The Australian Council of Social Service has welcomed the Federal Government’s decision to drop its unfair proposal to cut the indexation of all pensions and instead tighten access to part-pensions for people with substantial assets. ACOSS is also calling for broader social security reform to improve adequacy and indexation of the lowest payments and for action to reduce the cost of superannuation tax breaks.
“We are pleased the government is listening to the community on this important issue. It wasn’t fair that people on the lowest incomes faced cuts to the maximum rate of pension while a couple with over a million dollars in assets other than their home still received part pensions and concessions,” said ACOSS CEO Dr Cassandra Goldie.
“This is a modest step in the right direction but much more work will need to be done so that future Governments can afford health and aged care services for an ageing population. ACOSS will closely examine the Government’s proposal to assess whether it meets the goals of an adequate pension for those who need it while making sure the payment is sustainable into the future. The proposal partly reverses a decision to ease the assets test by a Government in 2006, which was neither fair nor sustainable.
“The Government must also look to the revenue side of the Budget, especially the over-generous superannuation tax breaks which make paying income tax voluntary for many retirees with substantial income and assets. As ACOSS has argued for many years, and as is now widely acknowledged, superannuation tax breaks are skewed towards high income earners with the top 10% receiving a third of their overall value. Superannuation should be a tool to manage income in retirement not a tool to avoid paying income tax.
“There is much unfinished business in social security reform that should also be tackled in the Budget. The decision to maintain indexation of pensions to wage movements is welcome but people receiving Newstart and other Allowance payments and low income families on Family Tax Benefits do not benefit from this. That means their incomes are falling behind those in the community generally, and Newstart Allowance is $170 a week less than the pension. The assets tests for Allowance payments and Parenting Payments should also be reviewed.
“We have consistently called for an increase in Newstart and related payments. We also propose (and the Government has partly endorsed) the idea that the adequacy of social security payments should be regularly reviewed by an independent advisory body. The cuts to indexation of Family Tax Benefits for low income families in 2009 should also be reversed, so that indexation to wage movements as well as prices is restored.
“We’ll also be looking for the government to take off the table other harsh measures in last year’s Budget, particularly longer waiting periods for unemployment payments for young people and reductions in family payments for low income families.
“In addition, the Age Pension access age, which the Government proposed to increase to 70 years in the last budget, should not be increased until Newstart and other allowance payments are substantially increased, the preservation age raised to parity with the Age Pension access age (with appropriate early access arrangements for those who need them) and a package of reforms introduced to improve employment services and ease age discrimination.
“As we have said consistently, Australia does have a serious public Budget problem. In dealing with this problem, the Government should not tie one hand behind its back by ruling out tax reforms that strengthen public revenue and deliver fairness and efficiency at the same time, such as proposals to curb tax deductions for negatively geared investors,” Dr Goldie said.
Media Contact: Fernando de Freitas 0419 626 155
See ACOSS Budget proposals:
Budget must chart a fairer path back to surplus: ACOSS