Tax cuts no solution for the most disadvantaged in society

9 May 2018

The federal government’s 2018-19 budget begins a long-term process of tax cutting, but there’s no long-term plan to assist people struggling with poverty and entrenched disadvantage.

“It’s critical that the government takes every opportunity to ensure the budget truly wraps around people, their families and communities,” said Stella Avramopoulos, CEO Good Shepherd Australia New Zealand.

“While we accept the importance of bringing the budget back into surplus, we believe it should not be done at the expense of essential services or social security payments for Australians who get caught in cycles of poverty or disadvantage.”

It was extremely disappointing to see the government ignore lobbying from the wider community to increase the Newstart Allowance. This $39-a-day safety net has not increased in real terms since 1994 and is an absolute priority for people without work, secure accommodation or enough money for food, bills, transport or clothes for job interviews.

The Newstart Allowance and related payments for single people and sole parents are disproportionately represented by women who have experienced family violence and women who are unpaid for their caring work and responsibilities.

Many of our clients who need financial counselling are caught in a debt cycle when they are on a NewStart Allowance or Parenting Payment. The amount provided does not cover living expenses nor provides for the cost of getting a job. When they do get a job they are still paying back debts incurred while on welfare support.

The income tax cuts that are the centre piece of this budget do not position the government to assist all Australians. The maximum benefit of $11 a week will go to people earning $48,000 to $90,000. Low income earners get no benefit. The lowest 40 per cent of individuals by income will get up to $4 per week or nothing at all.

This $4 return won’t provide an extra meal for a family and is no buffer for unexpected expenses for healthcare, car repair, extra school activity or any daily living needs.

“Moreover, the first round of tax cuts will cost $13 billion and there’s nothing in the budget to indicate where future revenue for essential services and social welfare will come from,” said Ms Avramopoulos.