Budget secures landmark disability and education reforms, but gaping hole for poorest on allowances

14 May 2013

“ACOSS warmly welcomes the Federal Government’s vision to secure disability care and dental and schools reform and the strengthening of public revenue to secure funding for these and other services, but cannot believe that there is no income relief for the people who are the poorest,” said ACOSS CEO Dr Cassandra Goldie. 

“We praise the move by the Treasurer to lock in government expenditure on crucial social reforms such as education and disability care, in some cases for a decade. We have also been strong supporters of the more equitable and effective system for dental care in Australia and that begins with two-thirds of all children in this Budget. These are not only visionary reforms but long overdue,” Dr Goldie said.

“However, we remain deeply concerned at the failure to reduce the rate of poverty in Australia by increasing the single rate of Newstart and other allowances. While we welcome the modest easing of income rates for people on Newstart and other allowances, the Government has failed to assist the four-fifths of Allowance recipients who are unable to obtain paid work. Each year we fail to act, this gaping hole in our safety net grows. One in eight people, including one in six children, are living in poverty and an increase in the lowest social security payments would have the most immediate and direct impact in reducing it.

“On the savings side, there are some incredibly important measures in this Budget. In addition to the welcome increase in the Medicare levy to fund DisabilityCare Australia, we are pleased that the Budget makes significant inroads into closing tax loopholes and inefficient tax arrangements. With tax receipts down by over $20 billion from the pre-GFC period, we must pull back from generous tax breaks that are not delivering on policy outcomes and eroding our tax base. ACOSS advocated the extension of the Medicare Safety Net threshold, the abolition of the medical expenses tax offset, the capping of self-education expense deductions and the tightening of the thin capitalisation rules, all of which we welcome in this Budget.

“We are also pleased that there is greater investment in tackling tax evasion through trusts. We would have liked to have seen changes to tax rules as well, but hope this commences the reforms needed to close this glaring tax loophole.

“We welcome the integrating of the baby bonus into the family payments system so that it is better targeted but remain concerned about reductions in payments for the poorest families.

“The next step to secure our economic and social progress must be to strengthen revenue. Otherwise we face painful cuts to essential expenditure down the track. Australia is the 5th lowest taxing country in the OECD. If we want a decent safety net, and universal health education and dental services, as well as the housing and infrastructure for present and future generations, we need a sustainable tax base,” Dr Goldie said.


Welcome measures in Budget 2013
• Securing the introduction of DisabilityCare Australia
• Building the blocks towards a more equitable basis for oral health care by funding the ‘Growing Up Smiling’ program for two-thirds of children up to 17 years
• $9.8b in new funding for reform to improve equity of schools funding
• Continuing funding for the National Congress of Australia’s First People
• Improved savings measures through the removal of tax loopholes and inefficient tax arrangements including:
o extension of the Medicare safety net threshold;
o abolition of the Medical Expenses Tax Offset;
o capping of self-education expenses; and
o tightening of the thin capitalisation rules.

Disappointing measures
• Failure to increase the base rate of Newstart and other allowances for single people; and to index allowance payments to wages
• Some reductions to family payments that will hit the poorest families

Key Facts on Poverty in Australia
• One in eight adults and one in six children are living below the poverty line.
• That number is growing.
• Increasing the base rate to single Allowance payments would have been the most direct and immediate way to reduce the most severe poverty in Australia and would have cost a modest $1.8 billion pa.

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