Cool head needed to restore budget balance: ACOSS

The Australian Council of Social Service has cautioned the Federal Government against trying to restore the nation’s Budget in one-hit, following today’s release of the Mid-Year Economic and Fiscal Outlook (MYEFO) which forecast a $47 billion budget deficit. 

“Our fiscal challenge is structural, and requires long-term reform. It would be dangerous to attempt to fix the problem in one budget,” said ACOSS CEO Cassandra Goldie.

“We now know that two thirds of budget deterioration this year due to “economic parameters” is on the revenue side. What we need is careful and considered reform to both revenue and expenditure.

“We understand the big fiscal challenge facing the nation, but previous governments share the blame by spending the revenue windfall from the housing and mining booms on eight successive income tax cuts and a range of cash bonuses and poorly targeted programs.

“Recent decisions show a concerning trend towards targeting those at the bottom to bear the brunt of budget cuts and largely sparing those at the top end. For instance, those on low incomes will be hurt by the abolition of the Income Support Bonus, the School Kids Bonus, and the Low Income Superannuation Contribution.

“Today’s decision to cut funding to much-needed legal assistance programs, including the National Aboriginal and Torres Strait Islander Legal Services, is short sighted and counter-productive. It will have little impact on the budget bottom line, but a devastating impact on those who need access to legal assistance.

“Meanwhile, those at the top have been spared by the decision not cap tax breaks on superannuation – tax breaks that flow mostly to those on high incomes. Government has also deprived itself billions of dollars in revenue from an effective Mineral Resources Rent Tax and pricing carbon pollution.

“What we need right now is a cool head and a serious national conversation about how we will restore budget balance, and close the gap between the community’s reasonable expectations and government revenue.

“Organisations who represent those who are vulnerable and disadvantaged have a vital role to play in this conversation, no more so than those who work on the front line in Aboriginal and Torres Strait Islander communities.

“We can restore revenue, reduce waste, close gaps in essential services, and look after the most disadvantaged in our community if we take the sensible and much needed reform road.

“The Government should restore revenues to the level obtained before the GFC (25.1% of GDP), and hold expenditures at that level as the economy grows. This would enable the Government to restore the Budget to surplus without unnecessarily cutting essential programs,” Dr Goldie said.

Media Contact: Fernando de Freitas

Read the ACOSS submission to the Commission of Audit here.

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