Gareth Morgan, Director of Gareth Morgan Investments
A family of two adults and three children, one at University and two at school, have a set of expenditures that could reasonably be the following;
| Family Gross Income: | $50,000 |
| Less Tax: | $13,000 |
| Less Mortgage of $60,000: | $6,000 |
| Less Rates, Maintenance and Insurance: | $3,500 |
| Less Electricity and Fuel: | $1,000 |
| Less Car costs: | $4,000 |
| Less Groceries, $150 pw: | $7,500 |
| Less University Expenses: | $10,000 |
| Less Medical Expenses: | $1,500 |
| Less Clothing, $150 per month: | $1,800 |
| Less Cat: | $200 |
| Less school fees, expenses: | $500 |
| Discretionary Income: | $1000 |
Amount available for retirement saving: Ha! Ha!
Options available for this family to raise discretionary income might include:
- Turning the student away from University.
- Expanding debt either directly, or via the student loan facility- the latter is marginally cheaper.
- Selling the house and renting for less than $160 per week.
- Selling the car
- Killing the cat, or better selling it; using candles, washing in cold water or not at all, and eating less.
- Lowering family income to avoid user charges.
The point of course is that the government’s user charges cut in fully for family incomes greater than $50,000. The ability of families with income close to $50,000 to undertake the above activities is being squeezed immensely. The cost per year of having a child at University has risen astronomically for these income groups. No longer is it possible for a child to more or less self-fund their way through even if they can get holiday work. Apportioning blame for the change is easy. A rampant fiscal history where government deficits were intransigent, driven by welfare largesse and then debt servicing, has left current governments with fewer options. Superannuation cuts or user charges? This government has made the decision to slam the taxpayer and recoiled from curbing super. Moore and Cullen threaten greater fiscal slop. Higher taxes or a larger deficit is only months away.
About the Author
