Following the Treasurer’s National Press Club Debate today, ACOSS is releasing new analysis of the Federal Budget and warning that there is a trade-off between large tax cuts – especially the $300 billion in tax cuts proposed by the Coalition – and sustaining the essential health, education and community services.
ACOSS CEO Cassandra Goldie said: “One of the critical issues in the federal election is the cost of the tax cuts being proposed, particularly by the Coalition, and our ability to fund essential services now and into the future.
“Australia already has a low tax base – 8th lowest in the OECD. The Government is now proposing the largest tax cut package seen, mostly benefitting those on high incomes, without corresponding action to close tax shelters or strengthen the income tax base. The Opposition’s tax package is smaller, and their policies include a range of measures to tackle tax shelters.
“As ACOSS argued on Federal Budget Night, now is not the time for more tax cuts.
“The analysis of the Federal Budget expenditure reveals that the next government is unlikely to be able to provide essential services and social security payments, while also providing large tax cuts. We will need to choose between these two competing priorities.”
The 2019 Budget is built on the dubious assumption that, without major new spending cuts, public spending over the next four years will be held at the lowest levels of growth in 50 years:
- Overall real growth in Commonwealth spending is estimated to fall to an average of just 1.3% per year for the next 4 years, half the growth rate from 2013 to 2018;
- Real spending growth per person (adjusted for inflation and population growth) is projected to be zero over the next 4 years;
- Real growth in health funding is projected to average 0.7% a year (without adjusting for population growth), compared with 3.0% over the last 4 years.
- Real growth in social security and welfare funding (including the NDIS) is projected to average 1.8% a year (compared with 2.0% over the last 4 years)
- Average spending levels after inflation are expected to fall over the next 3 years in dental health (-0.7%), employment services (-2.5%), family payments (-0.7%), housing (-2.7%), and tertiary education (-0.6%).
The above projections lock in the effects of previous funding cuts, including a six year freeze in Medicare benefits for doctor’s visits and cuts to dental care and residential aged care; together with a slow rollout of the NDIS.
Despite these harsh cuts, the Parliamentary Budget Office has estimated that by 2028, an extra $21 billion will need to be spent just to maintain existing health aged are and disability services, let alone fixing the obvious flaws in those services revealed by the Aged Care Royal Commission and other sources.
ACOSS CEO Cassandra Goldie said:
“People are already waiting more than a year for public dental care and for in-home aged care, yet the 2019 Budget is based on the lowest real growth in public spending in 50 years. This just doesn’t stack up with the needs on the ground.
“At the same time, we have the aged care royal commission exposing appalling neglect and abuse in some residential care services, a problem caused in part by chronic under-funding.
“If budget projections of scaled back funding growth over the next 4 years without a new round of harsh spending cuts prove wrong, how will the next government respond?
“Would the Coalition press ahead with its high-end tax cuts and undertake another round of harsh spending cuts in health, education and social security, to make room for them?
“All of us who are concerned about the future of essential services such as doctors visits, hospitals, dental and mental health, schools and vocational training, need to ask these questions of candidates in this election.
“We can’t have the largest tax cuts ever promised and good quality services for all. Australia will have to choose between them, and those of us who care about essential services and reducing poverty and inequality need to hold all parties to account,” Dr Goldie said.
For a comparison of political parties’ policies in key social service policy areas, see ACOSS’ Election Policy Tracker: https://www.acoss.org.au/2019-election-policy-tracker/
For ACOSS Media on Budget Night, responding to announcement of Coalition Tax Cut Package, see