Don’t target the most vulnerable to restore the budget: ACOSS

29 April 2014

The Australian Council of Social Service today urged the Federal Government to prevent unnecessary cuts to vital payments for some of the most disadvantaged people on the lowest incomes in the country, as it prepares its first Budget.

“If proposals under discussion were implemented, pensions for people with a disability, carers, sole parents and older people would be much lower in future and people on the lowest incomes could not afford to visit the doctor when they need to,” said ACOSS CEO Dr Cassandra Goldie.

“In his speech last night the Prime Minister said, ‘’this budget won’t be for the rich or the poor but for the country’. Yet so far it appears that most of the pain will be borne by people who can least afford it.

“We urge the Government to stand firm in its commitment to target government funding to the people who need it. This is a Budget that should be there for people who are poor, including the almost 600 000 children living in poverty. Government support for people who do not need assistance should be targeted, by reducing tax concessions, rebates and supplements which are benefiting people in the higher income brackets in our society. This would be good policy.

“Superannuation tax breaks cost the same as the age pension (around $40 billion a year) and one quarter of their value goes to the top 5% of wage earners. It’s time to put superannuation reform, and the generosity of the pension assets test, on the Budget agenda. The Seniors Supplement and private health insurance rebates for ancillaries are also poorly targeted, and disproportionately benefit higher income households.

“A fairer alternative to cutting the payments and services most needed by people on low incomes is to restore budget revenue. The mooted ‘deficit levy’ could help pay more of the future cost of the NDIS and health care and avoid policies such as $6 GP co-payment that would harm people on low incomes, but it lacks a clear purpose and as it stands it is only temporary. It would be removed in a few years’ time, just when the budget is coming under the greatest pressure.

“Reducing indexation for pensions to inflation only instead of wage movements would inevitably increase poverty as people on the lowest income fall further behind the rest of the community. One of the main reasons Newstart Allowance is only $36 a day now is that it has only been indexed to the CPI for the last 20 years. 

“We have long said that the Government should not consider raising the retirement age to 70 in the future until it first deals with the gross inadequacy of allowance payments such as Newstart for those who are unable to work and addresses the discrimination experienced by older people trying to stay or re-enter the workforce. The age at which people can access their superannuation, which is still only 55 years, should first be raised to the same as the pension age (67 years).

“ACOSS has already advocated a tightening of access to family payments to ensure they are targeted to households who really need assistance the most. We have proposed reducing Family Tax Benefits Part B once family incomes exceeds about $100,000. Any changes would need to ensure that single parent families, who have already been targeted under previous governments aren’t penalised again. ACOSS has proposed replacing FTB Part B for sole parents with a Sole Parent Supplement, paid at a higher rate for parents of older children to reflect the higher costs and demands of caring for children as a sole parent.

“To date, there are no signs of greater investment and support for people who need government to be there, including people locked out of the labour market. Closing the gap between the adequacy of the unemployment payment, and pensions should not be achieved by cutting the adequacy of pensions, but by lifting the adequacy of Newstart. Raising the rate and indexation of Newstart is an urgent and overdue reform, widely supported across business, economists, unions and the community sector. 

“Putting more money into compulsory income management is not the priority, It costs per person more than half the value of the social security payments which are being ‘managed’ by Centrelink, and remains widely unsupported by the sector that has the direct experience of what is needed to support families and individuals to move out of poverty and into economic independence.

“The Prime Minister has said that budget measures will be fair and equitable. To be fair and equitable we need to seriously look at the revenue problem and be brave enough to embark on the structural reform that is required. Ultimately this is the way to restore the Budget coffers and put our national finances on a sustainable path, without resorting to unfair cuts and charges that hurt those at the bottom the most,” Dr Goldie said.

Media Contact: Fernando de Freitas 0419 626 155