Does a family earning $115,000 deserve help? It's a slippery issue.

WITH three children, a mortgage, two cars and a small business, Liz and Phil Murray may be the typical Australian working family.

Mr Murray, 39, is a full-time IT consultant, while Mrs Murray, 37, runs a speech pathology business, which employs three other people. Officially, she is part-time, but jokes she is on ''48 hours a day''.

To cut childcare costs for Jessica, 3, and Catherine, six months, Mrs Murray works on Saturdays, and her mother babysits one day a week. But even so, the bill for childcare, and after-school care for Thomas, 5, is about $800 a fortnight.


''We work every day, come home, and do the best we can,'' Mrs Murray says. ''There are families that do it a lot tougher, but we pretty well battle day-to-day.''

The Murrays may be the sort of people Julia Gillard was thinking of when, in March, she spoke of Australians who work hard and set their ''alarm clocks early''.

But with a family income of about $115,000 a year - which will rise to $150,000 a year when Liz returns to full-time work - the Murrays are also in the government's firing line. 

Not only does their income place them squarely in the middle class, they also rely on various forms of ''middle-class welfare'' to make ends meet. They receive the health insurance rebate, a $1600 childcare rebate every three months, and - depending on how much Mrs Murray earns - family tax benefit A. They also receive $105 a fortnight for Thomas, who has Asperger's syndrome, and a grant for speech and behaviour therapy.

Without the help, Mrs Murray says she would struggle to keep working, jeopardising her business. Even now, Mr Murray says, they feel as if they are caught in a vicious circle. ''Liz is basically working so the kids can go to childcare,'' he says.

Having foreshadowed a tough budget for May 10, Labor has been flirting with a crackdown on middle-class welfare as it looks to meet its promise of returning the budget to surplus by 2012-13.

There are suggestions of plans to means-test the childcare tax rebate for families earning more than $150,000, along with another attempt to means-test the private health insurance rebate for families earning more than $160,000.

If successful, it would be the latest ALP move to means-test a range of Howard-era payments. These moves are backed by such groups as the Australian Council of Social Services, which has called for ''bold action'' to cut payments to high-income earners, and economists such as Saul Eslake from the Grattan Institute. ''In my view, there's little good done by giving people who are perfectly capable of looking after themselves and their dependents money raised by higher taxes on other people,'' Mr Eslake says.

But middle-class welfare is a slippery issue - derided in some quarters, but defended by many who benefit from it.

An outcry from businesses, unions, childcare centres and parents followed reports of a new means test for the childcare rebate. Despite its calls for Labor to rein in spending, the opposition criticised the measure.

In a country where almost everyone considers themselves middle class, it can be hard to define middle-class welfare, and at what point it should cut out. In its attempts to means-test various benefits, Labor has returned to a household income of $150,000 a year as the threshhold.

But Mr Eslake says this should be lowered, perhaps to about $125,000, adding that all households should still have access to Medicare and other support if they have high medical bills.

But some believe $150,000 is too low, especially with the rising cost of living and housing affordability problems. With average full-time earnings about $68,900 a year, a family with two parents on average salaries would come very close to this threshhold.

''It seems that families who have struggled and worked hard to get themselves into good positions are the ones who are being targeted,'' says Gwynn Bridge, president of the Australian Child Care Centre Alliance.

The Howard government used middle-class welfare to achieve various ends, such as greater uptake of private health insurance. The family tax benefits were billed not as income support but a ''recognition of the costs associated with being a parent''.

For critics such as Mr Eslake, this philosophy is the problem. ''People should get assistance from the government not because of what they are - people with children or people over the age of 65 or people who choose to take out private health insurance - but because of their income,'' he says.

Some, such as Gerry Redmond of the University of New South Wales' social policy research centre, warn that cuts to family assistance could have unintended consequences, such as deterring people from earning more. In Liz Murray's case, withdrawing the childcare rebate could force her from the workforce, destroying a small business in the process. As she notes, it wouldn't be such an issue for those on far more than $150,000 a year. ''It is the families in the middle that get impacted the most by these sorts of decisions.''

You really do have "everything envy", don`t you.

I posted these comments elsewhere - and they are equally relevant here...

Equitist wrote on May 1^st, 2011 at 11:18am:

Equitist wrote on May 1^st, 2011 at 11:24am:



Damn these $150k millionaire families eh??

Some of you guys really do have NO idea.

<<...latest finding has found that most of the daughters of Maquarie Links have fallen pregnant to the rogues of Maquarie Fields.>>
...........................................................................

LOL....did you see that andrei, I bet their parents would never have thought it. You too, might be the granddaddy of a black baby one day. I love karma!

The Murrays can hardly be considered as average, because the majority of the Australian families are not in receipt of this income, and they ar not workers but Business professionals.
They claim that they work hard, but so do others, or have worked hard before they retired, like retiree one in the following case and are then forced almost to the verge of poverty in retirement, like retiree 1.


Here are my calculations how the current retirees are treated
Take retiree: 1)
Worked for 45 years and paid taxes, but did not accumulate enough assets to be completely independent of the age-pension. For every dollar of extra income for him and his wife above $6,500, the couple loses $0.50 of age pension, and if their income exceeds $45,000 per annum, the couple will pay tax of $0.315 in the dollar including medicare levy, leaving them with an income of $0.185 from every dollar extra income. For the defined benefit income a 10% tax-offset applies if paid from an Australian super fund, but not if the income comes from an overseas fund.

Retiree 2)
Has accumulated assets of $1.5million and the assets are in a so-called taxed Self Managed Super Fund. To be very conservative, the assets are in a term deposit earning 7.0% income of $122,500 per annum and even if the retiree is single, he/she will not pay a cent of tax.
Now if the assets are in fully franked shares, like banks and return $100,000 worth of franked dividends, he/she will again pay no tax on the dividend, and the government will send him/her a cheque of $30,000 for the franking credits.

Retiree 3)
Is an ex-politician or highly paid public servant, in receipt of a defined benefit pension of $100,000, on which he/she will have to pay tax, but he/she gets a 10% tax offset, which equals $10,000 after reaching retirement age, but before retiring, the public servant can establish a SMSF and contribute into it extra with tax concessions if the $25,000 total for under fifty and $50,000, if over fifty is not exceeded and in addition he/she can contribute $150,000 from after tax income, and the earnings from the SMSF will only attract 15% tax, and when the person reaches the age of 60 even the income will be completely tax-free for  the SMSF.

What Ken Henry should have recommended is, abolish all tax concessions for super, abolish the means test for the age pension so that even millionaires get the full pension, but then the retirees should pay the same tax as do the workers.

I have made submissions to the Ken Henry Tax review and the Jeremy Cooper Superannuation review.

I would also like to refer you to my website Hawilspoint “The Great Australian Super Fraud”

Yours truly
Hawil

longweekend58 wrote on May 1^st, 2011 at 2:18pm:




Er, actually, I have a very good idea.

And WHY THE smack won't people understand that,

JUST because someone
is unemployed, it DOES NOT mean they never
have worked, OR never will

?

As long as they are TRYING to find work, getting up-skilled, doing WfD, or
undertaking voluntary work, then they ARE 'having a go'
and DO deserve a better deal than they are currently getting.

And for politicians to use them as a political football to get
votes or to divert attention away from the REAL rorters
is contemptible in the extreme.

freediver wrote on May 1^st, 2011 at 3:51pm:





That should read 'The right-wing answer...'

They DO deserve it, they DO need it, but they AREN'T getting it.

Because of people with attitudes like that.