Tough Times?

There are flaws in Australia’s “tough times” narrative and concerned charities should understand that this discourse is not about our economy but about politics, writes David Crosbie, CEO of the Community Council for Australia.

In the lead up to the federal budget some charities are increasingly concerned about potential cuts to their government funded programs and services. Some have grounds for their fears, others are responding to a growing public discourse about “tough times” in Australia.

It is not unusual at this stage of the budget cycle for governments to lower our expectations, highlight how difficult our economic circumstances are, the size of our debt, and the projected blow-outs in expenditure. It is grist to the mill of a narrative about tough times needing tough measures.

Tough times, it seems, justify cutting back our support for the poor, the disadvantaged, the old and the ill. Tough times mean we should slash our foreign aid to the lowest level ever, not make the investments we need in education, health, housing, arts, legal services and infrastructure until we struggle our way out of debt.

The tough times narrative also provides the rationale for making short-term economic gain the main measuring stick for government investment.

Few question the fundamental assumption that Australians are doing it tough. To do so is to be “out of touch”, to display a level of financial illiteracy (you cannot spend more than you have) or to be an irresponsible hedonist seeking to spend now and put the debt on generations to come.

At the risk of being labelled all of the above, I think it is important to highlight the fundamental flaws in the tough times argument.

The first flaw is that most of us are not going through tough times at all, we just think we are.

Australia has had over two decades of continuous growth. Our wealth, depending on how you count it, puts us in the top three in the OECD. Our household disposable income is in the top 10.  We are one of the very richest nations on earth, well ahead of most OECD countries.

Debt is an issue, but not quite the problem it is portrayed to be. Germany, Finland, Israel all have higher levels of government debt to GDP. The UK, USA, Belgium, Canada, France and Spain all have levels of debt to GDP close to double that of Australia.

Even then, one of the often overlooked issues with debt is not just the amount, but also the purpose – investment in infrastructure or early childhood education is better debt than borrowing to meet growing public sector salaries.

The facts suggest we are wealthy, so why do so many Australians feel poor?

According to the MLC funded IPSOS conducted research published in the 2016 report Australia Today, 69 percent of Australians feel the cost of living means they’re struggling to make ends meet, while others don’t feel they’re “rich enough”.

Close to 50 per cent of us believe you need over $150,000 in income to live comfortably in Australia.

Most Australians think being a millionaire no longer means you are rich.

When Australians talk about achieving a comfortable lifestyle, they talk about eating out in restaurants; annual international holidays; paying private school fees; having a nice car; and living in a nice house are all on most people’s list of requirements.

One of the interesting findings about perceptions of wealth is that the more we have, the more we want. Thirty-three per cent of people earning $40,000 to $69,000 per year aspire to greater wealth, 45 per cent of people earning $70,000 to $99,000, 55 per cent earning $100,000 to $149,000, and 71 per cent of people earning $150,000 admit to wanting more.

Australia is a wealthy nation. Most of us are rich, comparatively speaking. Most of us lead very comfortable lives.

The uncomfortable truth here is that although there are some generally poor and needy people in Australia, most of us consider being able to buy what we want when we want to as the measure of our economic circumstances. If $1 million doesn’t make us feel rich, will $2 million?

The second flaw in the tough times argument is that if politicians were serious about making savings, there are many areas of expenditure that could come under the microscope for cuts well before we target the most vulnerable.

I still find it incomprehensible that the government provide the 3,000 or so anonymous pharmacy owners that belong to the Pharmacy Guild with over $4 billion a year on top of their Medicare payments, while preventing any competition and locking in location rules, most of which work against increasing accessibility to drugs. Freeing up the retail supply of pharmaceuticals would improve health and reduce costs.

Every year, taxpayers provide landlords with more than $11 billion for negatively geared properties through tax provisions.    

We provide businesses with over $5 billion in fuel tax credits, $2 billion of which goes to the mining industry.

We provide billions of dollars in tax exemptions for high income earners through generous superannuation measures.

I could go on listing examples ripe for review like the tax avoidance involved in family trusts, licensed clubs (income exempt), the cash economy, etc. I am sure many readers might have their own lists.

I could also provide a list of measures that Australia should be considering, especially if we think our economic circumstances really do require tough measures. For instance, Australia is almost unique amongst comparable OECD countries in not having any form of death duty on the wealthy (thanks to Joh Bjelke Petersen). Even if the cut-in point was $5 million in wealth and the rate was relatively low, such a duty would not only raise hundreds of millions of dollars in revenue, but also significantly increase philanthropy (as it does in the US, Canada and the UK).

The tough times line has become a political argument rather than a description of our economic circumstances, and that is not surprising because federal budgets are more about politics than our economy. Federal budgets tell us who is politically powerful.

The Pharmacy Guild is politically powerful, the poor in Africa are not. We cut foreign aid, but not protections and industry assistance for pharmacy owners. The mining industry is politically powerful, unemployed Indigenous young people are not. We cut support programs for Indigenous youth as their suicide and incarceration rates soar, but not the fuel subsidies for the mining industry.

Charities could be politically powerful, but most are not.

As the tough times rhetoric increases, and the government positions itself as a warrior for economic responsibility, concerned charities should understand that this discourse is not about our economy, but about politics.  

This is why our advocacy for the vulnerable, our push to achieve the “Australia We Want”, is never more important than during the federal budget process.

About the author: David Crosbie is CEO of the Community Council for Australia. He has spent more than 20 years as CEO of significant charities including five years in his current role, four years as CEO of the Mental Health Council of Australia, seven years as CEO of the Alcohol and other Drugs Council of Australia, and seven years as CEO of Odyssey House Victoria.

David Crosbie writes exclusively for Pro Bono News on a fortnightly basis, covering issues of importance to the broader not-for-profit sector.