5 days ago
Raise jobseeker to 90% of age pension and pay for it by curbing super tax concessions, Vinnies says
A welfare reform package that includes raising jobseeker to 90% of the age pension would lift 590,000 Australians out of poverty, with the $11bn price tag paid for by curbing super tax concessions in a way that still leaves the vast majority of savers better off.
A new Australian National University paper for the St Vincent de Paul Society, titled A Fairer Tax and Welfare System for Australia, examines a range of options that 'are targeted to benefit persons who have the greatest financial need and would be paid for by those most able to accommodate a modest additional contribution'.
In addition to the rise in the main unemployment benefit, the 'major' reform package also includes increases to commonwealth rent assistance and payments to families and single parents.
The analysis lands less than a month out from Jim Chalmers' economic reform roundtable, which will bring together representatives from government, business and unions in an attempt to achieve a consensus around concrete measures to lift the country's abysmal productivity performance.
But with an estimated one in 10 Australians, or nearly 3 million people, living in households experiencing poverty, the charitable organisation's report highlights the urgent need to make the country more equitable as well as more efficient.
Mark Gaetani, Vinnies' national president, said he was hopeful the reforms put forward in the report would be seriously considered at Labor's summit.
'Yes, the government does need to address productivity. But there are two sides to the coin, and the options we put forward will make a really significant difference to those who are doing it really tough and who we see coming through our doors every day,' Gaetani said.
'What we are putting forward is budget neutral. We are simply asking those well off in the community to forgo in the vicinity of $3,000-3,500 a year to offset the cost of assisting those 3 million Australians who live under the poverty line'.
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Ben Phillips, an associate professor at the ANU who co-wrote the report with Richard Webster, said increasing the jobseeker benefit for singles and couples was a 'no-brainer'.
'People don't talk about the age pension as a king's ransom, and lifting jobseeker to 90% of that just takes it back to 1990s levels,' Phillips said, noting that it was in line with the recommendation by the government's Economic Inclusion Advisory Committee.
The ANU sets the poverty line at $486 a week, or half the median household disposable income of after housing costs.
In comparison, the full jobseeker rate for an individual is $390 a week, or about 75% of the $525 rate for a single age pensioner. Lifting it to 90% would involve a weekly rise of about $80.
More than half of people on jobseeker or youth allowance are in households experiencing poverty, and the report noted that the balance between avoiding disincentives to work and providing an adequate safety net had become skewed too far in one direction.
'The pendulum needs to swing back towards adequacy,' it said.
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The ANU's poverty rates are adjusted to exclude those with low income but with high wealth, such as some retirees.
Single parents are much more likely to experience severe financial disadvantage, with poverty rates among this group reaching an estimated one in three.
The proposed reform would lift youth allowance and the partnered parenting payment by the same proportional amount as jobseeker, and increase the single parenting payment to equal the age pension.
The report said the jobseeker rate and related payments should also be increased each year in line with wages, rather than inflation.
The family tax benefit part A should be raised to the same as for older eligible children, and the link between wage growth and family payments should also be re-established, it said.
With one in five renters estimated to be in poverty, or twice the national average, suggested changes to the welfare system included a 15% increase in commonwealth rent assistance, as well as an additional $100 supplementary payment to those receiving the disability support pension in recognition that an estimated 37% of people on working age pensions are below the poverty line.
The measures in the reform proposal would be paid for by replacing the flat 15% tax on super contributions and earnings with a rate set at the saver's marginal tax rate minus 20 percentage points.
The reform to superannuation concessions that Phillips modelled would leave 90% of savers no worse off, and in some cases better off, he said.
'The people who it [the super tax change] would impact negatively are those whose income is above the $190,000 level, where the marginal rate is 45 cents in the dollar.'
