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Saturday, May 15, 2021

Economic recovery lies in jobs, not tax cuts: TAI

Canberra-based progressive thinktank, The Australia Institute (TAI) has called for the Federal Government’s pathway to economic recovery to go through healthcare and education rather than personal income tax cuts.

TAI research shows implementing tax cuts previously slated for 2022/23 now would cost the budget $13 billion, which if spent on service industries like university, healthcare, aged care and the creative arts instead could create 162,000 jobs across Australia. That’s an estimated seven to 12 times more jobs.

Key findings from the TAI research show:

  • 50% of the benefits would go to the highest 10% income earners;
  • 79%-91% of the benefits to the top 20% of earners;
  • 3%-4% of the benefit would go to the lower half of all income earners.

TAI senior economist Matt Grudnoff said spending public money wisely was both an “investment” in Australia’s long-term prosperity and an extremely efficient way to create jobs.

“We know that at least some of the tax cuts will go into people’s savings accounts or used to buy goods from overseas, providing very poor stimulus to the Australian economy in comparison to investment in services.”

Federal Treasurer Josh Frydenberg said the Federal Government would deliver a “jobs focused budget” after spending $32 billion in income support during coronavirus.

“Our plan will create opportunity, our plan will drive investment, our plan will grow the economy and guarantee the essential services Australians need,” Mr Frydenberg said.

TAI has put the early tax cuts through a gender analysis and found despite “recession job losses” affecting women more than men, $2.19–$2.28 of the tax cut would go to men for every $1 that goes to women.

“This is the time when the government needs prompt, well targeted stimulus to reduce the economic damage,” the TAI report reads.

“This will lead to more gender inequality.

“Previous TAI research has shown that bringing forward the tax cuts would be poor stimulus because it mostly benefits high income earners, who are more likely to save it than lower income earners.

“Despite women facing a bigger impact from the recession, the Government’s response has seemingly ignored them.

“The Government removed JobKeeper from early childhood workers, an industry dominated by women, and at the same time they have chosen to stimulate male-dominated industries like construction through the HomeBuilder scheme.

“Bringing forward tax cuts that mostly go to men is just another policy that will advantage men, while women are again left behind.”

Treasurer Frydenberg said “women and young people” were among the heaviest hit by the pandemic but “importantly” more than half had now gone back to work.

He said “54% of jobs that were lost were lost by women and 60% of jobs that have come back are jobs that are going to women”.

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