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Tax cuts might be a done deal, but the full package isn’t a good deal

Taxpayers are set to get more in their pay packets – but at what cost to the broader community?

Jul 04, 2019, updated Jul 04, 2019
Centre Alliance Senators Rex Patrick (left) and Stirling Griff with Senator Jacqui Lambie. Photo: AAP/Sam Mooy

Centre Alliance Senators Rex Patrick (left) and Stirling Griff with Senator Jacqui Lambie. Photo: AAP/Sam Mooy

All of us need vital community and public services – and it’s the taxes we pay that fund them. Changes to our tax system, at any level, can have dire consequences for our most vulnerable citizens.

Today, our federal politicians are considering making radical changes to the future tax system. Despite reports that a deal has been stitched up, our Opposition and crossbench Senators from South Australia can still play a crucial role in determining the outcome.

As an organisation committed to justice, opportunity and shared wealth for all South Australians, SACOSS is extremely uncomfortable with the Coalition’s $158 billion tax package. It’s not that tax cuts are wrong, but we have two key questions. What will we lose from our social infrastructure when this revenue is lost? Do those who will benefit most from these tax cuts, need them?

Whenever we cut taxes, our governments get less to spend in the vital services we all want and need as a community. So it’s really important our Senators make the right decisions today about each phase of the Government’s tax package.

We need a fair taxation system which, as part of its economic strategy, values the well-being of all Australians – their health, education, housing and fiscal security.

Everybody who meets just a few of the homeless people sleeping rough on our streets or the young person couch surfing at a friend’s parents place or a mum living in her car with her kids, will agree that we urgently need major investments in social housing to help address homelessness.

By investing in affordable housing, we enable low-income households to live affordably and securely. This means less economic stressors on households, more people in safe housing and fewer people requiring emergency housing. As a community, when we share the price for affordable housing, we pay a lower price economically and have a greater return societally through less reliance on desperate measures.

Talk to an elderly relative about how hard it is to get the extra help they need to support them to stay at home, or to find somewhere to live that suits their needs and lifestyle as they grow older. They’ll tell you there are not many options. The aged care royal commission, underway now, reminds us that our support for older Australians is nothing like it should be.

We think these Stage 3 tax cuts threaten to destroy our long-term ability to meet the challenges we face as a community.

Talk to any child whose parents’ untreated addictions or mental health issues or unaddressed poverty have resulted in an unbearable family home life. They’ll ask for their parents to have access to services which help them with those issues and that prevent them from needing the intervention of the child protection system. When we value our children growing up in safe homes, when we work with families facing difficult issues, we raise healthier, happier children and parents. And this means placing a value on whole people, from birth, rather than picking up the tab when they find themselves in need of out-of-care housing or serious health care, or when they’re testing their legal parameters.

We desperately need better investment in preventative health. We need to stop people from getting to emergency departments because they have issues that we should have been helping them address years before. When we prevent emergent health issues, we take the heavy-lifting away from our very costly hospital systems.

To do more as a country, we actually need a mix of both tax cuts and taxes so that we get both the economic stimulation we need as well as the long-term services that are crucial to community wellbeing.

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SACOSS and the Councils of Social Service across Australia endorse Stage 1 of the Federal Government’s tax package. It is well targeted and will help the local economy, here and around the nation. This first stage will see $3.5 billion less per annum in the Federal Budget from 2019 but it will mainly go to middle-income households and provide a modest boost to the economy when it’s needed.

Stages 2 and 3 lock in large tax cuts, three to five years in advance, when we don’t actually know what the economy or Budget will look like.

The Stage 2 cuts, due in 2022, mainly go to high-income earners and would cost another $6 billion per annum. We don’t think these should be locked in three years in advance.

The proposed Stage 3 tax cuts are disproportionately designed to go to people on relatively high incomes – people who might actually not need the tax cuts as much as others. This stage would see people on $200,000 receive $11,000 per year and will cost the budget $12 billion per annum from 2024.

That means that, in 2024, if the entire tax cut package is passed, it will cost the budget about $35 billion, which is the equivalent of 100,000 new social housing properties (approximately twice the current stock in SA), more than 57 refurbished Adelaide Ovals, or 14 new Royal Adelaide Hospitals.  That’s a lot of lost revenue for a country that is already the seventh lowest-taxed country in the OECD.

We think these Stage 3 tax cuts threaten to destroy our long-term ability to meet the challenges we face as a community. There is still an opportunity for the Senate to choose to split the Bill.

Our Centre Alliance Senators have a crucial role to play, so while we urge every single one of our South Australian representatives in the federal Parliament to vote down the State 3 cuts, we call on Senator Rex Patrick and Senator Stirling Griff to use their position of power for the good of all South Australians.

Without access to the tax base we require now and into the future, how on earth will we respond to pressures on aged care, tackle housing affordability and relieve the burden of poverty?

Ross Womersley is the CEO of the South Australian Council of Social Service (SACOSS).

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