Budget analysis: Families will be $21k worse off over four years

A Sunday Herald Sun analysis of May’s budget papers has found the average family will take a substantial hip pocket hit in the coming years. Here’s why.

An average family will be hit by a real wage fall of $21,000 over the next four years.

The Sunday Herald Sun can reveal an analysis of May’s budget papers has found the Federal Government expects real wages for an average Australian family to fall by $21,000 over the next four years.

According to Treasury predictions in this year’s Budget, the government expects rises in the cost-of-living will outstrip wages growth for this year and the next financial year.

And the following two years is tipped to see wages only just keep pace with the cost of living and then slightly outpace inflation in the financial year ending in June 2025.

The impact will be less spending money, according to the Treasury estimates.

The data prompted Labor Deputy Leader Richard Marles to commission modelling showing what the cuts would mean in dollars for an average family.

The findings have been verified by the independent researchers in the parliamentary library in Canberra.

The modelling was based on average family with a net household income of $170,000 split between two full time wage earners.

Under that scenario the family will be $3,800 worse off this financial year and $4,300 next year.

The total drop in the family’s spending power will be $21,000 over the course of the next four years.

The average single-parent family will be $9,114 worse off according to the analysis.

Mr Marles said the budget predictions showed the Morrison Government had “backed in” wage cuts for the next four years.

“Based on the government’s own numbers, over the next four years the pay of working Australians will not keep pace with the cost of living – that is, Aussies will be working more and affording less,” he said.

Mr Marles said that $21,000 was a lot of money for working families and the question was what they would be forced to go without over the period.

“Families are going to be forced to make really tough decisions all because of this government,” he said.

In better news for workers, with the economy approaching full employment, some economists have begun to predict that wages will soon begin to rise.

The Commonwealth Bank’s head of Australian economics Gareth Aird said recently: “The laws of supply and demand still work. If firms are struggling to recruit they will be forced to pay higher wages.”

Originally published as Budget analysis: Families will be $21k worse off over four years