Newstart Spared in Budget Savings Bill, But Threat of Cuts Remains

A $6.3 billion budget savings deal between the Coalition and Labor has spared proposed cuts to Newstart, but the peak body for welfare said the threat of social security cuts remains.

Proposed changes to the energy supplement measure, which would have reduced Newstart payments by $4.40 a week, have been pared back.

Only new recipients of the Family Tax Benefit and Commonwealth seniors card holders will lose their supplement, reducing government savings from $1.3 billion to $208 million.

The deal follows weeks of uncertainty surrounding the omnibus bill.

The Australian Council of Social Service (ACOSS) welcomed the budget compromise but warned against the government pushing cuts to Newstart through under separate legislation.

“It is unfortunate we have had to debate whether or not to cut the $38-per-day Newstart allowance by removing the energy supplement. We should be focusing on how to increase the payment so people can live with dignity while looking for work,” ACOSS CEO Cassandra Goldie said.

“We call on the federal government to not seek to introduce any of the measures removed from the omnibus bill separately, there has already been too much uncertainty for people on low incomes.

“Removing these measures from the bill is sensible and we’re pleased that Labor and the government has listened to concerns from a wide variety of stakeholders who opposed these cuts.”

However, Goldie said it was concerning that families on low incomes would be hurt by the loss of the energy supplement.

“A single parent family with two teenage children will lose $284 a year, or $5.50 a week,” she said.

“The loss of the energy supplement to families follows a series of cuts to these payments over the last few years. We cannot afford to further cut away at family payments.”

She also said government should change its approach to the budget to support vulnerable Australians, including the removal of other proposed cuts to welfare payments.  

“The youth payment cuts which remain before the Parliament would result in an unemployed young person losing $47 a week and having to wait four weeks for payments,” she said.

“Parliament and the community have shown that they will not support harsh cuts to those on low incomes. The government must reset its budget strategy, by withdrawing proposed tax cuts as well as further cuts to family and youth payments and other measures which will hurt those on low incomes.”

In the budget renegotiations Shadow Treasurer Chris Bowen secured three other major concessions.

Cuts to the Australian Renewable Energy Agency were reduced from the proposed $1 billion to $500 million.

The Coalition’s $1.4 billion baby bonus was scrapped, and the Family Tax Benefit Part A supplement for families with incomes above $80,000 was also removed.

The compromise will deliver $6.3 billion in savings over four years, in line with the Coalition’s original target.

“Passage of these more than $6 billion in savings measures is another crucial step in the Turnbull government’s continued path to budget balance,” Treasurer Scott Morrison and Minister for Finance Mathias Cormann said in a joint statement.

“Restoring our budget will arrest our debt, meaning we can protect our economy against significant economic shocks.

“Putting Australia on the path to a stronger economy will also ensure we can boost living standards and employment opportunities.”

Bowen credited Labor with delivering budget savings that are “fair” and protected vulnerable Australians.

“Once again, Labor has protected pensioners, single parents, carers and people with disability and people who have lost their job from the Liberal’s harsh cuts,” Bowen said.

“Labor’s package delivers more savings over four years than the $5.997 billion first proposed by the government. In negotiating with the government, Labor has developed fairer measures that will save the budget more.”