Australia’s budget policies to disproportionately hit women on low incomes, warns report

The analysis, undertaken by the National Foundation of Australian Women, claimed that a mix of measures would be “particularly harsh for women”.

A new study on the combined impact of the Australian government’s Budget policies suggests that women on below-average incomes will be severely and disproportionately hit.

The analysis, undertaken by the National Foundation of Australian Women, claimed that a mix of measures, including a proposed increase in the Medicare medical insurance levy, freezing family tax benefit rates and earlier repayment requirements for student loans, would be “particularly harsh for women”.

Changes to the Medicare levy will affect females on incomes of more than A$21,644 (US$16,340), while women who are eligible to receive family tax benefit part A will see rates frozen for two years.

As a result, the report entitled ‘Gender Lens on the Budget’ said that women paying childcare fees would continue to face high effective marginal tax rates, while university graduates would start repaying loans on reaching income levels of A$42,000 (US$31,693).

Effective marginal tax rates are the proportion of an additional dollar of earnings that is lost to both income tax and the reduction in means-tested government benefit payments.

“These changes hit those earning well below the average wage and are particularly harsh for women,” the report continued. “Combined, these changes could lead to effective marginal tax rates of possibly 100% or higher for some women, particularly as family tax benefit part A begins to decrease at A$51,903 (US$39,166).”

The situation means that graduates caught between the two policies are likely to experience “considerable financial stress”. If they earn $51,000 (US$38,495), they would, in fact, have less disposable income than someone with an income of A$32,000 (US$24,154).

The issue is particularly problematic for women as they tend to earn less than men and so changes to government benefits and tax increases affect them disproportionately. Statistics from the Australian Taxation Office indicate that the median income for women in fiscal year 2014/15 was A$47,125 (US$35,575) compared to A$61,711 (US$46,586) for men.

But in her foreword to the report, feminist, social activist and retired public servant Marie Coleman, who heads the Foundation’s social policy committee, said she was “at a loss to understand” how such measures could have been introduced as the Treasury has a micro-simulation tool to assess the impact of its policies on different demographics.