Budget 2019-20 and the way forward for welfare
Joe Zabar, Deputy CEO, Catholic Social Services Australia
As published in Eureka Street 8 April 2019
With the Prime Minister set to announce the federal election date any day now, both major parties have painted a picture of the Australia they want. Treasurer Josh Frydenberg announced Australia was 'back in the black' and 'back on track', with a $7.1 billion surplus for 2019-20, growing over the subsequent two years before falling back in 2022-23.
How does the Coalition — and the Australian Labor Party — plan to spend the fruits of a prosperous economy that is moving back into surplus? Both parties are offering tax cuts, delivered to slightly different segments of the community, as the way to share the country's economic success in the short term. But is that enough?
All Australian families are feeling the heat as cost-of-living pressures increase, but low-income households live in the crucible of low wages growth and an outdated welfare payment system. Research shows that the minimum wage can no longer support a single-income household. And everyone from the trade unions to the big business lobby acknowledges that Newstart is completely inadequate and even a barrier to employment.
Despite that, neither party made any significant move to address the problem. It could be argued that the most forgotten group in last week's budget speeches was the 722,000 people on Newstart.
The Treasurer, under pressure, extended the energy supplement to Newstart recipients after they had initially been left off the list of people getting help to ease ballooning electricity and gas prices. Opposition leader Bill Shorten said Labor would review Newstart if he becomes prime minister. In summary, those on Newstart shouldn't expect much relief — or not any time soon, at least.
That's why a proposal to take decisions around welfare payments out of politicians' hands is the best way forward. If the major parties are going to put supporting the most vulnerable in the 'too hard' basket or kick the can down the road, let an independent commission determine the rates at which various welfare payments can allow people to live a dignified life.
That move would bring welfare payments, including pensions and Newstart, into line with other independent mechanisms, such as the Remuneration Tribunal, which sets the salaries for federal politicians, and the Fair Work Commission, which sets the minimum wage.
"The funding signalled that 'Getting cancer should not be a gateway to financial hardship.' Imagine if that philosophy was applied to the many social issues which impact individuals and families and drive them into financial distress and poverty."
There was one significant paradigm shift announced in the budget speeches: Labor's announcement of additional funding for those with cancer. It has the potential to be a genuine game-changer well beyond the significant number of people for whom cancer is or will become their reality.
What the funding signalled was this: 'Getting cancer should not be a gateway to financial hardship.' Imagine if that philosophy was applied to the many social issues which impact individuals and families and drive them into financial distress and poverty.
Too many Australians find themselves battling financial and other forms of hardship, regularly not of their own making. Just like those facing cancer, people who lose their job unexpectedly, who suffer a debilitating injury or fall into addiction shouldn't have to reach desperation point before they can access support. All too often, such support is difficult to access simply because service providers just don't have access to the level of funding needed.
This budget back-and-forth, falling weeks before an election, is clearly more a political debate than an economic one. It is also a marker of the way the two major parties view the most vulnerable in our society — families battling to pays the bills and those without work who are forced to survive on an inadequate level of Newstart.
Tax cuts over the next four years, offered in fairly equal measure by the two parties, are nice and have the potential to support struggling working families. But the people who need the most support are people who don't have a job, so what good is a tax cut to them?
Addressing cost-of-living pressures is important and tax cuts will help. But it's not enough if you are a single income earner trying to raise your children, or if you are unemployed and forced to live on Newstart.
In the coming weeks, the challenge for every political party is to offer the Australian nation a vision of social and economic inclusion where the inherent dignity and potential of each person can be realised. Maintaining the dignity of individuals and families must be the bedrock of our social and economic policies and of the highest policy priority for every government.
Joe Zabar is deputy CEO and director of economic policy at Catholic Social Services Australia.