Budget 2016: Welfare Safety Net But Sector Warns Budget Locks in Harsh Cuts

The federal government budget will establish a welfare safety net along with a $96.1 million fund aimed at reducing the number welfare recipients. But the welfare sector has warned that the budget still locks in harsh cuts.

The new fund will be called the Try, Test and Learn fund.

Social Services Minister Christian Porter, following the treasurer’s budget speech, said that the welfare safety net would help the government identify groups at risk of long term welfare dependency and move them off welfare into employment.

“The education, health, social services and employment portfolios will develop the policies with key input from external experts and the community sector,” he said.

“Policies that are found to be effective will be continued or enhanced, while ineffective policies will be improved or ceased, with funding made available to new approaches.”

In addition, Porter said the government would invest $5.1 million over four years in two early intervention and prevention trials to reach vulnerable people, and reduce the likelihood of people requiring support services later in life.

The budget confirmed it will also provide $100 million in new funding over three years to reduce violence against women and their children.

The government said it would also provide $7.1 million in 2016-17 to the Commonwealth Financial Counsellors for a problem gamblers initiative.

“This will allow specialised financial counsellors to continue operating for a further 12 months in 50 locations across Australia. These counsellors are specifically trained to help people manage their addiction and the accompanying financial challenges, and provide early intervention for people at risk of problem gambling,” Porter said.

CEO of welfare peak body ACOSS, Dr Cassandra Goldie, said the budget offered some positive directions but locked in harsh cuts with more likely to come.

“The budget locks in $13 billion in cuts from family payments, income support for young people and paid parental leave, and adds a further $3 billion in cuts to payments and essential services. This includes cuts to Medicare and dental health and income support for people with disability,” Dr Goldie said.

“Alarmingly, the budget delivers a real cut to new recipients of the Newstart Allowance through removing the compensation for carbon pricing, while the related tax cuts remain in place. For people surviving on just $38 a day, this is unconscionable.

“We are very pleased to see the new approach to helping young people into paid work. This budget recognises the failure of work for the dole, and has instead provided an opportunity for young people to get work experience in real jobs with a wage subsidy, something we have urged for some time and should be used more widely.

“The tightening of super tax concessions and changes to youth employment programs are welcome, but harsh cuts affecting people on low incomes remain locked in, with more announced and more likely to come. The failure to strengthen revenue is a major problem, and this budget reveals the ongoing consequences to essential services and the social safety net.

“We also welcome the action on superannuation and multinational tax avoidance. The superannuation reforms take us in the right direction, tackling unfair concessions for people on higher incomes, and providing assistance to people who struggle to secure adequate retirement savings. However, the tax treatment of super remains biased towards higher income earners, and the door for future reform must remain open.”

Dr Goldie said personal and company tax cuts costing $8.8 billion are only partly offset by the $3.3 billion in integrity measures, most of which are assumed to come from more resourcing of the ATO.

“By failing to act on shelters and loopholes such as negative gearing, capital gains discounts, private companies and trusts and work-related deductions, our revenue base is at real risk of further erosion,” she said.

ACOSS said it was concerned that all of the reduction in the deficit over the next four years ($1.7 billion) from the budget comes on the spending side ($3.3 billion), with revenue declining by $1.3 billion.

“The budget has failed to take any action to address housing affordability in Australia, or to lift the unemployment payment. Serious gaps remain in essential services including legal assistance, early childhood and homelessness services,” Dr Goldie said.

“We cannot support further cuts to Centrelink staffing, at a time when the system is already under severe strain.

“This budget must be the beginning, not the end of tax reform. Any tax cuts – personal or corporate – should wait until enough revenue has been raised to pay for them and restore essential services.

“Most people are still paying less tax overall than a decade and a half ago, before eight annual tax cuts were given. The proposed personal tax cut will only benefit the top 20 per cent of income taxpayers.”