Billions in budget cuts may 'destroy' social safety net, ACOSS warns

Updated

Australia's social safety net is at risk of being "destroyed" by billions of dollars worth of cuts in the federal budget, the nation's peak social services body says.

The findings come as Prime Minister Tony Abbott continues his post-budget sales tour of the east coast, describing the budget as "striving to be fair".

The Australian Council of Social Services (ACOSS) has released analysis of the budget measures and concluded that, instead, the budget will hit low and middle-income households the hardest.

It follows analysis from the National Centre for Social and Economic Modelling (NATSEM) at Canberra University - commissioned by the ALP - that found 1.2 million families would be, on average, about $3,000 a year worse off by 2017/18.

In last week's budget, the Government announced family payments will be frozen for two years from this July and the indexation for pensions would be lowered from 2017.

ACOSS estimates that linking the pension to inflation, instead of male average earnings, will leave recipients $80 a week worse off over a decade.

CEO Cassandra Goldie says the budget will entrench divisions between people on "high incomes" and those "struggling to make ends meet".

"[The budget] threatens to destroy the social safety net that has served our nation well," she says in the report, titled A Budget That Divides The Nation.

Pensioners and concession card holders could also face higher rates, power, water and public transport costs from July because of a Federal Government decision to axe funding for the subsidies from this July.

The National Seniors organisation says the discounts save older people up to $1,200 a year.

A Government spokeswoman says the Commonwealth contributes about 10 per cent of funding, and that states will either have to pay more from their own budgets or ask pensioners to make up the difference.

National Seniors spokesman Michael O'Neill says he has written to state and territory leaders asking for urgent clarification.

"I think the response from older Australians will certainly be one of great anxiety and I think also considerable anger, given the way it's been implemented in almost overnight fashion," he told AM.

"Essentially they will look at it as buck-passing between the Commonwealth and the states, and the last thing that older Australians appreciate is being used as political football."

Deficit levy 'perfectly reasonable' for high-income earners

In Tasmania, Mr Abbott has defended the equity of the budget, saying "there are no soft options in the real world" and pointing to the temporary 2 per cent income tax rise slugged on high-income earners to pay off the nation's debt.

"Everyone is going to do his or her bit," he told ABC Local Radio in Hobart.

"On someone earning half-a-million dollars a year, such as the Prime Minister, that means a $6,500 a year tax increase. Now I'm not complaining, I think that's perfectly reasonable.

"Now, I don't think you can say that people earning high incomes are getting off scot-free."

ACOSS has been deeply critical of the budget move to strip unemployed people under 30 of their payments for the first six months they are without a job.

It says 100,000 people will lose $255 a week.

The Government argues the decision will force young people to get more training and stop them becoming entrenched on welfare.

But in Tasmania, where Mr Abbott on Thursday spruiked spending on a highway upgrade, social service providers are grappling with youth unemployment of close to 20 per cent in some areas.

CEO of the Tasmanian Youth Network Joanna Siejka says the move will not fix the problem.

"In theory it's one of those things that sounds wonderful," she told The World Today.

"A lot of these young people have already done that; they've already spent a lot of time upskilling, trying to get themselves job ready.

"But at the end of the day if the opportunities are not there, they're just not there."

Shorten likens budget to 'Sheriff of Nottingham'

Opposition Leader Bill Shorten says Labor will fight the "Sheriff of Nottingham budget", restating it will vote against increases to the fuel excise and the $7 fee for GP visits and other medical services.

"Tony Abbott will be the only person in Australia who has read the book Robin Hood and comes down on the side of the Sheriff of Nottingham," he said.

"This budget is robbing the poor to give back to the Government."

Mr Abbott has also questioned the veracity of the NATSEM modelling, used by Mr Shorten in his budget reply speech last week.

"The modelling in question is Labor Party NATSEM modelling; it's not pure NATSEM modelling as I understand it. It's built on assumptions that the Labor Party has fed into them," he said.

NATSEM has rejected the Prime Minister's statement, saying it uses the same modelling for every client.

"Certainly no assumptions were set by the Labor Party," principal researcher Ben Phillips told ABC News Online.

It found that low-income couples with children and single parents will bear the brunt of the budget, losing up to 15 per cent of their disposable income when the measures hit in full.

The backlash to the budget measures, and a slump in the polls for both Mr Abbott and his Government earlier this week, has prompted questions about the Prime Minister's hold on the job.

But Mr Abbott laughed off the suggestion he may be ousted before the next election.

"I think the Australian people are sick of governments which change their leaders mid-term," he told Channel Nine.

"Neither Kevin Rudd nor Julia Gillard made it from one election to the next. I don't think the Australian people want to see a repeat performance.

"I think what we need in this country right now is not an action replay of the last six years. Everything this government has done demonstrates that we are the polar opposite of the former Labor government.

Topics: government-and-politics, federal-government, community-and-society, welfare, social-policy, australia

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