While the battle over tax cuts begins, we are losing the war on poverty

In responding to the Opposition Treasurer’s reply speech to the Federal Budget 2018 yesterday, ACOSS CEO Dr Cassandra Goldie said, “While the Opposition has adopted important policies to close tax concessions and strengthen revenue, it has now put these gains at risk by joining the Government in a dangerous personal income tax cut war.”

“Labor’s commitment to match and raise the government’s tax cuts two days after the Budget stands in contrast to its cautious approach to reviewing the Newstart Allowance, despite the obvious and widely supported case for a substantial rise in the lowest social security payments.

“The tax cuts offer little or no benefit to most people on low incomes: those earning less than $40,000 (the lowest 40% by income). People receiving income support, people who are unemployed, students, and low-paid part-time workers, most of them women, are truly the forgotten people of this Budget debate.

“Labor has done the hard yards to strengthen revenue through a package of proposed tax reforms. These gains are now at risk in the tax cuts bidding war. Essential services cannot be guaranteed, and people on low incomes will suffer most if too much revenue is given away now in a race to the bottom on personal income tax cuts.”

“Both parties talk a lot about people on low incomes, but as former Prime Minister Howard acknowledged, for the past 24 years each Federal Government has failed to lift, in real terms, the lowest incomes of all – Newstart, Youth Allowance and related payments.

“On Budget night, almost everyone from business to unions, community organisations and economists, called for an increase. This Budget was the opportunity for both the Government and Labor to commit to raising the rate. The Government declined to do so and Labor reiterated its promise for a review of social security payments.

“ACOSS applauds the support of the Greens, Senators Storer and Hinch and the members from Centre Alliance in their call for an immediate increase.

“It is disappointing that both major parties keep raising the furphy that a majority of recipients of Newstart Allowance also receive other payments. They know the only payment received by the vast majority is the Energy Supplement (at just $4 a week) and this payment is on the chopping block. Other payments such as Rent Assistance and Family Tax Benefits only go to a minority with the highest living costs: the costs of private rental and children.

“With the first signs of a better picture on public revenue, this is a time for careful budgeting, not a tax cut war. With 3 million people living in poverty in Australia, including 731,000 children, the first call on public revenue should be to lift the lowest incomes,” says Dr Goldie.


Key facts on supplementary income support payments and paid work: 

  • The only payment received by the majority of people is the Energy Supplement (at just $4 per week) and legislation to cut this payment remains in Parliament.
  • 38% of people receiving Newstart also receive rent assistance because they pay private rent. The maximum rate for single adults without children is just $67 per week. In our increasingly unaffordable housing market, Anglicare Australia recently found just 3 properties out of 67 000 nationally were affordable for a single person on Newstart receiving Rent Assistance.
  • The other additional payment, Family Tax Benefits (FTB), is received by only 19% of people on Newstart and is there to help parents with the increasing costs of raising children. The Federal Government froze the level of FTB in 2017 and abolished a range of supplements.
  • There is only one job available for every 8 people looking for paid work, and two thirds of people receiving Newstart are having to rely on the allowance for 12 months or more. Treasury predicts unemployment will not fall below 5% for the foreseeable future (around 700,000 people).