Female graduates earning $51,000 may have less disposable income than Australians earning $32,000 because of the Coalition’s latest budget, a new study warns.

The combination of the Medicare Levy increase, frozen Family Tax Benefit A, and the lower repayment threshold for university debts will result in effective marginal tax rates of 100 per cent or higher for some women, the National Foundation for Australian Women reported on Monday.

“Graduates caught between these policies will experience considerable financial stress; graduates earning $51,000, most of whom are likely to be women, will have less disposable income than someone earning $32,000,” the report said.

“Changes to penalty rates may also have a significant impact on some graduates if they are extended to the aged and health care sectors as well as the childcare sector.”

The ‘effective marginal tax rate’ adds together the combined effect of income tax and government welfare on a person’s earnings.

So in the hypothetical example of a woman earning $51,000, the report suggests that every dollar she earns above $32,000 has an approximate EMTR of 100 per cent – that is, she forfeits it all to the government in taxes and lost welfare.

Why?

Because Treasurer Scott Morrison announced in the budget that the Medicare levy will increase from 2 to 2.5 per cent of income from 1 July 2019.

Everyone will pay the levy, so long as they earn above the modest thresholds (starting at $21,655 for singles and $36,541 for families plus $3,356 for each dependent child or student).

Also, the drop in the university debt repayment threshold from $54,869 in yearly income to $42,000 will “disproportionately affect women”, according to the report, because females earn roughly 10 per cent less than men in the first 10 years or so after graduation.

“As a result, women are more likely to be caught by the reduced repayment threshold and have a lower weekly take home pay than previously.”

The NAFW also dismissed the government’s key housing affordability measure – super saver accounts – by pointing out they would only benefit young women who can afford to make additional contributions to their superannuation fund, likely to be a very small percentage.

Official statistics cited by the report showed that the median income is $47,125 for women and $61,711 for men (in 2014-15), and that only 17 per cent of women had taxable incomes greater than $80,000 (in 2013-14).

“Given women are more likely to be on lower incomes, combined with the reduced HECS-HELP repayment threshold and increased Medicare Levy, it is unlikely that many women will be able to make such contributions,” the authors wrote.

The NAFW called on the government to switch its focus away from tax cuts to other measures more likely to help low-income women.

“The way to improve incomes for most women is not to cut taxes but through improved welfare, social investments and increased wages (for example, by taking real action against the spread of precarious low paid work or by opposing cuts to penalty rates).

“Tax cuts, particularly those for top income earners, lower revenue at a time when investment is needed in public services and social infrastructure.”

In a statement, Shadow Minister for Women Tanya Plibersek said the budget measures would be a “huge disincentive” for some women to enter the workforce, and would worsen gender equality in Australia.

The NAFW has been analysing the budget’s impact on women since 2014, when the Abbott government stopped issuing the ‘Women’s Budget Statement’, which the government had published since 1984.

What pleased the NAFW

• The spending on public infrastructure, as most users of public transport are women, particularly low income women
• Substantial increase in funding for child care arrangements
• Permanent extension of homelessness funding, with a focus on young people and victims of domestic violence
• Abandonment of “negative measures” in 2014 budget, such as university fee deregulation and increased age of eligibility for the dole