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ACOSS Delivers Federal Budget Proposal


10 February 2014 at 3:59 pm
Staff Reporter
Welfare peak body, the Australian Council of Social Service (ACOSS) has urged the Federal Government to deliver on its promise to put the nation's Budget on a fair and sustainable long-term footing in its Budget submission, which proposes almost $5 billion in savings next financial year.

Staff Reporter | 10 February 2014 at 3:59 pm


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ACOSS Delivers Federal Budget Proposal
10 February 2014 at 3:59 pm

Welfare peak body, the Australian Council of Social Service (ACOSS) has urged the Federal Government to deliver on its promise to put the nation's Budget on a fair and sustainable long-term footing in its Budget submission, which proposes almost almost $5 billion in savings next financial year.

"We agree with the Treasurer that it's our duty to help people who are most vulnerable in our community,” ACOSS CEO Dr Cassandra Goldie said.

ACOSS says its Budget Savings Measures total $4.4b in 2014-15 and $10.2b in 2015-16.

ACOSS supports a review of government entitlements, but states it should target wasteful and poorly targeted programs, not benefits and services for people who are already doing it tough such as homeless people, Aboriginal and Torres Strait Islander peoples, unemployed people and people living with disabilities and relying on income support.

“People are entitled to expect governments to provide income support and essential services such as age pensions, health services, and tax breaks for superannuation, but those entitlements can only be sustained and improved if they are based on need,” Dr Goldie said.

"Now is the right time for Government action to clamp down on wasteful and inefficient expenditure to allow us to close the worst gaps in our economic and social infrastructure.

"The Coalition Government's first Budget is a real opportunity to better direct spending and tax breaks to areas of greatest need, such as adequate income support and employment assistance for people who are unemployed.

“There's also great need in the areas of affordable housing and child care for low and middle income families, and for maintaining the critical support provided by community services helping the most vulnerable members of our community,” Dr Goldie said

"The budget should take urgent action to meet the needs of those who are excluded from the benefits of a wealthy society – a job, affordable housing, a decent income, and basic community services such as disability services and dental and mental health care.

"These priorities are all the more important at a time when employment growth is stagnating,” she said. “Already we see that more than 60 per cent of people receiving the unemployment allowance Newstart are left to survive for a year or more on $36 a day without access to the training, work experience and job counselling they need to help them secure a job. More people are likely to face this experience in the coming year with the unemployment rate expected to rise to 6 per cent.

"The Government cannot ignore the fact that much of the waste in the budget lies on the tax side of the ledger. For instance, super tax breaks cost around $40 billion each year, about the same as the Age Pension. Almost a third of the tax breaks for super contributions go to the top 10 per cent of workers.

"The current set of retirement and age-based tax concessions are both unfair and inefficient. As the population ages, governments will face increasing and legitimate demands on health and aged care services, yet less than 20% of individuals over the age of 64 pay any income tax.

"Another key area of reform is housing tax concessions, and in particular negative gearing which encourages excessive borrowing to invest in existing rental properties with a view to making capital gains rather than rental returns. This contributes to house price inflation and excessive levels of household debt during investment booms.

"Our proposal is to quarantine deductions for expenses relating to passive investment in housing, shares, collectables and similar assets purchased after 1 January 2015 to offset income received from those assets, including capital gains realised on their subsequent sale,” Dr Goldie said.

ACOSS proposes that half the revenue savings from this measure be earmarked to help alleviate Australia's worsening housing affordability crisis through an Affordable Housing Growth Fund and future expansion of the National Rental Affordability Scheme (NRAS).

"On the spending side, there is scope to redirect health and child care programs towards those in most need and to stem inflation in costs to consumers and governments at the same time,” Dr Goldie said. “The health insurance rebate for ‘extras' cover and Extended Medicare Safety Net should be removed and child care assistance restructured to absorb the Child Care Rebate into a simpler, better targeted Child Care Benefit.

ACOSS views the Age Pension as a vital safety net for retirees and supported the recent pension increases for singles. To put the pension on a more sustainable footing, ACOSS believes it should be better targeted.

“As a result of a poorly conceived easing of the assets test in 2007, a couple over 65 with assets apart from their home worth a million dollars can now claim a part pension, Dr Goldie said.

"Retirees whose income and assets are too high to qualify for a pension under these rules receive a Seniors Supplement. These public supports are clearly not well targeted to people who need them,” she said.

"Our Budget proposals would improve the bottom line by $1 billion in 2014-15, $5 billion the following year, and much more in future years, making room to fund the services that will be needed by an ageing population.

"This gradual tightening of the Budget, paid for by curbing wasteful and poorly targeted programs, is the fair and responsible path to budget reform," Dr Goldie said.

Summary of ACOSS proposals

•    Quarantine tax deductions for expenses relating to passive investments in housing, shares, and collectables purchased after January 1 2015 to offset income received from those assets, and earmark half the savings to the affordable housing growth fund (-$500 million) (-$1,000 million in 2015-16).

•    Reform tax treatment of private trusts (-$1,000 million in 2015-16).

•    Restore $25,000 annual cap on concessional superannuation contributions (-$500 million).

•    Curb tax avoidance through the ‘churning' of wages through superannuation (-$500 million in 2015-16).

•    Progressively extend the 15% tax rate on super fund earnings to accounts in the ‘pension phase' $300 million in 2015-16).

•    Remove 30% Private Health Insurance Rebate for ancillary cover (-$1,000 million in 2015-16).

•    Reduce Pharmaceutical Benefit Scheme subsidies for out-of-patent medicines (-$1,300 million).

•    Abolish the Extended Medicare Safety Net (-$550 million).

•    Restrict the tax offset for Seniors to people who qualify for a pension (-$900 million in 2015-16).

•    Restrict income support Supplements for Seniors to people who qualify for a pension (-$250 million).

•    Tighten the pension assets tests so that couples with assets over $1 million apart from their homes no longer qualify (-$1,300 million).

ACOSS spending measures (Total $3.4b in 2014-15 and $5.6b in 2015-16):

•    Raise level of 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 ($400 million) ($1,800 million in 2015-2016).

•    Index all Allowance payments to wage movements ($300 million) ($600 million in 2015-16).

•    Improve the targeting of the family payments system and raise payments for families at greatest risk of poverty ($300 million) ($350 million in 2015-2016).

•    Double the number of wage subsidies available for very long term unemployed people to 20,000 places per year ($30 million) ($30 million in 2015-16).

•    Establish an Affordable Housing Growth Fund to expand the stock of affordable housing, with a down-payment of $750 million in the first year and increased and sustained long term ongoing funding ($750 million) ($900 million in 2015-16).

•    Maintain current funding for homelessness services beyond expiry of the National Partnership Agreement on Homelessness and index to Consumer Price Index (CPI) ($160 million) ($170 million in 2015-16).

•    Increase the maximum rate of Commonwealth Rent Assistance (CRA) by 30% (around $19 per week) to assist people on low incomes to meet rising rental costs ($880 million) ($920 million in 2015-16).

•    Maintain critical support for services assisting the most vulnerable members of the community, including legal services ($6.5 million), Aboriginal and Torres Strait Islander representative organisations and multicultural services ($17 million).

•    Strengthen the capacity of the community sector by: properly indexing community service contracts to a standard index to improve the contracting environment for government-funded services ($350 million) ($360 million in 2015-16); funding an Industry Plan for the community sector ($20 million) ($30 million in 2015-16); and establishing a Community Sector Adaptation Fund to support climate change adaptation and extreme weather preparedness projects undertaken by community sector organisations ($10 million) ($10 million in 2015-16).

•    Introduce a universal minimum level of Child Care Benefit and increase the maximum rate of Child Care Benefit to better reflect child care needs, reasonable costs and capacity to pay, as recommended in the Henry Report. This revenue-neutral reform should be funded by savings from removing the poorly targeted Child Care Rebate. (Cost neutral).

DOWNLOAD ACOSS Budget Priorities Statement

 

Staff Reporter  |  Journalist  |  @ProBonoNews





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