% $9.70 $0.00 0.6% $13.45 $4.80 0.6% $14.95 $8.65 2.5% $14.50 $4.80 4.4% $2.20 $3.20 0.4% $5.95 $11.70

75% 30.5% $14.45 $0.00 2.3% $17.70 $0.00 0.9% $21.45 $4.80 1.0% $22.95 $8.65 3.1% $21.30 $4.80 7.7% $6.50 $3.20 0.6% $12.25 $11.85

100% 38.2% $15.80 $0.00 3.7% $19.05 $0.00 1.8% $22.80 $4.80 2.2% $24.30 $8.65 3.7% $22.60 $4.80 8.7% $14.80 $0.00 0.9% $18.55 $5.45 0.3% $20.05 $9.25

125% 42.1% $17.15 $0.00 4.7% $20.40 $0.00 2.6% $24.15 $4.80 3.2% $25.65 $8.65 3.9% $23.95 $4.80 9.8% $18.05 $0.00 1.3% $21.80 $4.80 0.9% $23.30 $8.65

150% 44.2% $19.85 $0.00 5.2% $23.10 $0.00 3.0% $26.85 $4.80 3.9% $28.35 $8.65 4.0% $26.65 $4.80 11.2% $20.15 $0.00 2.1% $23.90 $4.80 1.9% $25.40 $8.65

175% 45.0% $22.50 $0.00 3.3% $29.55 $4.80 4.4% $31.05 $8.65 13.1% $23.60 $0.00 2.6% $27.35 $4.80 2.7% $28.85 $8.65

200% 45.5% $25.20 $0.00 5.3% $28.45 $0.00 14.4% $28.60 $0.00 3.2% $32.35 $4.80 3.4% $33.85 $8.65

Total 46.2% 5.8% 3.7% 5.1% 4.2% 18.0% 4.8% 5.7%

(a) Per cent ol total Australian families ol this type and with family income (c) Total lor sole parent families with one or more children, up to the level specified in the first column. Numbers do not add to column totals because families with income in excess of 200% AWE are not represented. (d) Families are assumed to have fam flies as follows:

figure used is $537 ($28,000 per annum). A blank cell indicates insignificant family numbers. Family Sole Single Two

type parent income income

(b) income in two income families assumed to be distributed as follows: One child

Under 5 1 1 1

Family income First Second 5 to 12 0 0 0

%AWE $pa income income 13 to 15 0 0 0

50% $14,000 $8,000 $6,000 Two children

75% $21,000 $15,000 $6,000 Under 5 1 1

100% $28.000 $20,000 $8,000 5 to 12 1 1

125% $35,000 $25,000 $10,000 13 to 15 0 0

150% $42,000 $30,000 $12,000

175% $49,000 $35,000 $14,000

200% $56.000 $40,000 $16,000