Middle- to high-income couples with children in inner-city electorates fare the best, economic modelling finds
Regional residents and older people would get the least benefits from the Morrison government’s tax, according to new analysis by Natsem. Photograph: Dean Lewins/AAP
People in regional Australia and older people would get the least benefits from the Coalition’s tax cuts to 2024-25 while middle- to high-income couples with children in inner-city electorates fare the best.
New analysis by the National Centre for Social and Economic Modelling (Natsem), shows federal regional electorates make up the bottom five seats when it comes to returns from the tax package.
The Natsem analysis comes as Bill Shorten prepares his budget-in-reply speech on Thursday night with an election expected to be called in the coming days.
Shorten is expected to focus on fairness, particularly for low-income workers, highlighting that anyone earning less than $40,000 will pay more tax under the Liberals than under Labor’s original proposal announced last year.
According to the parliamentary library, 2.9 million Australian taxpayers earn less than $40,000, 57% of whom are women.
“So the Liberals are hitting nearly three million working class Australians – mostly women – with higher taxes,” Shorten will say.
Shorten is also expected to unveil a major health policy, with a view to fighting the election campaign on Medicare.
While tax relief has been the main Coalition offering in the budget week, the Natsem analysis will increase the pressure on the rural Coalition MPs in the wake of the NSW election, which saw the loss of two National party seats.
According to the analysis, David Gillespie’s seat of Lyne (Nat), Keith Pitt’s seat of Hinkler (LNP), Kevin Hogan’s seat of Page (Nat), Ann Sudmalis’s seat of Gilmore (Lib) and Llew O’Brien’s seat of Wide Bay (LNP) would receive the fewest gains if the tax changes pass.
Voters in those seats would see annual benefits ranging from $118 to $127 of per capita annual disposable income by 2022-23 if the tax changes pass.
At the same time, inner-city seats including Anthony Albanese’s seat of Grayndler (ALP), Trent Zimmerman’s seat of North Sydney (Lib), the new seat of Macnamara, Kerryn Phelps’s seat of Wentworth (Ind) and Tanya Plibersek’s seat of Sydney (ALP) would receive the greatest benefits. Annual gains range from $262 to $291 in disposable income in the same period.
By 2024-25, the analysis shows electorates with the least gains in annual disposable income include the new South Australian electorate of Spence, Hinkler, Lyne, Lyons (ALP) and Page, with voters receiving benefits ranging from $284 to $305 annually.
Again, voters in city electorates including Grayndler, Sydney, Tony Abbott’s seat of Warringah (Lib), North Sydney and Wentworth receive the greatest benefits, ranging from $935 to $1,140.
The modelling also shows people aged 65 and older – a group which makes up 22% of the 2016 voting population – benefit least of all of the age groups. On average, men benefit more than women from the tax changes due to the income gap.
Middle- to high-income couples with children receive the biggest benefit from the tax package.
Under the Coalition’s plan, voters on incomes between $50,000 and $90,000 would receive a rebate of $1,080 if the government wins the next election. The second round of the Coalition’s tax changes would lower the 32.5% tax rate to 30% from July 2024. The tax package cannot pass the parliament until after the election.
A number of the seats identified as receiving the fewest benefits from the tax package are marginal.
On the NSW south coast, Sudmalis is retiring in Gilmore, which she holds with a notional margin of 0.73%. She leaves the Coalition in a four-way contest after the preselected Liberal candidate, Grant Schultz, was dumped in favour of the former Labor national president Warren Mundine.
Mundine will stand against the Liberal-turned independent Schultz, the former NSW water minister Katrina Hodgkinson and Labor’s Fiona Phillips.
On the NSW north coast, Hogan holds the seat of Page with a notional margin of 2.3% in the same region that saw Labor win the state seat of Lismore on 23 March.
The analysis shows regions in the eastern states receiving fewer benefits than the Western Australian regions.
The income tax measures in Tuesday’s budget are worth $19.5bn over the forward estimates, or a total of $158bn over 10 years.
Census data released in June 2017 shows capital cities have younger populations, with 20 to 44 year olds making up 38% of combined capital city populations compared with 30% in the rest of Australia.
The Natsem director, Prof Rob Tanton, said the relatively better result in WA regions may reflect mining income. “Certainly those electorates where there is higher incomes finds the benefits.”
First published at The Guardian Australia. Wednesday 3 April 2019