Monday, February 27, 2017

ACOSS – We can reduce poverty, inequality and the budget deficit

February 27, 2017

The Australian Council of Social Service today called on the Turnbull Government to throw out harsh proposals that have repeatedly failed to pass Parliament and adopt budget policies that are fair and sustainable.

“After two years of chasing the ill-conceived 2014 Budget cuts, it’s time the Government recast its Budget strategy and moved on from the one-sided focus on spending cuts, particularly in social security,” said ACOSS CEO Dr Cassandra Goldie.

“ACOSS proposes a suite of measures that will save $9.4 billion by 2018-19 in addition to putting $4 billion into critical social infrastructure to reduce poverty and inequality in Australia.

“Australia is a low-spending country on social security, spending just 9% of GDP on welfare compared with the OECD average of 12.4%. We are also the sixth lowest taxing country of 34 OECD countries.

“It is clear that governments will not be able to fund the cost of essential services such as health, aged care and NDIS from present tax revenues. Nor is it fair or reasonable to expect people who need to see a doctor, attend hospital or move into aged care to pay more for these essential services.

“Instead, this Government and all political parties must acknowledge that the best way to guarantee funding for health, aged care and the NDIS is through structured tax reform and growing the revenue base fairly, steadily and efficiently.

“In 2012, the major parties agreed to a modest increase in the Medicare Levy to help finance the NDIS. We propose that the Levy be further strengthened to help pay for health, aged care and disability services, by removing the exemption for those holding private health insurance from the Medicare Levy surcharge. We estimate this would raise $4 billion.

“We can improve the effectiveness of health spending by dropping the Private Health Insurance Rebate and investing more in preventive health services instead of waiting until people need to use hospitals. Our proposed tax on sugary drinks and reforms to alcohol taxes should improve public health and help ease future pressures on the health care system.

“We encourage this Government to follow the approach agreed by business, union and community peak bodies at the National Reform Summit in November 2015 for us to identifythe main areas of direct budget spending and tax concessions that are either growing most strongly or are no longer ‘fit for purpose’. We must remove tax concessions that are not effective, as well as close tax avoidance opportunities for both personal taxpayers and businesses. Our nation cannot afford unfunded company tax cuts at this time for large or small business: any company tax cut should be funded through business tax reform.

“A good example of a harmful tax concession we can no longer afford is the 50% discount on taxes for capital gains from property assets and the deductions for such investment using negative gearing. Whilst we welcome the Government’s signal that housing affordability will be front and centre in this Budget, it must take steps to reduce this discount, by at least half, and wind back negative gearing, to reduce speculative investment in rental properties that has helped fuel Australia’s housing affordability crisis.

“We need to develop a national affordable housing strategy in partnership with community, industry and housing policy experts, in negotiation with state and territory governments and the Opposition, and underpinned by specific targets. We are deeply concerned that tax incentives for private investment in housing may be paid for by scrapping the National Affordable Housing Agreement.

“Ultimately budgets are about choices and the priorities and goals we set for our country. This May Budget cannot repeat the mistakes of the past three Budgets, which were widely seen as unfair and rejected by the Parliament and general community.

“ACOSS has shown a preparedness to work with government to ensure our social security system is targeted and efficient. However, billions have been taken out of Family Tax Benefits and crucial community services in recent years. There is simply little left to cut without harming people on the lowest incomes and driving more families and children into poverty.

“To be ‘fair’ the upcoming Budget must prioritise addressing critical problems including unaffordable housing, below poverty level unemployment and family payments, and chronic under-investment in mental and dental health – which have been neglected for decades and impact most strongly people on the lowest incomes.

“In our budget submission, ACOSS has outlined a comprehensive set of proposals which would allow the Government to address areas of urgent reform at the same time as boost the national revenue base, while ensuring much needed investment in vital public infrastructure.”

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