Raising Newstart for the first time in 20 years a legacy for 43rd Parliament: ACOSS

The Australian Council of Social Service today said raising the single rate of Newstart Allowance could be the greatest legacy of the 43rd Parliament if the Federal Government takes the courageous step for the first time in 20 years.

“The Hawke-Keating government was the last government brave enough to increase unemployment benefits in 1994, now this government has the chance before the federal election to leave a lasting legacy,” said ACOSS CEO Dr Cassandra Goldie. “The government would certainly have the support of the wider community, including the entire community welfare sector, unions, business, the Organisation for Economic Co-ordination and Development, and its own Henry Tax Review panel.”

Speaking at the launch of the peak community welfare body’s 2013 Budget submission today, Dr Goldie said, “Increasing the abysmally low base rate of Allowance payments by $50 a week is the single most important thing this government could do in the immediate term to lift more than one million people out of worsening poverty in Australia.

“This is not rocket science and it is completely fundable. We estimate it would cost about $800 million dollars this year to increase the payments, including indexation, and $1.8 billion in 2014-15.

“We understand the current pressures on the Budget, however, this is doable, especially if the Government tackled the current waste in the Budget in the form of tax avoidance and poorly targeted spending programs and tax breaks. We’ve identified around $6 billion dollars in savings, some of which could be used to fund this must needed increase.

“We are calling on the government to clamp down on things like the use of private ‘discretionary’ trusts and capital gains. We are also proposing the scrapping of the health insurance rebate for ancillary or ‘extras’ cover, the Seniors and Pensioners Tax Offset, and non-superannuation termination payments, which are wasteful measures.

“We are pleased the Federal Government has capped the deductions for education expenses and moved to make the superannuation system fairer. However it appears they have backtracked on the opportunity for more far-reaching reform of the retirement savings system, particularly the churning of income through super accounts to avoid taxes on wages.

“Now is the time for courageous decisions to be made in the national interest if we are to move towards creating a more sustainable tax base to fund the important social programs and services we all want into the future for our aging population.

“In his speech at the National Press Club this week, the President of the Business Council of Australia, Tony Shepherd, declared that our nation is at the crossroads and urged our political leaders to be brave and be prepared to lose their jobs to lift national prosperity. ACOSS supports those sentiments, especially the recognition that we need to do more as a country to ensure the benefits of that social progress are felt by all.

“With 2.2 million people, including 1 in 6 children living below the poverty line, we were pleased to hear the strong statement from Mr Shepherd that income support allowances need to ensure people without paid work are able to ‘live in dignity’. He is the latest in long line of prominent people speaking out in support of lifting the $35 a day Newstart payment.

“Now is the time for our federal leaders to listen to this widespread call and show this courage by prioritising an urgent increase in the single rate of Newstart Allowance in the May federal Budget,” Dr Goldie concluded.

Media Contact: Fernando de Freitas 0419 626 155

DOWN LOAD ACOSS Budget Statement


ACOSS submission finds $6b in savings and $5b in spending for the most immediate needs.

Key ACOSS asks:
• Increasing Newstart and other Allowances by $50 and indexing payments
• Doubling number of wage subsidies very long term unemployed to 20,000 places per year and boosting job assistance
• Establish an Affordable Housing Growth Fund to expand the stock of affordable housing
• Increase the maximum rate of Commonwealth Rent Assistance by 30% (around $15 per week) to assist people on low incomes to meet rising rental costs
• Invest in capacity for community health services to engage with key health policies, including the establishment of Medicare Locals and the Partners in Recovery framework
• Urgent Investment in the capacity of the community sector to deliver services and engage in national industry initiatives that will strengthen the third sectors ability to meet the crucial social demands of the future
• And the establishment of a Community Sector Adaptation Fund to support climate change adaptation and extreme weather preparedness of the community sector.

Key ACOSS Budget savings: $6b in 2014-15

Curb income tax avoidance
• The use of private ‘discretionary’ trusts
• Capital gains – income from sale of assets such as property and shares
• International companies reducing tax paid in Australia
• Churning income through super accounts to avoid taxes on wages

Tackle poorly targeted spending programs and tax breaks
• Health insurance rebate for ancillary or ‘extras’ cover not related to hospital care
• The 20% tax-break for medical ‘gap fees’ exceeding $2,060 a year
• Senior Australians and Pensioners Tax Offset
• Deduction for education expenses – already announced.
• Non superannuation termination payments

Revenue Neutral measures
• Restructure Family Tax Benefits – Target families at risk of poverty and simplify the family payments system – review Baby Bonus and School Kids Bonus and better target through higher Family Tax Benefit Part A to low and middle income families.
• Remove Child Care Rebate – Use saving to introduce a universal minimum level of Child Care Benefit – the maximum rate of Child Care Benefit should be increased to better reflect child care needs, reasonable costs and capacity to pay. This would increase subsidies for low and middle income families facing the highest costs and reduce the regressivity of present subsidies for ‘gap fees’.