Federal Budget 2012: Cut Wasteful Expenditure, Not Support for the Most Needy - ACOSS

ACOSS, the Australia Council of Social Service, has released its priorities for the Federal Budget in 2012, calling on the Australian Government to tackle waste while giving priority to those who struggle the most.

‘There are glaring gaps in our national policy efforts to reduce poverty and exclusion, including the inadequacy of income support and employment assistance for unemployed people, sole parents, young people and people with disabilities who rely on payments such as Newstart and Youth Allowance,' says Acting CEO Dr Tessa Boyd-Caine.

‘There is no question that, through good economic stewardship, Australia has fared relatively well during the recent global economic downturn and our unemployment rate remains relatively low. However, it is also clear that, at the beginning of 2012, progress in reducing unemployment further has stalled, Australia's economic growth prospects are uncertain in the short term, and structural changes in the economy pose social challenges as well as economic ones.

‘The solution to the tension between resources and need is not to retreat from reform but to pursue it more comprehensively, with a sustained attack on wasteful expenditure and tax breaks, while continuing social and economic reforms to improve support for those who continue to struggle to make ends meet,' says Dr Boyd-Caine.

‘In addition to long overdue reforms to the lowest income support payments such as Newstart, the absence of a national scheme to guarantee affordable basic dental treatment for people on low incomes, and the growing crisis in the supply of affordable, secure housing are also key priorities.'|

The ACOSS Budget Priority Statement outlines policy recommendations for consideration by the Federal Government in its 2012-13 Budget. Modest additional expenditures of the order of $3.6 billion in 2012-13 in key priority areas should be funded by savings from tackling unfair, inefficient tax waste and tax breaks, and by implementing revenue strengthening reforms that would save an estimated $4.8 billion in 2012-13.

Dr Boyd-Caine says, ‘This Budget strategy would lay the foundations for more sustainable Budget spending, and a more efficient tax system in future years, as well as promoting great social and economic fairness and an adequate standing of living for all.'

Key expenditure and revenue measures, ACOSS Budget Priority Statement 2012-13

Proposed new expenditure (costing an estimated $3.6 billion):

• Raise the level of payments for Newstart Allowance, Youth Allowance and other Allowance payments for single adults and young people living independently of their parents by $50 per week as recommended by the Henry Report ($600 million);
• Double the number of places in the new wage subsidy scheme for long term unemployed people and substantially boost the resources available to Job Service Australia providers to work intensively with this group ($100 m);
• Develop a national population-based oral health program, in place of the Medicare Chronic Disease Dental Scheme and Teen Dental Program ($500 m);
• Introduce national comprehensive community based primary health care ($500 m);
• Establish an Affordable Housing Growth Fund to expand the stock of affordable housing, and 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 ($1,000 m);
• Properly index community services funding to cover unavoidable increases in costs and to meet equal pay obligations as well as recruiting and retaining quality staff ($350 m).

Expenditure savings and revenue measures (raising $4.8 billion in 2012-13):

• Remove the private health insurance rebate from ancillary health cover ($500 million);
• Reform the tax treatment of private trusts to stem their use to avoid personal income tax obligations ($1,000 m);
• Fairer and more consistent tax treatment of lump sum termination payments such as ‘golden handshakes' ($300 m);
• Abolish poorly targeted tax rebates and deductions including the Senior Australians Tax Offset, the Mature Age Worker Tax Offset, the deduction for self-education expenses, recreational boating concessions, and the Medical Expenses Tax Offset ($2,000 m);
• Remove recently introduced Capital Gains Tax concessions for small business, which together enable individuals to permanently avoid tax on the capital gains from disposal of business assets ($1,000 m);
• Tighten the ‘thin capitalisation rules' to reduce opportunities for international companies to shift profits offshore ($500 m).

Replace the following poorly targeted tax concessions and direct expenditures with better-designed programs to improve assistance for those who need them most and to simplify them, at no cost to public revenue:

• Tax concessions for superannuation contributions should be restructured to make the system fairer and simpler, in conjunction with the proposed increase in Superannuation Guarantee contributions, roughly doubling the gains in retirement incomes for low income earners from higher compulsory contributions and capping poorly targeted tax breaks for the top 20% of taxpayers.
• The Child Care Rebate should be integrated within the better-targeted Child Care Benefit, so that benefits are based on child care needs, reasonable costs and capacity to pay, together with a minimum level of assistance for all. This would increase subsidies for low and middle income families facing the highest costs and reduce the regressivity of present subsidies for ‘gap fees'.

Further detail on ACOSS Budget Priority Statement can be found at www.acoss.org.au