Prime Minister Scott Morrison has come under fire for suggesting workers earning as much as $180,000 are not rich, as tax cuts for Australia’s wealthiest taxpayers come into the spotlight.
Speaking in Queensland on Wednesday, Morrison said he doesn’t consider someone earning over $45,000 to be on a high income, and that he also believes fly in fly out workers earning up to $180,000 also deserve a tax cut.
“Many of these workers they’ll go out and work on the mines. It's hard work, you’re away from your families. It's fly in and it’s fly out. And you do earn a bit more when you're doing that. But I tell you what, you put a bit of it away, too,” he said.
“And I don't think they should be penalised and treated like they’re some merchant banker in Sydney. They're not, they're hardworking people working out on mines and difficult parts of the country. I think they deserve a tax cut. I think they deserve to take more of what they earn.”
Responding to questioning around whether he would consider someone earning $150,000 or $180,000 a high-income earner, he said the threshold often depends on where someone lives and what their job is.
“I was in Rockhampton today, and there are many people there and in Sydney, for that matter, or in Melbourne or in Perth or other places who go out and work in the mines. And they earn quite well while they’re up there in the mines. But you can’t do that work forever, and so what they’ll do is they’ll save,” he said.
“Now, I think it's a good thing for Australians to want to earn more. And I don’t want anything to penalise them for doing that.”
Australia’s average yearly wage for full-time workers is $89,122 across all types of workers, but drops to $67,844 when taking casual and part time workers into account. However, the median annual wage as of December 2019 was below $50,000. That’s because the average wage is skewed by billionaires’ earnings.
Labor leader Anthony Albanese has flagged he would scrap planned tax cuts for Australia’s wealthier earners if Labor is elected. The tax cuts, which are scheduled to kick in from July 2024, see the 37 per cent tax rate abolished. That means that anyone earning between $45,000 and $200,000 would receive a 30 per cent tax rate.
High income earners are expected to receive the lion’s share of the benefit, with someone earning $200,000 to receive a $11,640 benefit from the cuts.
Appearing on the ABC’s Q and A on Monday, Albanese said it’s “very hard to argue” for high-end tax cuts at the moment.
“We will look at the details and make an announcement at an appropriate time,” he said.
Labor also opposed this stage of the tax cuts when they were announced in the 2019 Budget.
‘Out of touch’
Australians responded by questioning how Morrison considers people on JobSeeker and the age pension.
@ScottMorrisonMP doesn't consider people who earn $180,000 per yr aren't rich. Maybe not his type of rich but well off never-the-less. If he considers salary of $180,00 not rich how does he condoned poverty-level pensions & dole being 'enough'?
— SueTW SA (@SueTW5) October 14, 2020
Morrison earns $500,000 for his role, with some suggesting the Prime Minister is “out of touch”.
— Paul Roberts (@PaulRob11880584) October 14, 2020
However financial commentator Peter Switzer said there’s more to being rich than just annual income.
“The perception of who’s rich does depend on who’s doing the assessing. If I’m a single person on the pension of $25,000 a year with no home I own, then someone on $180,000 a year could be seen as rich,” he said.
“But if I’m on the pension and own a home outright worth $3 million, I might have a different view, especially if the person on $180,000 a year owns a home worth $1 million but has a loan of $800,000.”
While he said he defines “rich” as having the freedom to easily meet life goals, “Certainly a couple both on $180,000 a year are on the road to being rich.”
Samantha Armytage enters the fray
Sunrise host Samantha Armytage agreed that a $180,000 salary doesn’t automatically make someone rich, saying the cost of living in some of Australia’s most expensive cities erodes that significantly.
“It depends where you live in Australia as to whether or not you are wealthy on that, in Sydney probably not,” she said on Sunrise on Thursday morning.
“$180,000 sounds like a lot but these FIFO workers make huge sacrifices. They are often the sole income earner, (have) a couple of kids, a mortgage.”
Armytage earns around $500,000 in her role, and in July offloaded her North Bondi home for a reported $3.2 million.
Appearing on the same panel on Thursday, writer and commentator Jane Caro said rich is “a relative term”, but that to many people, $180,000 is the type of salary that’s beyond their dreams.
“It’s all relative. It very much depends on where you are standing when you look at that salary,” Ms Caro told Sunrise.
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.
Follow Yahoo Finance Australia on Facebook, Twitter, Instagram and LinkedIn.