The Australian Council of Social Service has warned that bolder action will be needed to stem poverty and restore the federal budget to surplus over time, following the release of today’s Economic Statement.

“While we welcome many of the savings measures, the Government will need to tackle Budget waste at the top end that would pay for essential investments in payments and services for the most disadvantaged in the community, including an increase in the Newstart Allowance and disability care,” said ACOSS CEO Dr Cassandra Goldie.

“Wasteful programs and tax breaks should also be curbed to help put the Budget on a more sustainable path, but a quick return to surplus should not be sought for its own sake, regardless of the risks to the economy.

“The change to the Fringe Benefits Tax on cars, increasing the tobacco excise and the introduction of a bank levy are all sensible measures. However the tobacco revenue will drop off long term and the bank levy has a different purpose to funding important social programs like an NDIS, education and health into the future.

“We are pleased that the Government has held the line on the commendable action to remove tax subsidies for private use of company cars and capping the tax deduction for self-education expenses (albeit deferred for a year) in the face of vigorous opposition from well-resourced campaigns.

“There are other areas of waste that remain to be tackled as part of wider reforms to the tax and super systems, including parts of the tax subsidy of $14 billion for superannuation contributions made by employers, around half of which goes to the top 20% of taxpayers. The five year freeze on further reform in this area is a retreat in the face of vested interests and is a setback for the future of tax reform in Australia.

“We are extremely disappointed that the Government has cut the aid budget again to raise the $1b needed to fund offshore processing arrangements in PNG. This funding should be directed towards achieving the Millennium Development Goals for the world’s poorest people, the majority of whom live in the Asia Pacific region, rather than supporting cruel and inhumane domestic policy solutions.

“Similarly the government has again failed our nation’s poorest people by not increasing low income support allowances such as Newstart and Youth Allowance.

“We’ve said that Newstart Allowance is still unfinished business for the Rudd and Gillard Governments, which failed to increase the payment when raised pensions by $32 a week in 2009. With unemployment expected to rise further we’ll see more people forced into worsening levels of poverty in our country.

“The reality is that despite two decades of unprecedented growth our country faces growing inequality. One in eight people are currently living in poverty, including one in six children. This is simply unacceptable.

“Whoever wins government must be prepared to secure a sustainable revenue base to make room in the budget for essential services and increases in income support for the poorest. A measured and considered approach to tax reform and improving productivity are both essential,” Dr Goldie said.

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