Disadvantaged Australians being ignored while tax loopholes benefit the rich, say the Australian Council of Social Service

Middle-class welfare such as superannuation tax concessions and the schoolkids bonus could be scrapped in favour of a stronger safety net for the most disadvantaged in Australia, the Australian Council of Social Service (Acoss) has said in its submission to the government for its commission of audit.

The 25-page submission, published on Friday, says social and economic challenges such as an ageing population, housing affordability and rising poverty were ignored in Australia’s boom years in favour of eight consecutive tax cuts.

The submission recommends tax cuts not be made again until the budget is back in surplus and targets superannuation tax concessions, pensions for couples with assets in excess of $1m and schoolkid bonuses for people on incomes of $120,000 as a waste of government money.

“Over time community expectations have grown, fanned by political rhetoric of a ‘cost of living’ crisis,” the submission said.

“Expectations have been built up that, above and beyond essential services and benefits, governments will step in to ‘guarantee’ steadily rising living standards when these are perceived to be under threat.

“This is not a reasonable community expectation. A growing number of people believe that they are entitled to assistance even when they are not disadvantaged.”

Acoss said the community also expected people who are not able to look after themselves to be cared for by the government and the social security system to “insure” against “life course risks” such as the cost of having children and retirement.

Because of the combination of these expectations, tough choices are needed and people in the community need to be prepared to give up assistance they do not need which benefits middle and high-income earners, according to Acoss.

“It would be a travesty for governments to cut essential services today to make room for tomorrow’s tax cut,” the submission said as it recommended the government build on recommendations from the Henry tax review.

“Within this expenditure cap, spending should be re-ordered to prioritise areas of unmet need and reduce spending on programs that are poorly designed. In this way, progress can be made to restore the budget and close service gaps at the same time.”

Acoss said closing major gaps in the social safety net of welfare payments and closing tax loopholes that benefit high-income earners should be in the top priorities of the commission of audit.

In a section subtitled “revisiting the age of entitlement”, Acoss listed the childcare rebate as disproportionately benefiting high-income earners. It said the community expecting the government to keep taxes low while engaging in those types of payments was not “realistic or sustainable”.

It said support for the national disability insurance scheme could be a starting point for other schemes that address a number of issues: inequality in school funding; severe poverty experienced by people who rely on Newstart payments; housing and energy affordability; closing the gap between Indigenous and non-Indigenous people on health; education and living standards; and making dental and mental health services more accessible for people in remote areas.

The commission, headed up by Tony Shepherd, will hand down an interim report on how to return the budget to surplus within a decade in January and a final report in March.

Treasurer Joe Hockey is understood to begin incorporating the recommendations of the commission into May’s budget.