Federal budget 2016 poor set to be worse off anu modelling shows

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AUSTRALIA’S poorest families will be worse off than ever before once all the new Budget measures come into force.

Modelling by the Australian National Universitys research school of Social Sciences reveals how changes to family payments, childcare, taxation, tobacco excise and superannuation will hit poorer people the hardest.

The report, Distributional Modelling of Federal Budget 2016-17, also shows that high income groups are less impacted overall.

Report author Dr Ben Phillips found around 40 per cent of families on low incomes will be the most heavily impacted when everything in the Budget is taken into account.

By 2018-19, the report shows poorer families will be on average $1407 worse off a year.

Single parent families in the bottom 20 per cent of the income distribution are expected to be, on average, worse off by $1209 in 2018-19, the report found.

Families would be hardest hit by the removal of tax benefit part A and part B supplements which amount to around $480 a year.

The Budget which the Government has consistently declared fair actually gives a boost to households on higher incomes.

The modelling shows these households will be on average more than $200 better off a year largely due to personal income taxation cuts. Those on lower incomes will also be hardest hit by increases in tobacco excise.

A further four annual 12.5 per cent increases from September next year will more significantly impact low-income families, the modelling shows.

While noting the superannuation changes are positive for lower income households, the report warns it is not enough to address a regressive impact.

The top 20 per cent wears a $645 burden while the bottom 20 per cent gains $34 each year on average from the selected changes that were modelled for 2018-19, the report concludes.

Dr Phillips told news.com.au the report showed it was lower income earners who benefited the least.

However he said he thought the changes in superannuation would have made a bigger impact on the Budget overall.

We found this Budget like the previous ones, continue to favour higher income earners rather than those on lower incomes, he said.

Dr Phillips also said lower income earners would be harder hit because the increase was higher than indexation.

He said the report showed higher income earners would spend around $144 more a year, compared to $135 for lower income earners.

However, this would burn up a bigger chunk of their earnings, therefore representing a much bigger hit for those not so well off.

A low income is classified as a single person earning around $27,000 or $57,000 for a couple with two children.

Treasurer Scott Morrison has been contacted for comment regarding the report.

The report comes as polling reveals many voters felt they would be worse off as a result of the Budget.

A Newspoll found 39 per cent of voters believed they would be worse off while just 18 per cent believed they will be better off, and 43 per cent uncommitted.

Only 37 per cent of those surveyed in the Fairfax-Ipsos poll believed the 2016 Budget was fair.

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