ACOSS calls for clear agenda on tax and transfer reform

6 October 2011

In the wake of two days of tax and transfer discussions, ACOSS is calling for the Federal Government to set out a clear agenda for reform of the tax and transfer system in the national interest.

“We congratulate the Government for staging the National Tax Forum, which despite some cynicism, was extremely worthwhile. But the Commonwealth needs to outline a clear path for the next phase of tax reform in the areas of vital importance to the Australian community,” said ACOSS CEO, Dr Cassandra Goldie.

“There was widespread agreement – from community to business, trade unions, researchers, environment groups, and others – on the need to secure our future revenue base, tackle income tax shelters, and make superannuation fairer.

“ACOSS was particularly heartened by the broad acknowledgement that income support allowances, notably Newstart Allowance, is simply not enough for people to live on and should be increased as recommended by the Henry Review.

“This was widely agreed on, not just by community groups but also unions, academics, and economists like Judith Sloan from National Seniors Australia. Researcher Peter Whiteford told the forum the Newstart benefit has shrunk so much relative to living costs that the cheapest capital city accommodation leaves a person with just $16.50 a day to live on.

“ACOSS does not support the Treasurer’s view that every single expenditure, especially Newstart Allowance, has to be linked to savings. Government’s prioritise spending in every budget and we think policies to ease the worst poverty should have a high priority.

” ACOSS believes that an increase in Newstart can be funded almost immediately by Government action to close business loopholes and shelters that we estimate cost at least $20 billion in forgone revenue every year. This compares to around $1 billion to fund an increase in Newstart by $50 a week – which would help lift scores of struggling people out of the worst forms of poverty.

“ACOSS rejects any talk of a supposed welfare payments blowout as completely overblown. Commonwealth figures show that the proportion of people of working age relying on income support has declined in the past decade, and as Professor Whiteford explained, Australia spends less in social security than the average of the rich nations in the OECD.

“We were disappointed the Treasurer did not make any reference to securing more affordable housing through the tax and transfer system, which was another area of wide consensus. We simply must tackle the biases in the tax system that favour speculative investment in housing and other assets, which inflate home prices and add to cost of living pressures.

“Whilst ACOSS welcomes the announcement by the Treasurer of the independent tax advisory board, we believe it is essential that both the board and the new business tax working group include representation from the community and unions as well as business.

“Tax reform isn’t just about business interests. This was well demonstrated by the Tax Forum itself where the diverse interests represented helped to sharpen the debate. The government must ensure that diverse representation continues.

“The tax and transfer system is the engine room of the country. It must be used to guarantee the things we all want – namely, adequate income for all, including post working life, affordable housing, and a greater sense of fairness and equality for all Australians,” Dr Goldie said.

Media contact: Fernando de Freitas – 0419 626 155

ACOSS Submission Paper to the Tax Forum: A fairer, more efficient tax and social security system.

Opinion piece by ACOSS CEO Dr Cassandra Goldie in the AFR titled: ‘Tax system needs a dose of equality’.