Before we get into any detailed analysis of the hard politics of the budget, I thought it might be useful to look at the sideshow argument being kicked around. Is a family earning $150,000 per annum “rich?”
Let’s look at a family with a full-time and a part-time working parent; one child younger than school age; one car; and a dog or a cat.
After income tax and levies, nett annual income is $115,000. This is “The Pot.”
The family I describe, in a mid-tier suburb, spends $20,000 to $30,000 annually on rent or a mortgage. Let’s say $25,000. The Pot becomes $90,000.
They mostly cook at home and eat well. They spend $350 per week on food and items such as detergents, toiletries etc – call this an even $20k, making The Pot $70,000.
The family car (a standard sedan), registered, insured and maintained, and fuelled to the tune of $80 per week, is another $10,000 – The Pot now $60k.
Power, gas and water bills totalling $700 per quarter pull The Pot down to $57,200.
Health insurance, nett of the rebate, at $200 per month reduces The Pot to $54,800.
A nominal $200 per month for out-of-pocket medical expenses, prescription medicines etc brings The Pot to $52,600.
The child is in day care three days per week. After rebates, this costs $50 per day. The Pot is now $44,800.
The pet costs $60 per month to feed and incurs $500 per annum in veterinary bills, reducing The Pot to $43,580.
Fixed and mobile telephony, plus internet access, adds $250 per month to outgoings and reduces The Pot to $40,580.
Clothing, at $300 per month in total, brings The Pot to $36,980.
$10 per day for lunches on workdays adds $80 per week and over a 48-week working year reduces The Pot to $33,140.
A football membership for Dad and a gym membership for Mum cost $1500 per annum and take The Pot to $31,640.
The family eats out fortnightly on a budget of $150. $3900 later, the ever-shrinking Pot becomes $27,740.
Mum and Dad each have $100 per week as “in-pocket” money to cover incidentals (parking, coffees, a bottle of wine, the odd tram ticket), reducing The Pot to $17,340.
In a year, the household spends $5000 on such things as replacing an old washing machine, buying new sheets, or purchasing kitchenware. The Pot is now $12,340.
$2000 is allocated to one two-week holiday each year – The Pot now $10,340.
And if we assume that $100 each week goes to “unforeseens” – a car wash or a domestic maintenance call or a pizza if people got home too late to cook – the grand total left in The Pot is $5,140.
Not even $100 per week left, after reasonable routine living costs are covered.
It’s true that this scenario could yield some savings on a tighter ship, but it’s by no means unrealistic. It is also true many, many people subsist on less than $150,000.
But is a household remunerated at that level “rich?” I haven’t even looked at eventual educational expenses; considered additional children; or allocated for minor luxuries such as a Pay TV subscription. Nor, indeed, for a raft of other things that apply to hundreds of thousands of families in Australia, irrespective of their income.
Wake up, Swan and Gillard. $150,000 per annum does not make a family “rich.” Not in 2011, when inflation overall might be static but the actual basic costs of living are rocketing. Your claims otherwise illustrate how divorced from reality you really are.