IN YOUR INTEREST

Choking over our $250,000 ‘battlers’, Paul Clitheroe says we must pay for the services we demand

Paul Clitheroe

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WHAT ON EARTH IS going on! As I write this I am in Cambodia, where the national poverty level is earning less than 63¢ a day. Here you can easily buy a coffee for a dollar with free WiFi access, so I keep in touch with news from Australia. Let’s hope Cambodians or citizens of similar emerging economies don’t. They’ll think we come from Mars.

In Cambodia, after centuries of war and murder, peace and relative prosperity have broken out. Things are getting a lot better. Capital is pouring in, infrastructure popping up, tourists rushing to see the wonders of Angkor. Incomes are on the rise. Only some 20% now earn less than 63¢ a day.

The web also tells me that, on average, a Cambodian earns 95% less than one of us, spends 97% less on health and – presumably because of both factors – dies 19 years earlier. They are not overly stressed about electricity bills as they use 99% less electricity per person than we do. And they are a positive, hard-working and entrepreneurial people who see a really good future.

Back in Australia – a little world that less fortunate countries might see as a nation of overindulged whingers – I read one of our politicians, and a Labor one at that, feels folk earning around $250,000 are doing it pretty tough. This, of course, is in response to the debate about higher taxes on the super funds of the “rich”.

It seems voters in his electorate earn pretty good money so, quite sensibly in terms of votes for the next election, he is defending his “working poor”. Good grief. I nearly fell about laughing a couple of years ago when it was argued families earning $150,000 were the working poor, but $250,000 is a new benchmark.

Just to make sure I had not lost touch with reality, I went to a world wealth website and punched in a few numbers. This was not very helpful as once you hit $150,000 a year, it puts you in the top 0.1% of income levels and putting in $250,000 a year makes no difference. Sensibly, the calculator reckons if you earn more than 6.6 billion people, whether you are in the top 0.1% or the top 0.01% makes no difference, in global terms. At either level of income you are ridiculously privileged.

Most of these sites draw on World Bank data, which indicates 1 billion people earn less than $2 a day, around $700 a year. Income goes on survival. Having no car, phone, computer, running water or light will do wonders for any household budget.

I showed a well-educated, English-speaking Cambodian the headline from home and he thought it some sort of comedy sitcom. Thank heavens – better than thinking we’ve lost the plot completely. Look, I do get it. Like Cambodians we want to live the best lives we can, have the best health, education, roads and transport with a high-level government safety net in terms of retirement, unemployment and so on. This is perfectly reasonable.

But the problem is if we don’t want to run Australia into the ground, we have to pay for what we want, or agree to want less. An example was the removal of the tax rebate on health insurance for high-income earners and the recent reduction of the baby bonus. Both caused a minor storm.

Taxing super for high-income earners is actually not a silly idea. I’ll be caught by that, so it is bad for me. But the idea that I can whack up to $25,000 a year into super at a tax rate of 15%; put in up to $150,000 a year of my own money and only pay 15% tax on my super fund investment earnings; convert it to a pension fund at retirement and pay no tax on my earnings; and then take it out tax free, while expecting tax-free status on my family home, no death taxes and high-quality services such as health-care, roads and so on, seems rather naive.

I appreciate this will not exactly fill readers with joy but a very sensible solution to the issue of our demands for a high level of services and governments to stop mucking around with super is to do what most first-world countries have done and move the GST up to around 17%. Politicians don’t want to touch that hot potato but low-income earners and pensioners can be compensated for a higher GST, and taxing us when we spend makes a lot of sense.

Thankfully I am not a politician. It is very difficult to offer sensible solutions and win votes at the same time. But if we want to be a very privileged community, we must pay for it.

And at least let’s reject the notion that a family earning $250,000 is doing it tough. That is ridiculous. Wake up Australia!

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