Wrapping up an unbalanced budget

In part two of our budget wrap-up, the CEO of VCOSS and the team at Good Shepherd Social Policy and Research Unit sum up the key societal costs and implications of the Federal budget:

Out of balance: Tanya Corrie, Kathy Landvogt, Susan Maury and Denis Sheehan, Good Shepherd Youth & Family Service

The first Abbott government budget has few wins for those struggling with high costs of living, unemployment, or disability. The shift to target income security more tightly towards those most in need is a welcome, but patchy initiative. Any gains are overshadowed by the many imbalances and inconsistencies.

Most obvious is the imbalance between expenses and revenue. This budget focuses heavily on the expenses side of the ledger rather than increasing revenue through obvious means such as changes to the tax system and superannuation tax breaks. The resulting budget lacks coherence and fails its own test of securing the nation’s economic health for the future.

“Sharing the pain” is the creed being touted by the Federal Treasurer to justify savage cuts to payments to single mums, young people, Indigenous Australians, people with disabilities and older Australians, whose lives just got even more difficult. At the other end of the spectrum – and only a temporary measure – people earning $180,000 will contribute 2 per cent toward fixing, what is now proving to be a false, ‘budget emergency’. We are not sharing the pain; we are taking from the most vulnerable. This is not balanced.

The imbalance between haves and have-nots

The pain of cuts falls disproportionately on those least able to bear it. The cuts to income security for unemployed young people, meaning they will go six out of twelve months without income support, are brutal. Not all young people have a family that can support them. Young people in our services are already disadvantaged and struggle to find work. Youth unemployment is higher than in other groups and is increasing. However, investments into the public education, training, and support programs that help them into work are being cut. They will now be punished for this structural problem by being denied access to income support.

Single mothers and their children will suffer through losing the Family Tax Benefit when their youngest turns 6 instead of 18yrs, effectively losing twelve years of payments. The compensation payment of $750 per child is hardly an adequate offset. The well-off, on the other hand, continue to benefit from massive superannuation tax breaks, and the deficit levy does not go nearly far enough to redress this imbalance.

Nor are these harsh measures in the name of getting people into jobs justified by the evidence. Punishment does not provide the motivation and capacity to overcome complex barriers. In fact poverty and scarcity increase the barriers and create stress that undermines capacity for future-oriented thinking and autonomous behaviour. Instead of punitive and rigid measures we need flexible supports that create pathways to participation.

The imbalance between short and long term thinking

The Treasurer speaks of leaving a better legacy for the next generation, but this budget threatens to reap a bitter harvest: an alienated and socially costly underclass created through lack of hope and support. The ‘safety’ net exists because there are dangers, not just for individuals but also for society as a whole, in people falling into abject poverty. The next generations will pay for a more unequal society: worse health outcomes, increased crime, more teenage pregnancy, and more people shut out of the economy – all are associated with more unequal societies.

Community services remain committed to working in partnership with government, especially to prevent social distress and damage, but such prevention and early intervention are virtually invisible in this budget. Jobs are seen as the answer to all social ills, but we know this is an overly simplistic view that leaves out the many individuals who cannot just walk into a job.

Unbalanced household budgets threaten national economic health

But the most important imbalance is in the household budgets of the families and young people we work with. Single mothers will now be faced with the choice of whether they can afford to send their children, or themselves, to the doctor. Women in our family violence service often stay with their violent partners because they cannot afford to leave. This budget places their lives, and that of their children, at risk.
It may also put at risk our national confidence and wellbeing.

Many people are already living on the edge, and this budget will further erode their confidence in the future. There needed to be more balance, and more hope, in this budget.


Low income Australians bear the brunt of cuts: Emma King, VCOSS CEO:

The striking thing about this budget is that it overwhelmingly targets people on the lowest incomes to bear the brunt of cuts.

This budget is harsh, unfair and risks entrenching poverty across the community for a generation.

From the cradle to the grave, people who are already disadvantaged will see significant cuts to their incomes and will find it that much harder to get by.

Talk back callers this morning have made it pretty clear that the community is shocked at the harshness of the measures outlined by the Treasurer last night.

VCOSS has been taking calls this morning from people on pensions and supports who are seriously distressed by what they are seeing in this budget and what it means for their future.

There are a number of implications for Victoria that we will seek clarity on in the days ahead – particularly when it comes to some of the National Partnerships that the State Government has signed up to, but which the Commonwealth has not yet.

As it stands this budget is a prescription for a poorer, sicker and far more unequal society and it is hard to believe that the vast majority of Australians want that to happen.

Posted by Pauline McLoughlin