Highlights

  • The Greens propose lifting the tax-free threshold from $18,200 to $26,000 and adding $1,092 a year to JobSeeker, student, carer and age pension payments.
  • The PBO says means-tested payment recipients would lose the full $1,092 top-up at once if their income crossed the eligibility threshold.
  • The PBO costs the full package at $22 billion a year; the Greens' proposed funding sources have not been independently costed by the PBO.
  • The Greens hold Senate influence, so the package design matters for Labor's other legislation even if the proposal itself is unlikely to pass.

The Greens' plan to lift the tax-free threshold and boost welfare payments carries a sting for some of the people it is meant to help. The Parliamentary Budget Office has found that recipients of means-tested payments would lose the full $1,092 top-up at once if their income crossed the eligibility threshold. New Greens leader David Shoebridge has made the package his first big policy pitch, and its design will face scrutiny from the moment Parliament resumes.

What the Greens Are Proposing

Senator Shoebridge, who has succeeded Larissa Waters as Greens leader, used his National Press Club speech on 28 October to pitch lifting the tax-free threshold from $18,200 to $26,000. According to the ABC, the tax change would be worth up to $1,092 a year, or about $21 a week. The Greens would add the same amount to JobSeeker, student, carer and age pension payments. The PBO costs the full package at $22 billion a year.

The words "up to" matter. People earning less than $26,000 would gain less from the tax change, because only part of their income would become newly tax-free. Someone earning below $18,200 already pays no income tax, so the welfare top-up is where the package would reach them.

The PBO's Warning on the Welfare Cliff

The PBO's concern is how the welfare part of the package interacts with means tests. Recipients of means-tested payments would lose the full $1,092 at once on crossing the eligibility threshold, the PBO said. That creates a cliff: instead of a payment phasing out gradually as income rises, a chunk of support disappears in one step. The PBO said this could discourage people from working extra hours, because someone close to the cut-off might reasonably decide that an extra shift is not worth it if it costs more in lost support than it earns.

How the Greens Would Pay for It

The ABC reported that the funding ideas behind the package have not been costed by the PBO. One is a 25% gas export tax, which the Australia Institute suggests could raise $17 billion a year. The other is a $28 billion mining royalties figure from Prosper Australia, a ballpark estimate of state revenue if all states matched Queensland's royalty rates. Royalties are a state matter, so that money would not flow to the Commonwealth budget without state cooperation. The $22 billion annual cost does carry a PBO costing.