One of the least debated issues about Liberal budget this year in Australia was about the government’s devious pressure for social security beneficiaries to return to workforce. Many will be loosing their government support outright while others will do in near future if they failed to adequately make efforts for getting a job.
The pressure has come at a time country is experiencing rising unemployment that has been climbing up for last one decade. The primary factors for such unexpected and steady rise would possibly be declining business activities, directly influenced by slowing down of growth in China.
Many elderly citizens who live on their interest from deposits might also be forced to seek part-time job as interests are not enough to suffice their daily needs. They government is unlikely to support this older generation who have quite a bit of deposit. That will likely to cost more for national exchequer to support them with pensions.
While people are certain to get their social security stripped off, Canberra is also putting pressure on public to spend more in an effort to stimulate the economic activities. That’s why Canberra is mulling over imposing taxes on bank deposits. Hockey didn’t categorically put this proposal this time, fearing backflip but he has not officially withdrawn the idea.
Reserve Bank Adelaide (RBA) aligns with the government to encourage public to invest or increase spending. Continues fall in interest rates is a way to tell people that they invest more. Despite such efforts, business investment has not grown enough to stimulate growth. Majority of the investment has been on properties, which has already created fears of bubbles that might burst. As banks continue to easing their lending regime to channel money into property market, property-lending is likely to rise further.
Contrarily, growing unemployment and constriction on widening the income source, property investors would in longer term find is extremely difficult to pay back the loans. This would convert a huge investment from the bank into bad debt.
When investment is not growing adequately and unemployment is rising, stripping off social security from people would certainly not support economic growth. The government has already faced backlash for trying to withdraw the disability scheme.
It is essential that government create employment opportunity and good economic environment before telling people to leave the social security support and return to the workforce.