Audit Avoids the Real Problem - ACOSS

The Australian Council of Social Service says the biggest failure of the National Commission of Audit report is that the Commission never got the chance to look at the real problem of public revenue.

The National Commission of Audit report, released yesterday, made 86 recommendations  which included increasing the retirement age to 70, a $15 co-contribution fee for a doctor's visit, a means test on aged care funding and carers, abolishing the Family Tax Benefit Band and many other changes in a bid to make savings of between $20-$30 billion in the 2017-18.

ACOSS Chief Executive Officer Dr Cassandra Goldie said the biggest failure was that the Commission never got the chance to look at the real problem, which was public revenue.

"Revenue is more than $30 billion down a year on pre GFC levels," Dr Goldie said.

"The Commission tackles some areas of poorly targeted spending, but if the report was adopted, the community would lose many essential social protections and services."

She said most of the recommendations in the report failed the fairness test but believed a few were fair.

“The Audit advances a number of welcome proposals to curb spending for people who arguably don’t need assistance,” Dr Goldie said.

“These include restrictions on health cards for retirees with financial assets over a million dollars, a fairer system of child care benefits and paid parental leave, opening up pharmacies for competition, potentially fairer means tests for the pension and family payments, and an increase in the preservation age for superannuation.

“But the Commission does not go far enough in clawing back poorly targeted programs. A  balanced review, which looked at the revenue side as well as spending, would review superannuation tax concessions, one third of which goes the top 10 per cent of wage earners.

“These cost the public purse around $40 billion each per year. They are growing more quickly than the age pension and they are unfair and grossly inefficient, yet they remain untouched.

“The Audit is a first step not the last, in our collective effort to develop a reform blueprint to put our national finances on a sustainable footing.

“This should not be left with a small handful of experts. We all have a stake in this, and we urge the government against rushing to wholesale adoption of these radical changes in the coming Budget without closer evaluation and taking them to the community at the next general election.”

ACOSS believes the following recommendations are fair:

• Age Pension: single means test for income and assets;

• Tighter means testing  of Senior’s Health Cards;

• Increasing super preservation age, however, this should be equal to the age pension age;

• Paid Parental Leave: lowering the government contribution to average wages;

• Childcare: a fairer, single payment to replace Childcare Benefit and Childcare Tax Rebate;

• Expanded role for allied health professionals in medical practice;

• Independent pricing authority for PBS, and opening pharmacies up for competition;

• Tighter means tests for family payments, excluding families on high incomes;

• Establish a policy process to review and simplify the structure of welfare payments.

Among the recommendations ACOSS believe are unfair include:

• Freezing of tax revenue at 24 per cent of GDP for a decade, which will severely limit provision of essential payments and services beyond about four years;

• States having access to personal income tax. Income tax is the fairest way to raise revenue and if the States compete tax rates down, fairness would be jeopardised;

• Abolish direct federal funding for affordable housing and homelessness programs;

• Market rents for public tenants, offset only by the inadequate Rent Assistance payment;

• Cuts to pensions, including Age Pension, Disability Support Pension, Carer Payment and Parenting Payment: reduction to pensions of 28 per cent of overall average wages (25 per cent for Parenting Payment Single) instead of average male wages. This reduced indexation would cut single pensions by $100 a week in a decade;

• Cut in minimum wages which will increase poverty and could also lead to future reductions in Newstart Allowance.

Other Responses to the Report

In response to the Commission of Audit report recommending that housing and homelessness programs and services should be a State and Territory only responsibility, Homelessness NSW has called on the NSW Premier Mike Baird to reject any moves that pull Federal funding.

"In NSW, the loss of Commonwealth funding for homelessness services in 2014-15 would mean NSW would have to find an extra $100 million just to retain current services," Homelessness NSW Chief Executive Officer Gary Moore said.

"The Baird Government is in the middle of a major transformation of the State's existing 340 homelessness services. It could find no additional funds of its own to help this reform. Having to find extra funds to meet a Commonwealth abrogation of its responsibility would be impossible."

The report also recommended that Commonwealth funds, withdrawn from this area, should be put into rent assistance, including direct rebates for public housing tenants who should be required by State housing authorities and community housing providers to pay market rents.

Carers have also expressed concerns about the report’s recommendations that affect payments to carers.

Peak body Carers Australia was most concerned with the recommendation of transitioning Carer Payment and the Disability Support Pension to a new benchmark of 28 per cent of Average Weekly Earnings compared to the current Carer Payment, which is indexed to 27.7 per cent of Male Total Average Weekly Earnings, or Pensioner and Beneficiary Living Costs Index, whichever is highest.

“Any change to the indexation rates for these payments which results in a diminished real value will see some of the most financially vulnerable members of our community facing even greater hardship,” Carers Australia CEO Ara Cresswell said.

“We have seen that the Newstart Allowance has not kept pace with the real costs of daily living, which is directly attributable to its indexation rate. Current recipients of Newstart Allowance now live below the poverty line.

“Any decrease in the value of the Carer Payment will see many carers unable to meet the medical, support and day-to-day living costs associated with unpaid care.”

Cresswell was also concerned about the Commission’s recommendation to limit the annual Carer Supplement to only one payment per carer.

“Approximately 16 per cent of carers care for more than one person, involving a significant financial burden. Should this recommendation be taken up by government, many of these carers would be adversely affected,” she said.

The Commission also recommended a review of the eligibility criteria for the Carer Payment “applying to the type of care provided and to the needs of the adult receiving care” and “this should ensure that Carer Payment is targeted to those whose caring responsibilities limit their capacity to work”.

“Access to the Carer Payment is already tightly controlled, as recipients must prove that they personally provide constant care in the home, and the care-recipient must also meet strict conditions about the nature of their disability,” Creswell said.

“The introduction of an income test for the Carer Allowance is also a concern to many carers. To limit carers’ eligibility for the payment on the grounds of income fails to recognise the additional costs of caring that all carers must face, regardless of income. 

“While we appreciate the need for effective economic management, we urge the government to resist the changes proposed by the Commission of Audit and to fully recognise the substantial contribution made by unpaid carers to the aged care, disability and health sectors on an ongoing basis and in the upcoming Federal Budget.”

The Government said it would not provide an immediate response to each of the report’s recommendation – its response to the Commission of Audit report will be its first Budget on May 13.

To view Phase One of the National Commission of Audit report and its recommendations, click here.