MY MONEY

Are the government's planned welfare cuts fair?

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One of the Coalition's key promises in the lead up to the election was budget repair. Now they've been re-elected, a range of welfare cuts have been scheduled in order to fund the government's National Disability Insurance Scheme (NDIS). Are the cuts fair? Can they be justified?

Dr Cassandra Goldie, CEO of the Australian Council of Social Service (ACOSS)

It's vital the federal government ensures economic policies pass the fairness test. The community understands hard decisions must be made but has resoundingly rejected policies that shift the costs onto people who can least afford to pay.

welfare cuts

Unemployed people, families on low incomes and people with a chronic illness or disability should not be targeted in the name of "budget repair".

Budgets are about priorities. It's not acceptable for a single-parent family living on $600 a week to take a hit to their income, or for people with chronic illness to pay more for their prescriptions or doctor's visits. Unemployed people receive just $38 a day to pay rent and bills and to feed and clothe themselves and at the same time look for work. This is against a backdrop where tax breaks remain in place for a retiree with over $1.6 million in their super account. In a tight budget, the economic impact of business tax cuts should be rigorously reviewed - not taken for granted.

One of the biggest myths is that the number of people relying on welfare is on the rise. In fact, the percentage of people who receive 50% or more of their income from welfare has decreased by 20% since 2001.

Stable government, and community confidence and support for reform, are grounded in an adequate safety net, an affordable and secure home, being treated with dignity and respect, and essential services like health and education. These social protections depend on growth in the economy and jobs and a strong tax base. The government's challenge in its second term will be to demonstrate that these goals can be achieved together.

Finally, it is important that when we debate welfare reform in Australia we understand the big impact any changes have on those living in poverty. Small reductions in support can have huge consequences for those relying on income support, so any changes needed to be considered carefully.

Benjamin Phillips, Associate Professor at the ANU Centre for Social Research and Methods

Low-income families will be hit hardest as a result of the coalition's budget measures, according to analysis by the ANU Centre for Social Research and Methods. The aggregate of all hip-pocket changes will reduce the take-home amount for low-income families with children by an average of $1209 a year (2.8%) but increase the amount for higher-income families by $228 (lower personal income tax).

The most significant of the measures (in 2015-16) included cuts to family payment supplements (Family Tax Benefit, parts A and B) and cuts to, or the removal of, the part B payment for some families with children aged 13 and over. Added to this are the removal of the carbon price compensation and further measures to reduce welfare fraud. The government is also delaying the new childcare system - which was anticipated to offer more generous subsidies to families with children in formal care - by a year to July 1, 2018.

Some of the budget measures are broadly sensible. In isolation, removing the compensation for a carbon price that no longer exists is one example. However, for a person on a Newstart allowance of $527.60 a fortnight (well below the poverty line) the energy supplement of $8.80 a fortnight will be missed.

Making cuts to family payments for single parents with children aged over 12 may encourage these parents to re-enter the workforce earlier but for many, particularly those living in low-employment regions or who face other barriers, it will be a significant reduction in living standards.

The crackdown on welfare fraud is appropriate where people are gaming the system but the concern will be that the measures will have a demonising impact on the largely genuine welfare recipients.

Many recent budgets (under both the major parties) have focused their cuts heavily on welfare payments of working-age people. While there is no doubt that it can be improved, Australia has a well-targeted welfare system that by and large only provides for those who need it most.

The welfare debate is often poorly informed. A recent survey undertaken by my centre asked Australians which payment was the biggest burden on the budget. Alarmingly, most thought the unemployment benefit was the most expensive. The total cost of the unemployment benefit is, in fact, less than a quarter of the largest payment, which is the age pension at $45 billion a year.

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