The tax cuts were fast-tracked through Parliament and approved by the Senate on Friday. Payments should start flowing to workers within weeks.
Prime Minister Scott Morrison said the budget’s personal income tax cuts, on top of business tax cuts, would deliver a major boost to the Australian economy.
“This is real change. This is a real budget that is going to have a real impact on Australians as we come out of this COVID-19 recession,” he said.
“This is the plan that Australians have needed. And this is the plan that has been legislated, made law in our Parliament, in three days. In just three days.”
The Curtin research found 73.5 per cent of people will gain from the budget measures this financial year.
Almost 31 per cent will be less than $25 a week better offer, 32.1 per cent will be between $25 and $75 a week in front while 10.7 per cent of people will gain more than $75 a week.
While high income earners benefit from the tax cuts, more than four in five or 1.6 million unemployed people are also at least $75 a week better off because of the government’s coronavirus supplement. The supplement was worth $550 a fortnight until late September and is now $250 a fortnight.
An average employed person will be $1301 a year better off this year compared 2019-20. They will be another $702 in front in 2021-22.
An average unemployed person, thanks to the coronavirus supplement, is almost $5300 better off this year. But with the supplement ending, the same unemployed person goes backwards by $3058 in 2021-22 compared to this financial year.
Single parents, who are overwhelmingly women, will get a $2797 average increase this year but see that trimmed by $1028 the following year. A single unemployed person, after gaining $2177 this year, will lose $206 of that in 2021-22.
Curtin director Alan Duncan said the modelling showed the benefit that had flowed to unemployed people because of the coronavirus supplement, and also the risks of not increasing the JobSeeker base rate once the supplement ends.
“This cliff reinforces the imperative to transfer the temporary COVID-19 supplement into an ongoing increase in the base rate of JobSeeker,” he said.
“We recommend at least $100 per week added to the base JobSeeker to lift recipients to around the poverty line.”
The government is reviewing the current JobSeeker base rate of $565.70 a fortnight with an increase expected to be confirmed by year’s end.
The same modelling showed the benefit of the government’s tax cuts are more likely flow to men who dominate high paying jobs across the country.
This year, 40 per cent or $5.1 billion worth of the tax cuts will go to women. But in 2021-22, almost 68 per cent or $8.6 billion of the benefit will go to men.
The top 10 per cent of income earners, those whose wage is more than $147,500 a year, will get a $2430 annual boost this financial year and next. Mid-paid workers, those with an income between $64,000 and $73,500, will enjoy a $1371 boost this year but this will fall to $320 in 2021-22.
In its financial stability review released on Friday, the Reserve Bank said the tax cuts and other arms of financial support would help households.
“Fiscal measures to support low and middle income households, including income tax cuts, will help to support households’ financial position and spending going forward,” it found.
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Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.