Jeff Kennett: Middle-income Victorians paying for Andrews government’s failings

Victoria is in a debt trap and the government who single-handedly caused its demise is squeezing middle-income earners, while blaming them for its failings.

I was recently informed by a very senior economist that 50 per cent of Australian citizens pay no net tax.

That clearly and equally applies to Victorians.

That figure surprised me, and I sought clarification as to what that actually meant. Working Australians between the ages of 15 and 65.

That means we are an increasingly financially divided country.

Those who are totally dependent on governments to simply survive.

Those who are of an age, worked hard all their lives, paid their taxes, but are now on government pensions or fixed incomes or a combination of both. These are who I describe as middle-income earners. The vast majority of the employed community who in the main work for salaries.

Finally, the financially comfortable and very wealthy.

I am only referring to taxes here paid by individuals and families.

So where do the majority of the 50 per cent who are paying tax reside? In middle income Australia.

Those totally dependent on government payments in any of many forms pay no tax. The financially comfortable and very wealthy will survive and probably prosper when the economy shrinks and assets are sold under pressure.

Middle Australia is, as always, being made to pay the price of government failures. Picture: Ian Currie

But it is middle Australia who is as always being made to pay the price of government failures.

The increasing cost of living, food, energy charges and rental costs fall most heavily on those with less.

But it is middle-income earners who are increasingly attacked through government taxes and charges and higher interest rates. Those Victorians who are aspirational and seek to be independent of government assistance.

Here in Victoria, we have seen that attack intensify through the recent state budget. Take education. Thousands of families make a decision, that the most responsible thing they can do is to invest in their children’s education. If they choose to send their children to a private school, in the main they make huge personal financial sacrifices.

Now as a first in Australia, the state government removed the payroll tax exemption from private schools, adding huge costs to those schools, costs that must be borne by parents, middle income Victorians. It sells the message that these private schools are profit-making enterprises.

No private school is a profit-making body. None have shareholders. If in any year they return a surplus, that is income is greater than expenditure on teachers and running costs, that surplus goes into new buildings, more teachers, new programs.

Many Melbourne properties are occupied by middle-income earners who will now be hit with an additional tax to pay for the government’s failures.

The existence of private schools substantially reduces the demand on the state government to provide schools and education for those students who attend private schools.

Should pupils be forced to leave private schools it will only put more pressure on an overtaxed state education sector.

Secondly the government has imposed a tax on a tax, being land tax on properties owned by a person or family beyond the family home.

Drive through the Mornington and Bellarine Peninsulas or the Great Ocean Road. Most houses are small, wooden, even fibro cement holiday homes. Many have been handed down from generation to generation.

They are occupied by middle-income earners who have seen their property values escalate over time, pay land tax, only now to be hit with an additional tax to pay for the government’s failures. For many it will be a tax too far.

The only two things the government is doing are delaying some infrastructure projects and supposedly retrenching 4000 public servants. Picture: David Crosling

Not only is the government squeezing middle-income Victorians, but they are accepting no responsibility for the situation they alone have created here in Victoria. They are blaming us!

The only two things the government is doing are delaying some infrastructure projects and supposedly retrenching 4000 public servants.

The latter is the attrition rate every year. If the government was serious, they would retrench 50,000 public servants. All would receive payouts that would be spent back in the economy, which would be good, and secondly all would find new jobs in a market desperately short of workers.

We did this in 1993 and Victoria’s economy grew. But no, Victoria is now caught in a vicious debt trap, with a government that single-handedly caused our demise, still accepting no responsibility and taking no meaningful steps to address the situation. Except to put the majority of the burden on middle income Victorians.

There is one other factor to bear in mind. If you were a young person, aspirational, or hoping to have and raise a family here in Victoria, or start a business, what incentive is the government offering you?

Victoria was once a proud erect candle. Its flame once burnt brightly, it showed the way among all states. Today that flame flickers. Unsure of what the future holds. If middle-income Victorians are continued to be squeezed, that flame might very well be snuffed out, and Victoria again sadly becomes the butt of jokes around the country. Sad times.

Jeff Kennett is a former Victorian premier