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Trickle-down economics – “when we let the rich piss on you and tell you it’s raining”

Neither of the two major parties has what it takes to tackle inequality; instead they each support taxation policies that will, to a more or less degree, exacerbate inequality.

That’s according to Dr Tim Woodruff, president of the Doctors Reform Society, who puts a health equity lens over the recent federal budget and associated taxation policies and promises.

Beneath his article are links to other budget analyses – and a must-watch “explainer” from The Juice Media about trickle-down economics, which includes the memorable line used in the headline above (thanks to Dr John Boffa for sharing this clip, as per his tweet below).


Dr Tim Woodruff writes:

As a financially comfortable part-time medical specialist, I will be in the group receiving the highest tax cut immediately, whilst my daughters working full time at much lower income will receive about one third of that.

It’s of even more concern, that in seven years’ time, the major beneficiaries of the Government plan will be those on incomes like those of politicians, receiving eight times more in reduced tax compared to low income earners.

Whether it’s Labor or the Coalition, everyone wins eventually, or do they?

The Government promises that by 2025 the rich will pay $7,225 less tax yearly, middle earners will pay $675 less, low income earners will be a paltry $200 better off, and for those on $20,000 or less, nothing will change.

Even in the short term, the Government favours middle-income earners over low-income earners and gives nothing to those on very low incomes.

Labor does better. It makes no long-term promises, but in the short-term it gives middle earners $1,067, nothing to the rich, taxes the very rich more, but curiously it gives only $350 to low income earners and nothing to those on very low incomes.

How does this relate to health?

Poor people are sicker and die younger than middle income earners, who in turn are sicker and die younger than rich people.

In last years’ Boyer Lectures Sir Michael Marmot, the former president of the British Medical Association and international leader on the social determinants of health, explained this social gradient of health.

Essentially it is the degree of control over one’s life which is crucial to health and wellbeing. In a supportive community/ family setting this social gradient of health is less apparent.

Although poverty is not destiny, income is generally a huge component of this sense of control. Nor is it about absolute poverty, but rather it relates to relative poverty, the difference in incomes across society. This has been starkly documented by British epidemiologists Wilkinson and Pickett in their book The Spirit Level.

Given its elitist philosophy, it is hardly surprising that a Coalition Government may pay little heed to such evidence-based concepts, which, if addressed, would lead to improved heath across society.

One might expect, however, that it would be interested in the effects of inequality on productivity.  It is worth noting the comments regarding this in 2017 from Christine Lagarde, director of the International Monetary Fund:

However, if we look at inequality within specific countries, especially some advanced economies, we see widening gaps and an increased concentration of wealth among the top earners. IMF research has shown that excessive inequality hinders growth and hollows out a country’s economic foundation. It erodes trust within society and fuels political tensions.”

One might also expect more from the Labor Party, whose Health spokesperson Catherine King welcomed Michael Marmot’s visit to Australia last year with these comments:

“Only Labor is committed to tackling health inequality, and to improving the social determinants of health across all portfolios.”

So what happened?

There were small but definite and useful health-specific policies from both major political parties, along with Government cuts to childhood dental funding and minimal extra commitment to prevention and primary care.

But at the same time, their tax policies increase the income divide across sections of our society.

One has to wonder how Labor, supposedly the party of the workers, could promote a policy that increases the income gap between low and middle-income earners.

Under Labor, a worker in Aged Care, perhaps looking after a politician’s elderly parents, will receive just $350 a year and a pension-dependant parent of that same politician will receive nothing.

But for both parties, it is all about an election policy. The justification therefore may be that neither party expects those on low incomes to change their vote. So they don’t matter.

These new tax policies are definitely not about health or the welfare of struggling Australians. They do not promote equity or a fair go.

Sadly they are all about politics from Coalition leaders who either do not support the concept of equity, or Labor leaders who either pretend they support equity but are closet elitist, or are incapable of instituting in their own party the principles and policies which promote equity and health.

• Tim Woodruff is President of the Doctors Reform Society. This article was first published by John Menadue.


More budget analysis

• The Australian Parliamentary Library has published many overviews of the budget and specific health-related areas.

• Professor Stephen Duckett has written about the Government’s largesse to pharmacies.

• The Centre for Social Impact says the budget did not deliver for marginalised or disadvantaged groups.

• Australia 21 raises similar concerns about the impact on inequality, and says the budget lacks vision and values.

This link compiles Croakey’s coverage of #HealthBudget18 to date.


Honest Government Ad

By The Juice Media