ACOSS Budget Submission: Tax Cuts a Mistake While Services Funding Shortfalls Remain and Unemployment Payment Too Low

by Mez Fisher | 26, Feb 2018 | Reports & Information

The Australian Council of Social Service has cautioned that the up-coming Federal Budget must continue to strengthen public revenue to secure vital community services and supports into the future, rather than squander billions on unjustified tax cuts.

In releasing the ACOSS Budget Priorities Statement, CEO Dr Cassandra Goldie said, “It would be a big mistake for this government to press ahead with personal and corporate tax cuts when we’re facing major funding shortfalls in vital areas such as the NDIS, health, needs-based schools funding, and action to reduce poverty.”

“It would be unconscionable to pursue tax cuts at the same time as slashing essential benefits and services affecting people on the lowest incomes, particularly when the budget is still in a weak position.

“We cannot afford to repeat the past mistake of handing out unfunded tax cuts in the run-up to elections. The eight annual tax cuts from 2003 to 2011 largely created the budget problems the government now faces. We all know that tax cuts today mean cuts to essential services down the track.

“Income tax is not the main pressure on household budgets. The majority of personal taxpayers are paying less income tax now than they would have paid under the 2003 tax scales before all those tax cuts were given.

“The biggest increase in the cost of living over the last six years has come, not from taxes, but out-of-pocket payments for essential services. From 2011 to 2017, health care costs for households rose by 40%, child care rose by 57%, schools by 37% and dental care by 14%. The CPI rose by just 11% over this period. A ‘sandwich and milkshake’ tax cut isn’t the answer to these pressures on household budgets.

“We have a choice: either pay more up front for these services, or share the cost through the tax system. In this submission, $10 billion a year is earmarked for health, aged care and disability services from revenue and savings measures including a stronger Medicare Levy, reducing the generosity of superannuation tax breaks for retired people, abolition of the Private Health Insurance Rebate, and a tax on sugary drinks.

“Ultimately, we think the best and fairest way to raise revenue is to remove tax shelters, loopholes and other unjustified inconsistencies in the tax base.  These include capital gains tax concessions, negative gearing deductions, the use of private trusts and private companies to avoid paying personal income tax, further steps to curb international business tax avoidance, and remove business tax breaks that are not fit for purpose.

“Proposed new spending is in areas of critical underfunding that have been neglected for decades and which have especially impacted people on the lowest incomes. These include raising below poverty line income support payments, action to address unaffordable housing, and new investments in mental health and dental health services.

“The most urgent priority is to lift the unemployment payment, which has not been increased in real terms for 24 years.  We propose a $75 per week increase in income support payments for single people who are unemployed or studying fulltime, reflecting new evidence on basic living costs.

“The May Federal Budget provides this government with a clear choice: it can pursue a senseless tax cut handout now and leave the nation with the prospect of another horror budget down the track to pay for it. Or it can take the fair and sensible path of deferring any tax cuts until we can actually afford them – when the Budget is in better shape and essential services and poverty alleviating support payments are properly resourced,” Dr Goldie said.

DOWNLOAD ACOSS Budget Priorities Statement

ACOSS: Disability Support Pension Cuts Bad News

by Mez Fisher | 26, Feb 2018 | Reports & Information

Reports about lower spending on the Disability Support Pension (DSP) hide the increasing number of people on unemployment payments who have a limited capacity to work, ACOSS says.

In a media statement, ACOSS said these people have little hope of finding full time work, not least because there is only one job available for every eight applicants.

The savage drop in successful applications for the DSP has meant that large numbers of people with a disability are instead being forced onto the Newstart Allowance, receiving $170 per week less.

Cassandra Goldie, CEO of ACOSS says people are forced onto Newstart despite being known as disadvantaged in the jobseeker market.

“Almost one third of people on Newstart Allowance have a partial capacity to work,” says Dr Goldie.

“A partial capacity means a person, because of illness or disability, is defined by Centrelink as only able to work between 0 and 30 hours per week. Yet they are forced onto Newstart Allowance, a lower rate of payment than DSP, and must compete with other jobseekers who have full capacity to work.

“Over several years, governments have tightened DSP eligibility requirements. These policies increase rates of poverty in Australia.

“Successful claims have dropped from 63 per cent in 2010 to just 25 per cent in 2015/16 – not 40 per cent as suggested in media reports.

“Many people denied DSP would be forced to accept Newstart. They often have a poor chance of getting paid work and have to cover the cost of basic essentials including food, housing, transport and medical costs on just $274 per week (not including rent assistance), which is $174 per week lower than the DSP and more than $100 per week below the poverty line.

“This is obviously devastating for people who are living with a disability, often acquired in the workplace, and who are struggling to find a job.”

People can appeal a decision to deny them DSP, but they often need assistance from community legal centres like Social Security Rights centres.

The National Social Security Rights Network reviewed 22 of their centres’ cases where someone had been denied DSP and appealed the decision. Of these, 17 were granted DSP on appeal (77%).

“How many people are out there who have been denied DSP but are living with the wrong decision and haven’t appealed it?” asks Dr Goldie.

“Our social security system should ensure that people get the right support they are entitled to.

“We must urgently increase the rate of unemployment payment so that it does not leave people destitute.

“We must ensure people who need the DSP receive it.  And we must do better in terms of employing people with a disability.”