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Most disadvantaged will still struggle despite budget initiatives

8 May 2012

Although The Salvation Army welcomes a range of measures announced in tonight's budget that are designed to help low and middle income families, they are particularly concerned there is no real relief for the disadvantaged.  

We welcome announcements to increase  to Family Tax Benefit A, help for those with school aged children through the Schoolkids Bonus and trebling the tax-free threshold. These will provide valuable assistance to many families that have been struggling to make ends meet.

However, we are particularly concerned about those most vulnerable who are already barely surviving on income support payments like Newstart or Youth Allowance.  While the lack of housing affordability continues and housing stress has become an accepted part of people's lives, those on the nation's lowest incomes need our help more than ever.  Sadly missing in this budget is the relatively meagre $50 a week increase to these allowances recommended by the Henry Tax Review and supported by almost every agency and peak body connected with those who are doing it tough.  The new Supplementary Allowance, provides a payment of just over $100 for singles and $175 for couples, twice a year.  This will be welcomed but doesn't go as far as is needed. A Salvation Army report to be released next Wednesday confirms the desperate situation faced by many Australians. We anticipate that not addressing the income support needs of those on the lowest incomes will increase demand on our services.

The Salvation Army welcomes the $515.3M investment to improve access to dental services for those who can least afford it.  For around 400,000 Australians on low incomes, who are currently on public waiting lists, this will help them towards receiving the kind of care they often desperately need.

We are also pleased to see the introduction of the much anticipated National Disability Insurance Scheme (NDIS), which will bring important resources and services to people with disabilities who have, for too long, borne particularly high costs of living in the community.

The Salvation Army will continue to work with all levels of government and our partners in the community to support and advocate for those most disadvantaged, so that all can share in the benefits of Australian society.

Budget background summary points

What's Good

Increase to Family Tax Benefit A
A boost for more than 1.1M families who receive the higher rates of Family Tax Benefit (FTB) A between $300 and $600 a year.  Another 460k families will receive $100-$200.  This becomes effective 1 July 2013.

School Kids Bonus
The Salvation Army is broadly  supportive of the implementation of the School Kids Bonus.  
The new system will mean that up to a million families that aren't receiving the full benefit of the current system will get more timely, upfront payments to help with school costs when they're needed most (before the start and halfway through the school year).

We are also pleased to see the introduction of the much anticipated NDIS, which will bring important resources and services to people with disabilities who have, for too long, borne particularly high costs of living in the community.  The principles embedded in the NDIS, which acknowledge 'no fault' access to consumer-chosen supports, when they are needed could be applied to other areas of social policy.

Dental care
The Salvation Army welcomes the $515.3 M investment to improve access to dental services for those who can least afford it.  The package is hoped to assist about 400,000 Australians on low incomes, who are currently on public waiting lists, to  access much needed dental care.

Problem gambling services
An additional 50 financial counsellors to help those with problem gambling addictions.

Supporting redundant workers
Doubling the liquid assets test thresholds for income support recipients so that they don't have to wait up to 13 weeks if they have assets up to $5,000 for singles and $10,000 for all others.  This becomes effective 1 July 2013.

Trebling the tax-free threshold
In the next financial year, those on low incomes will pay less tax due to the tripling of the tax-free threshold from $6,000 to $18,200.  Although this will make little financial difference to people on statutory incomes, it will simplify their tax obligations.

What's missing?

Increase to Newstart and Youth Allowance.  The Salvation Army has consistently supported the campaign for a realistic increase in these allowances, which long ago ceased to provide meaningful income support that met the basic costs of living in Australia.

Following the recommendations of the Henry Tax Review, pretty much every major social service agency and peak body has called for an increase to these allowances to the equivalent of two thirds of the partnered rate for pensioners or an extra $50 a week.  For those currently struggling to survive on $35 a day, this would make a meaningful difference to their capacity to meet the costs of living.

Unfortunately the budget has failed to recognise this as a priority.  The new Supplementary Allowance for income support recipients to help meet the costs of essential bills only adds $210 per year for singles and $350 for couples.  This is delivered in two instalments, so singles receive either $105 or members of a couple $87.50 each.  Whilst any increase to the lowest income payments is welcomed, the challenges of housing affordability and other increased costs of living will quickly devour these supplementary payments.

The Salvation Army will continue to call upon the Government to fulfill their responsibility to care for those at the bottom rungs of the income ladder.

Homelessness and housing.  
Under the original Nation Building Stimulus Plan ($5.65 billion) and the National Affordable Housing Agreement ($400 million), we saw some of the biggest investments in housing ever in this country.  The introduction of NRAS and the facilitation of increased social housing has started to make an impact on a long neglected area of social policy in Australia.

However, this year's budget gives a 'business as usual' statement on housing and homelessness that doesn't reflect the urgency of this situation across the country.

With Housing affordability at a critical point right across the country, we would have liked the Budget to include further measures to address growing incidence and levels of housing stress, which can ultimately lead to homelessness for some people.  A range of practical strategies suggested by the sector that didn't feature in tonight's budget included:

a. Establishing a long-term affordable Housing Growth Fund
b. Doubling the original commitment to NRAS in order to create 50,000 more affordable rental properties
c. Increase to the maximum rate of Commonwealth Rent Allowance of 30% pending a review of the efficacy of CRA. The equivalent of approximately $15 pw.

What's of concern?

Changes to parenting payments
We echo the concerns of many of our partner agencies regarding the impact of changes to income support payments for single parents.  The Salvation Army is disappointed at this move which just places the burden of a budget surplus on the pockets of already disadvantaged people.  The drop in income that will result from parents being moved to Newstart will put added pressure on families and in some cases may cancel out the very positive initiatives for families included in this budget.

Movement of people from DSP to Newstart
We are concerned about the increased toughening of eligibility for DSP claims. A range of reforms, including revised Impairment Tables introduced this year, have resulted in a more than 22% drop in DSP claims being granted since 2010.  This further highlights the gap between pensions and allowances in our income support system.

Overseas aid
Maintaining current levels of aid, while seeming like a positive in tight economic circumstances, will actually result in real decreases and means that we'll fail to meet the Millennium Development Goals.

For more information please contact:

The Salvation Army, Australia Southern Territory
Territorial Communications & Fundraising Department, 95-99 Railway Road, Blackburn VIC 3130
T: 03 8878 2400 

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