ACOSS Says Government Faces ‘Choice’ to Either Fund Services or Cut Taxes

Australia’s welfare peak body has urged the government to strongly invest in social services in the upcoming federal budget, rather than introducing “unjustified” tax cuts.

The Australian Council of Social Service (ACOSS) released their budget priorities statement on Tuesday, which said the government faced a “choice” to either properly fund services or cut taxes.  

“In this budget we face a choice. The last budget marked a significant and welcome shift in budget policy from cutting spending on essential benefits and services to strengthening revenue,” the submission said.

“In 2018, we urge the government to continue down that path… [but] regrettably, the government is still proposing cuts to the company tax rate that are projected to cost $14 billion in 2026, and has also foreshadowed cuts to personal income tax rates.

“Tax rate cuts cannot be justified while cuts to essential benefits and services affecting people on the lowest incomes are also proposed and the budget is not yet in a robust position.”

ACOSS has proposed spending $10 billion a year on health, aged care and disability services from revenue and savings measures including a stronger Medicare levy, reducing superannuation tax breaks for retired Australians, abolishing the private health insurance rebate and taxing sugary drinks.

The welfare peak body said the most urgent priority was to lift the unemployment payment by $75 per week for single people who are unemployed or studying full-time, as the payment has not increased in real terms for 24 years.

“At $274 per week for a single adult, the Newstart Allowance is too low for people to afford the basic essentials of life, making it much harder for them to job search effectively. Rent Assistance for a single adult at $65 a week is a fraction of the cost of typical rents in major urban centres, where most jobs are located,” the submission said.

From 2011-2017, people's out-of-pocket costs for essential services – including paying for health, schooling and childcare – increased well above inflation. The government must prioritise funding for essential services, not cut taxes.#auspol #Budget2018 https://t.co/qDwPzGPhaI pic.twitter.com/yJAzCJgAsP

— ACOSS (@ACOSS) February 13, 2018

ACOSS CEO Dr Cassandra Goldie said the budget must continue to strengthen public revenue to secure vital community services and supports in coming years.

“It would be a big mistake for this government to press ahead with personal and corporate tax cuts when we’re facing major funding shortfalls in vital areas such as the NDIS, health, needs-based schools funding, and action to reduce poverty,” Goldie said.

“It would be unconscionable to pursue tax cuts at the same time as slashing essential benefits and services affecting people on the lowest incomes, particularly when the budget is still in a weak position.

“Income tax is not the main pressure on household budgets. The majority of personal taxpayers are paying less income tax now than they would have paid under the 2003 tax scales before all those tax cuts were given.”

Goldie said removing inconsistencies in the tax base was the best way to raise revenue to fund social services and ease cost of living pressures.

“Ultimately, we think the best and fairest way to raise revenue is to remove tax shelters, loopholes and other unjustified inconsistencies in the tax base,” she said.

“These include capital gains tax concessions, negative gearing deductions, the use of private trusts and private companies to avoid paying personal income tax, further steps to curb international business tax avoidance, and [removing] business tax breaks that are not fit for purpose.

“Proposed new spending is in areas of critical underfunding that have been neglected for decades and which have especially impacted people on the lowest incomes. These include raising below poverty line income support payments, action to address unaffordable housing, and new investments in mental health and dental health services.”

Overall, ACOSS has proposed additional expenditures of $3.2 billion (up to $6.7 billion in 2019-20), while increasing revenue by $3.4 billion (and $13 billion in 2019-20).

ACOSS said this would reduce budget deficit by $0.3 billion this year and by $6.5 billion in 2019-20, resulting in a projected surplus of $3.9 billion in 2019-20.

The submission also said the government should develop a new remote housing funding agreement for Aboriginal and Torres Strait Islander people, sharing the costs equally between the states and territories.

“This should be complemented by a national urban, rural, regional and remote Aboriginal and Torres Strait Islander strategy with funds in the new national housing agreement earmarked to support the growth of Indigenous Community Housing Organisations,” the submission said.

Looking to the charity sector, ACOSS called for Deductible Gift Recipient (DGR) eligibility to be extended from 1 July 2019 to all charities with an altruistic purpose for the public benefit.

The peak body also reaffirmed its support for charitable advocacy in the face of proposed new limits.

“[Extending DGR eligibility] would remove artificial restrictions on their capacity to meet their charitable purposes through public advocacy,” the submission said.

“Proposed new curbs on public advocacy by charities and other community organisations should be abandoned in the interests of open, informed debate on public policies affecting people facing disadvantage and threats to the natural environment.”

Goldie said the federal government should defer any tax cuts until social services were properly resourced and funded.

“The May federal budget provides this government with a clear choice: it can pursue a senseless tax cut handout now and leave the nation with the prospect of another horror budget down the track to pay for it,” Goldie said.

“Or it can take the fair and sensible path of deferring any tax cuts until we can actually afford them – when the budget is in better shape and essential services and poverty alleviating support payments are properly resourced.”