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Budget cuts needed to clear the decks for NDIS, dental care and other priorities

22 October 2012

ACOSS has today welcomed cuts to poorly targeted programs as essential to make way for spending in key priorities like support for people with disabilities and national dental care.

"Changes to the Private Health Insurance rebate and the Fringe Benefits Tax exemptions are key steps to make room for higher priorities such as the National Disability Insurance Scheme and dental care for people on low incomes," said ACOSS CEO Dr Cassandra Goldie. "The extra resources for the ATO to combat tax cheats are also a welcome increase." she said.

"Over most of the last decade, as tax revenues poured in from the economic boom, much of the proceeds were spent on poorly targeted programs. As Treasury warns that the “Government revenue boom” is over, it’s vital that these poorly targeted and wasteful programs are trimmed to make room for higher priorities including the NDIS; investment in social housing to ease the housing crisis; and improvements in Government benefits and employment services to ease poverty.

"It’s hard to justify generous benefits like the Private Health Insurance rebate and tax breaks for people on high incomes when one in eight people and one in six children are living below the poverty line, the Newstart Allowance is only $35 a day, and people on low and modest incomes are struggling with extreme housing costs. That’s also why ACOSS has called for increases to fringe benefits tax for in-house corporate benefits.

"As the population ages and the cost of essential health and aged care services grows, more will have to be done to rein in the cost of tax breaks for superannuation and other tax benefits for older people on above-average incomes. The MYEFO reports that superannuation tax breaks will cost $32billion in 2012-13, about the same as the Age Pension. Governments will have to decide whether it’s fairer to charge older people for essential health and aged care services or to fund these services by taxing those have the ability to pay. Due to various special tax breaks for older people, the tax threshold for a couple over 65 is over $50,000 and people who are financially well off are able to avoid tax by churning their wages through their superannuation accounts.

"ACOSS is concerned that $150 million has been underspent on Job Services Australia services and employment services. JSA providers receive just $500 to $1,100 a year to help a long-term unemployed person improve their job prospects with training or work experience. These savings should be reinvested in employment services for long term unemployed people, for example by expanding the wage subsidies announced in last year’s budget.

"ACOSS accepts the need to reduce the cost of the poorly designed Baby Bonus but would prefer to see the savings invested in better family payments for parents struggling on low incomes. Given the Baby Bonus reforms will be introduced in 1 July 2013, we are looking to see what will be done for families on low incomes through the family payment system in the May Budget, to ensure they won’t be worse off.

"ACOSS opposed the decision in 2009 to remove the indexation of family payments to wages. Full indexation of family payments should be restored to reduce the one in six children living in poverty. Similarly, the poorly targeted Child Care Rebate should be combined with the Child Care Benefit as the Henry report recommended. Savings from benefits that go disproportionately to high income families could be used to alleviate the shortage of affordable child care for low and middle income families, especially for children under 3 years old," Dr Goldie said.

Media Contact: 0419 626 155