The government could save $9.4bn in 2018-19 with measures including winding back negative gearing and capital gains tax discounts and abolishing private health subsidies, the welfare sector peak body has said.

In its budget submission, released on Monday, the Australian Council of Social Services has called on the Turnbull government to adopt the measures in the May budget in order to reinvest $4bn to fight poverty and inequality.

“After two years of chasing the ill-conceived 2014 budget cuts, it’s time the government … moved on from the one-sided focus on spending cuts, particularly in social security,” said the chief executive of Acoss, Cassandra Goldie.

“It is clear that governments will not be able to fund the cost of essential services such as health, aged care and NDIS from present tax revenues.”

Goldie said services must be paid for with “structured tax reform and growing the revenue base fairly, steadily and efficiently”.

Acoss wants the government to wind back spending and tax concessions to boost revenue by the following amounts in 2018-19:

Halving the capital gains tax discount from 50% to 25% over 10 years ($500m)

Abolishing negative gearing for new investments ($300m)

Taxing private trusts ($1.5bn)

Taxing income retained in private companies ($1.2bn)

Abolishing the private health insurance rebate ($3.5bn)

Superannuation contributions reforms ($1.3bn)



Labor took the first two measures to the federal election and they have been repeatedly opposed by the Coalition. Only the Greens have proposed abolishing the private healthcare rebate.

Goldie noted the government had signalled it wanted to tackle the problem of housing affordability, and said Acoss’s preferred measures would “reduce speculative investment in rental properties that has helped fuel” a crisis on the issue.

Despite reports the government was considering changes to capital gains tax, on Sunday finance minister, Mathias Cormann, repeated that the government had no plans to make changes.

Goldie said Acoss was “deeply concerned” at the prospect the government could fund tax incentives for private investment in housing by scrapping the National Affordable Housing Agreement.

Acoss proposed a number of new revenue measures which in 2018-19 would raise the following amounts:

Applying the Medicare levy surcharge to all high-income earners even if they have private insurance ($4.1bn)

Cracking down on international business tax avoidance ($500m)

Abolish fuel tax credits for off-road use, except agriculture ($2bn)

Abolish deductions for mining exploration, saving $500m in 2017-18 and $300m in 2018-19

Levying a sugar tax on sweetened drinks ($500m)

Reforming alcohol excise by taxing wine at $56 a litre of alcohol and cider at $33 a litre ($2.3bn)

Goldie said that Australia spent just 9% of GDP on welfare compared with the OECD average of 12.4%. “We are also the sixth-lowest taxing country of 34 OECD countries.”

Revenue raised from the measures could pay for a range of improvements to the welfare safety net, including increasing the dole and student payments by $54 a week at a cost of $1.9bn in 2017-18.

Indexing family payments and introducing a sole parent supplement instead of using the family tax benefit system to support children would cost a further $1.2bn in 2017-18.

Other social spending proposed by Acoss included:

Increasing commonwealth rent assistance by $775m in in 2017-18

Restoring community service funding levels, including through the Indigenous advancement strategy at a cost of $1.89bn in 2018-19; and

Indexing community services funding to wage movements at a cost of $391m in 2018-19

Goldie said in order to be fair the budget must prioritise problems including unaffordable housing, unemployment, family payments, and “chronic under-investment in mental and dental health”.

“In our budget submission, Acoss has outlined a comprehensive set of proposals which would allow the government to address areas of urgent reform at the same time as repair the national revenue base, while ensuring much needed investment in vital public infrastructure.”