Back in black… but a missed opportunity?
Wednesday, 3rd April 2019 at 10:08 am
The budget is back in black, according to Treasurer Josh Frydenberg who delivered his first budget on Tuesday.
But the social sector has lashed out that it was a lost opportunity to tackle poverty, with welfare, foreign aid and housing some of the biggest losers on the night.
At the heart of the 2019 Budget, which doubles as a campaign launch for the federal election, is the announcement that Australia is set to return to surplus for the first time since 2007.
“For the first time in 12 years, our nation is again paying its own way,” Frydenberg said.
However there has been some questions raised around the robustness of the surplus, with the 2018-19 financial year projected to end with a $4.2 billion deficit.
Moreover, the Coalition will have to win re-election if it is to deliver its much-lauded surplus, and there is talk the budget is more of a political leaflet.
It was certainly a politically charged budget in which the Coalition made a pitch to middle Australia, matching in large part what Labor has promised low and middle class earners.
The federal government appear to be positioning themselves as the party of good economic management, of tax cuts not tax hikes, and spruiking their credentials as putting money back in people’s pockets.
There was a record infrastructure investment of $100 billion over the next decade.
A recurring theme throughout Frydenberg’s speech was the assertion that they have done “all of this without increasing taxes”.
The centrepiece was $158 billion in income tax cuts over a decade.
The coalition will also seek to flatten tax brackets by 2024, cutting the 32.5 per cent tax bracket to 30 per cent.
“This will cover all taxpayers earning between $45,000 and $200,000 and will mean that 94 per cent of taxpayers will pay no more than 30 cents in the dollar,” Frydenberg said.
However many in the social sector have slammed the budget, for failing to look after Australia’s most vulnerable.
Australian Council of Social Service broke the tax package down claiming the overall package gives the most dollars to people who already have the most, and “offers people on the lowest incomes nothing”.
“People on $200,000 will get over $224 a week. People on $50,000 will get $23 a week. People on $25,000 (on pensions) get a one-off payment of $75 (equivalent to $1.40pw). People on $15,000 (on Newstart) get nothing,” ACOSS said.
Meanwhile Anglicare Australia hailed the budget as a “lost opportunity to tackle poverty”.
“If you’re locked out of a job or in an insecure job, it seems that you’re simply invisible. Tonight’s budget will leave unemployed people, underemployed people, students and those struggling with housing costs worse off,” Anglicare Australia executive director Kasy Chambers said.
A rise to the level of Newstart was noticeably absent from the budget – there hasn’t been a rise in real terms for 24 years.
But as previously revealed, the government is extending the rollout of the controversial cashless debit card.
Two of the biggest savings measures included in the budget also came from the welfare sector.
The government is expected to save $2.1 billion over five years by “simplifying and automating” the social security reporting system with data-matching technology, in a move to “greatly reduce” the likelihood of welfare recipients being overpaid.
There are some concerns among those in the social sector that this measure looks alarmingly like Robo Debt 2.0. Given the fall out from the first “robo-debt scandal”, the sector is waiting to see what this inclusion means for vulnerable people on income support.
A further saving is expected to come from slowing down payments made through the National Disability Insurance Scheme.
While the budget figures are not clear on the current underspend on the NDIS, conservative estimates put the figure at least $1.6 billion.
Kirsten Deane, director of Every Australian Counts said the NDIS has been underspent since its inception.
“NDIS funds must be spent on the NDIS – not bolstering the budget bottom line”, Deane said.
“This is a direct result of problems with the way the scheme is being implemented. People are waiting too long to enter the scheme – and once they do they are waiting too long for support.”
There was also no action to address homelessness or Australia’s housing affordability crisis.
Everybody’s Home, a national alliance of community, housing and homelessness organisations, slammed the record underspending on social housing in the budget.
“While the Coalition announced a forecasted surplus of $7.1 billion last night, it meant little to those 116,000 people experiencing homelessness or those 800,000 experiencing rental stress,” Kate Colvin, Everybody’s Home campaign spokesperson, said.
“The federal government continues to prop up the property sector with $11.8 billion in tax breaks but there’s nothing for ordinary Australians and renters who just want a home.”
The government also failed to lift the aid budget, which CEO of ACFID Marc Purcell, said was “effectively a cut” because of the failure to grow the aid budget in-line with inflation.
However, it was not all negative for the social sector.
There were welcome announcements in the form of additional funding commitments for aged care, along with a $461 million boost for youth mental health services and funding for education and support programs for newly arrived migrants.
The government will provide $328 million over the next four years to implement the fourth action plan from the National Plan to Reduce Violence Against Women and their Children 2010-2022. This will include funding for the 1800RESPECT helpline.
The budget also included $528 million over five years to fully fund a royal commission to examine violence, abuse, neglect and exploitation of people with disability, including $379.1 million to run the commissions and $149 million to provide counselling and support services.
Looking at the broader social economy, the $100 billion investment in infrastructure is being considered an opportunity to consider the social, as well as economic, costs and benefits of major public projects.
SVA CEO Suzie Riddell pointed to the Indigenous Procurement Policy as a promising start in this area, particularly the extension to 3 per cent of the value of Commonwealth contracts, but said there’s scope for much more to be done.
“We invite the government to embrace social procurement in its infrastructure and service expenditure and support businesses that are achieving social good through, for example, employing people who experience barriers to mainstream employment,” she said.
The government also allocated $5 million to establish a New Social Impact Investing Taskforce in the Department of Prime Minister and Cabinet.
SVA, which had recommended establishing a taskforce in a central agency, welcomed the move.
“Private capital is never going to replace the need for ongoing investment by government in critical services, but there is scope for it to have significant impact in areas including affordable housing supply, social impact bonds and social enterprise development,” Riddell said.
There was also a new investment of $14.1 million to trial three outcomes payment transactions to the social impact investing market.
SVA said this was a welcome addition to the social impact investing market, but would not reach the scale needed to see break out growth in the sector.
David Crosbie told Pro Bono News there was an “element of déjà vu” in the budget.
“Across most of the Liberal-National government budgets, there has been a relatively consistent narrative about the future of Australia grounded in future tax cuts and predicted budget surpluses. This is at best a shallow vision,” Crosbie said.
“Beyond the increased infrastructure spending, there are shards of welcome expenditure in important areas like; Headspace, apprenticeships, and primary care.
“There are also some one-off announcements like providing charitable status for mens’ sheds, and many small amounts of additional funding to groups like Mona in Tasmania, mentoring for female and Indigenous musicians. But these are generally minor ad hoc investments failing to address underlying issues.”
He said what was missing was “real leadership” on critical issues like; climate change, addressing poverty, wage stagnation, providing opportunities for the marginalised, improving education, reforming blockages to effective disability and health care, promoting innovation, supporting creativity and the arts, playing a role in reducing global poverty, and ensuring adequate housing.
Crosbie said while the treasurer used the word “fair” about the budget, he saw no real attempt to make Australia fairer.
“Even the proposed tax cuts favour the wealthy, further increasing inequality,” he said.
“This is a budget promising a steady as you go set of services, less taxes and a small surplus in the future, but it fails to offer a compelling narrative about the kind of Australia we want to live in.”
Our 2019 budget coverage is brought to you by Community Sector Banking.