“There have been some big winners from the pandemic – and after a year defined by widespread sacrifice, it’s only fair they pay their share.” These were the words of Victorian Treasurer Tim Pallas announcing $6 billion of new taxes in the 2021-22 Victorian Budget.
Who will these new taxes impact? Property owners and businesses. According to Pallas, property owners have benefited from asset price inflation and many businesses received taxpayer subsidies throughout 2020. Putting aside the fact that many landlords have been unable to collect rent for the past year, and that subsidies were available to help businesses survive lockdowns, Pallas has a point that some have benefited from the lockdowns while others have suffered.
What he failed to mention is that he is one of the beneficiaries, along with the entire Andrews ministry. In July last year, just days before forcing Victorians into a second devastating lockdown which lasted for most of the rest of the year, Pallas received a $37,000 pay rise.
Strangely, Pallas did not address this in the Budget. This is typical. For the past twelve months, the political class have insisted at every opportunity that we are “all in this together”, yet their pay was never affected by lockdowns. Not only did Andrews and his ministers not have their pay affected, but they also received an 11.8% pay rise between two lockdowns they chose to implement.
In April last year, the Institute of Public Affairs asked Australians what they thought about the idea of the political and bureaucratic elites sharing in the sacrifice we were all asked to make through lockdowns. Almost three-quarters of respondents agreed with the statement ‘Politicians and senior public servants on salaries over $150,000 should have their pay reduced by 20%.’
The Ardern Labour government in New Zealand had the decency to implement a temporary pay cut to show solidarity with the people they knew would be affected by lockdowns. And this was the only aim. As Ardern said at the time, it would not impact the government’s overall financial position, but “was always just going to be an acknowledgement of the hit that many New Zealanders will be taking at the moment.”
Ardern cut her salary by $47,104. Andrews increased his own by $46,000.
The disconnect between mainstream Australians and the public sector elites has been a key concern for the IPA over the past 15 months. Earlier this year we released Not in this Together: An Analysis of the Economic and Social Impact of the COVID-19 Lockdowns, a report which outlined how the political class has torn the country in two by implementing lockdown measures. We outlined how, in November last year, 300,000 private sector workers remained out of work while 25,800 new public servants had been hired. We also outlined the fact that, in the six months to September, private sector wages were reduced by $8.3 billion while public sector wages increased by $2.75 billion.
The new taxes proposed in the Victorian Budget are bad public policy. Increasing payroll tax will make it harder for businesses to create jobs at precisely the time when Victorians need them. And increasing taxes on landowners will only exacerbate issues of housing affordability which impact lower-income Victorians the most.
But these technical arguments are for another time and place.
The justification for the taxes gets to the heart of what has gone wrong in Australia. Pallas is a senior member of the government which decided to repeatedly force Victorians into lockdowns. It may be the case that some businesses benefited from lockdowns. But they did not decide to implement them. Pallas and the rest of the Andrews government did. And in doing so, they made a conscious decision to throw hundreds of thousands of people out of work, to drive businesses into bankruptcy, to exacerbate mental health issues, and to deprive school children of their education.
Talk about victim blaming.