Morrison Delivers Welfare Budget Blow

Treasurer Scott Morrison has announced that social security and welfare will be cut by more than $1.2 billion in an effort to claw back a $37 billion budget deficit.

In releasing his first Mid-Year Economic and Fiscal Outlook (MYEFO) since becoming Treasurer three months ago, Morrison revealed that a fall in iron ore prices was largely responsible for a $2.3 billion increase in the deficit.

“Despite revenue write downs of almost $34 billion caused by falling commodity prices, a declining terms of trade, weaker global growth and the adoption of a more realistic domestic growth outlook we continue patiently and responsibly on the path to budget balance,” Morrison said.

“The underlying deficit is projected to contract from 2.3 per cent to 0.7 per cent of GDP over the budget and forward estimates.”

Morrison revealed that he would save $704 million over three years by cracking down on welfare compliance.

While overall appearing to abandon his predecessor Joe Hockey’s doom and gloom budgetary outlook, Morrison did use the phrase “repair the budget” six times in his report.

“Critically we have adopted a measured approach, avoiding extreme responses that would place a hand brake on household consumption and business investment growth and unnecessarily threaten the fresh new momentum emerging in our transitioning economy,” he said.

About to release our half-yearly budget update with my good friend @ScottMorrisonMP at 10am from Perth. pic.twitter.com/hiog7UNIOX

— Mathias Cormann (@MathiasCormann) December 15, 2015

The report indicated that the government would spend $1.2 billion, or 1 per cent, less on social security and welfare than it announced in the May budget.

Morrison said the government would provide an additional $15.9 million over two years to ensure the continuity of front line community services.

Services that will be funded include Children and Parenting Support and Emergency Relief.

The Treasurer said while the government would continue to support the National Disability Insurance Scheme (NDIS) as it transitioned to a full scheme, payments related to income support for people with disability would decrease by $201 million in 2015-16.

He attributed this to slower than expected growth in the number of recipients and changes in the medium-term population projections.

Morrison said that the government would live up to its commitment to permanently resettle 12,000 Syrian refugees, at a cost of $827.4 million over four years.

“The Government is also providing $44.0 million to support more than 240,000 displaced people in the conflict zone,” his report said.

“This funding will deliver food, water, healthcare, education, emergency supplies and protection, including support for women and children.”

CEO of the Community Council for Australia (CCA), David Crosbie, said the MYEFO was an important document for the social sector.

“MYEFO highlights a number of critical issues for the sector including; the determination of governments to promote employment and productivity, the need to reduce expenditure wherever possible, and increased focus on finding savings in areas with growth expenditures like aged care and welfare,” Crosbie said.

“This will undoubtedly set the tone for future budgets. MYEFO will present challenges to some parts of the charities sector. It also offers opportunities for those in the sector that can align their activities with what is emerging as a clear theme for governments across Australia.”

CEO of the Australian Healthcare and Hospitals Association (AHHA), Alison Verhoeven, called for healthcare to remain a funding priority following the release of the report.

“The revenue shortfall announced by Treasurer Scott Morrison has emphasised the need for the healthcare system to find more efficiencies and ensure well-targeted spending,” Verhoeven said.

“Multiple review processes are underway throughout the health sector and it is essential the responses to these reviews are coordinated in a whole-of-system approach to make the entire sector as effective and efficient as possible.

“Increased efficiency, including measures to address growth in bureaucracy, will need to be complemented with adequate, durable funding if the health sector is to adapt to the challenges of a growing burden of chronic and complex diseases, our ageing population, increased costs of health technology and rising consumer expectations.”

The AHHA called for vulnerable people, such as low and middle income earners and patients suffering chronic health conditions, to be protected from any change to the tax mix or spending cuts.

“The Government has a number of options for raising revenue such as increasing or broadening the GST, minimising or removing Private Health Insurance rebates, and increasing the Medicare Levy. But they would need to be offset by adequate protections to the most vulnerable members of our society,” she said.

“Australians need access to a sustainable, equitable public health system which provides quality care supported by sufficient government funding.”

The MYEFO report said that the government would aim to deliver surplus by the 2020-21 financial year – one year later than previously projected.