ACOSS on Budget 2015: Better direction but lower income earners still doing the heavy lifting

Speaking at tonight’s release of the Federal Budget, ACOSS said it shows some improvements in strategy, with a fairer approach to pension reform and increased investment in child care. But the overall package retains many harsh cuts from last year’s Budget and will leave many people on the lowest incomes worse off. The Budget also fails to stimulate investment in jobs growth.

ACOSS CEO Dr Cassandra Goldie said, “We were looking for the Government to chart a different path from last year’s divisive and unfair Budget. The pension changes, youth employment strategy and higher investment in child care show the way forward and are a welcome change of direction, reducing the Budget deficit without creating a fairness deficit.”

“However, the Budget should be assessed as a whole – not just the changes announced tonight – and last year’s Budget still casts a shadow over this one.

“Welcome measures in 2015 like investing in child care are linked to unfair measures like 2014’s family payment cuts; and the Government has yet to find alternatives to cutting health, education, community services and family and youth payments for its savings measures. On the whole people on low incomes are still left to do most of the heavy lifting.

On the key measures, ACOSS said:

“The Families Package is at the heart of this Budget, and increased investment in child care is overdue and welcomed. Yet key features leave it unbalanced and unfair, relying on cuts to family payments for low income families, and providing overly generous subsidies to families on high incomes. Many children in low income families will lose 12 hours a week of early childhood education that helps improve their life chances. Meanwhile the Paid Parental Leave scheme change comes out of the blue and takes us backwards in the search for short-term savings.

“On the part Pension, we strongly support the reforms to the assets and income tests and applaud this change in direction. We now need a similar approach to superannuation reform, which is equally important in building a strong and durable retirement income system. We must get value out of super tax concessions, then benefits of which remain unfairly skewed towards high income earners. Super remains serious unfinished business.

“The Government’s Youth Employment Strategy is also a move in the right direction. Investment in school-to-work transition programs to help vulnerable unemployed young people shows the Government has listened to community concerns about the ending of the Youth Connections scheme. Regrettably, instead of reversing last year’s proposal to make young unemployed people wait six months for income support, it is reduced to one month and applied to a younger cohort (under 25). There is no justification for this measure.

“We are also pleased to see more flexibility in Wage Subsidies for unemployed people. Together with the BCA and ACTU, we have advocated for the expansion of this program.

“However, the Budget has not gone far enough in providing a strong Jobs Plan or investment in skills. Tax cuts and other small business measures will not stimulate the productive economic activity we know is needed to create new jobs.

“The Budget also leaves gaping holes in the social safety net. Missing in action is any fix to the low rate of allowance payments and the indexation of allowances and family payments (which are still indexed to the CPI only), the continuing lack of investment in affordable housing; and the loss of funding for vital policy, advocacy and service delivery across social services, health and legal assistance and in Aboriginal and Torres Strait Islander communities.

“We support a credible path back to surplus. However, if we fail to strengthen public revenue now, future governments will be forced to make further spending cuts in the future.

“The community is still looking for leadership from the Government to deliver structural reforms in crucial areas of public priority: jobs and skills, health, community services, and retirement incomes.

“Tax reform must be the next priority for responsible, fair and measured action. This Budget should have begun the work to safeguard the social safety net into the future, by trimming unfair tax concessions for superannuation and reforming negative gearing and capital gains tax breaks.

“Now is the time for the Government to lead a staged reform process to secure a sustainable revenue base and enable investment in essential social and economic infrastructure,” Dr Goldie said.

Media Contact: Fernando de Freitas 0419 626 155

Read more:
ACOSS Budget recommendations:
Budget must chart a fairer path back to surplus: ACOSS

ACOSS response to Families Package:
New child care investment welcome, but overall package is unbalanced and unfair

ACOSS response to Pension Reform:
Step in right direction on retirement incomes, much more to be done