The Australian Council of Social Service (ACOSS) today welcomed the Government’s decision to introduce legislation which will protect workers in the community sector from reductions in family payments.
The Government’s plan to restore the original formula used to take account of fringe benefits in the income test for Family Tax Benefits ensures that people working in the charitable sector will not suffer a loss of family payments after 1 July this year. This would have affected many workers in the community sector on modest incomes who receive part of their earnings as fringe benefits.
The main reason that many workers in charities were affected is that charities rely on ‘salary sacrifice’ arrangements to stretch often inadequate resources further so that they can attract staff. There are around 50,000 people employed in approximately 10,000 Public Benevolent Institutions, which are exempt from Fringe Benefits Tax. These services range from aged care and disability services to community legal centres, Indigenous community organisations and refuges. They struggle to provide vital support to the most disadvantaged people in Australia with inadequate levels of funding which fail to keep pace with basic costs.
In a recent survey by ACOSS* over 80% of agencies reported that the cost of delivering services was not matched by funding levels and morethan 60% of agencies reported difficulties in attracting and retaining qualified staff.
A comprehensive solution to these problems would be to fund services properly so that wages could be improved, and to ensure that Government funding keeps pace with the cost of providing services. This would ensure that all organisations providing essential community services benefit regardless of their tax status.
The changes to the income test for Family Tax Benefits affecting community service workers were legislated in 2006 for implementation in July 2008. They are not related to the Government’s proposed changes to income tests for various payments that were announced in the 2008 Federal Budget. ACOSS broadly supports the 2008 Budget changes as they would improve the fairness of the programs concerned and save the Government money that could be devoted to improving services for low and middle income people.
ACOSS Acting CEO, Gregor Macfie, said “We welcome the Government’s decision to restore the Family Tax Benefits that would have been lost to community workers. We also look forward to working with the Government to develop a comprehensive response to the underlying problem of inadequate resourcing of community organisations which compounds the shortage of skilled community workers.”
* Australian Community Sector Survey 2008