7 November 2019
Before the election, the Prime Minister told us he would roll out $300 billion in income tax cuts, guarantee funding for essential services, and get the budget into surplus. As we said at the time, the notion that all three could be delivered was never going to be able to come true. And now the royal commissions into aged care and disability abuse are showing just how shocking the reality is for our community when essential services are starved of the funds we need.
The Government’s budget assumptions included that spending would be kept to the slowest growth in 50 years. For example, the Government projects it can slow growth in health funding, after inflation, to just 0.7% a year over the next four years despite our aging population, the broken private health insurance model and never-ending waitlists. It has long been clear that aged care requires significant investment. Over 100,000 people are waiting for in-home aged care and people are dying before they get the care they need. While the Government has committed to a funding boost for in-home care packages before the end of the year, it needs to take a good, hard look at the dire need for properly funded essential services.
People are waiting for two years for urgent dental care in the public system. We’ve had the Productivity Commission reveal the need for billions extra a year in mental health, and that without this investment we are losing far too many people, and the country is losing as well. Now that the Royal Commission into abuse of people with disability is underway, it’s likely to shine a light on the need for better resourcing of disability services and to hear why many people are not getting the support they need through the National Disability Insurance Scheme. The underspend on the NDIS might contribute to the surplus but it comes at the expense of people waiting for wheelchairs and home adjustments.
The Government has far bigger problems on its hands than whether or not the Budget ticks over into surplus territory. As wages flat-line and household debts mount, consumer spending is not enough keep shops open, and jobs and incomes growing. We learnt this week that growth in consumer spending fell to just 0.2% in the three months to September, the lowest level since the last recession. As we predicted, the evidence so far suggests the government’s income tax cuts are mainly being used to pay off debt. Bringing forward the far more expensive tax cuts legislated for higher income earners in coming years won’t help because they save much of their income.
There are far more effective ways to strengthen growth in jobs and incomes – it will come as no surprise that my top pick is increasing Newstart. There’s no better way to rapidly inject activity into the economy than by giving those most in need funds to get by day-to-day, including in drought stricken regional communities where locals spend locally. But don’t just take my word for it – the RBA Governor, Philip Lowe; Dick Smith, Alan Koehler; KPMG and Deloitte partners and State Governments are publicly extolling the economic benefits of increasing Newstart, as the CWA and AMA urge the increase as well.
We can meet take immediate effective action through smart fiscal policy to kick start the economy and meet the promise of funding for essential services by deciding not to go ahead with further tax cuts, which are set to mostly benefit those on high incomes. Australia is already a low taxing country, ranked 8th lowest amongst 39 comparable countries. We’re seeing the tragic consequences of under-investment in essential services in aged care, mental health, dental, disability and community services, to name a few. These are the symptoms of an unsustainable tax system, which would only be made worse through high-end tax cuts.
Dr Cassandra Goldie is the CEO of the Australian Council of Social Service.