Boosting Minimum Wages for Aussies

A decision by the Australian Fair Pay Commission confirms Australia’s status as the nation with the second highest minimum wage in the developed world.

The decision means low paid workers receive an extra $10.26 a week taking the minimum wage from October 1 2007 to $522.12 a week.

With the cost of living being what it is, even with the increase to minumum wages, it still appears pretty rough. As frugal as our household is, I couldn't imagine feeding and housing a family on minimum wage. Still, let's not forget the additional social support available to Aussie families.

The recent report released by the Australian Bureau of Statistics confirms that after families receive government benefits, principally family tax benefit, only 40 per cent of households pay any net tax — that is, they get more back in family tax benefits than they actually pay in tax.

In my opinion, we really do live in the lucky country. Without a doubt, we have one of the most generous social support systems in the world. Unfortunately, generosity is open to abuse and can lead to a sense of entitlement or a cycle of dependency.

What do you think? Should we have minimum wage laws? Is it better to leave the labour market sort itself? Does the welfare system need to toughen up on some recipients? Who and how?

Low income households gain most from government benefits and taxes

I'm a bit of a statistics geek and today's release from the ABS made for some interesting reading. For fact collectors like myself, here's the latest from the Bureau:

Australia's low income households received more cash benefits from the government than higher income households, while indirect benefits (provided in kind) were more evenly distributed, according to an Australian Bureau of Statistics (ABS) study released today.

During 2003-04, more than a quarter (27%) of government benefits went to people in the 20% of households in the low income group. These people received over a third (36%) of government benefits in cash, and 22% of benefits in kind through government services.

In comparison, the 20% of households in the highest income group only received 4% of cash benefits and 16% of the benefits in kind.

People in the low income group paid 5% of all personal income taxes, and 17% of taxes on production such as the GST. People in the high income group paid 54% of personal income taxes and 26% of taxes on production.

The study also found that, on average:

• Households comprising couples under 35 without children paid $534 per week in taxes and received $109 per week in benefits.
• Couple households with dependent children paid $519 per week in taxes, and received $501 per week in benefits.
• Couples with one person aged 65 or over paid $148 per week in taxes and received $586 per week in benefits.
• Households in the ACT received the lowest benefits ($318 per week) and paid the highest taxes ($478).
• Households in Tasmania received the highest benefits ($398) and paid the lowest taxes ($278).

Source: Australian Bureau of Stataistics. Media Release 12/06/07

Child Care Budget Changes #1

According to the Family Assistance Office, a number of the 2007-08 budget initiatives will impact Centrelink and FAO customers.

Two significant changes have been announced in regard to child care. They are both good news for parents.

1. The rate of Child Care Benefit (CCB) will be increased by 10 per cent, on top of the normal CPI increase. As a result of these changes on 1 July 2007 families will receive a total CCB increase of more than 13%. What does that mean in your world? It means up to an extra $20.50 per child per week, for one child in full time care (5 days per week) for low income families.

Who will benefit?

All families who are currently receiving CCB and those who are eligible for CCB in the future will benefit from the additional financial support provided through the CCB changes.

How do I get it?

You don't need to do anything to receive the CCB increase. The Family Assistance Offcie will automatically adjust your entitlement. If you have chosen to receive your payment as a lump sum, it will be paid after you have complete your tax return at the end of the financial year.

More Personal Tax Cuts

According to Budget 2007-08, all taxpayers will benefit from from a further $31.5 billion in tax cuts over the next four years.

Highlights include:

1. From 1 July 2007, the low income tax offset will increase to $750 per year and the 30 per cent threshold will rise from $25,000 to $30,000.




2. From 1 July 2008, the 40 per cent threshold will increase to $80,000 and the 45 per cent threshold will increase to $180,000.

That's great news for next year but what about this tax season? Well, thanks to the May 2006 budget, it's still good news for low income earners.

More taxpayers are likely to qualify for the Low Income Tax Offset (LITO) this year as a result of the offset increasing from $235 to $600 and not starting to phase out until $25,000. So what does that mean for you? It means a reduced offset may be possible up to a taxable income of $40,000.