Friday, May 17, 2013

Welfare blowout coming

AUSTRALIA is facing a welfare and social security bill forecast to rise to $158 billion a year in 2016-17.

Former Liberal senator Nick Minchin, the finance minister in the Howard government, warned the cost, up from $132 billion this financial year, would result in a spending squeeze, higher taxes or eligibility tightening for the vulnerable in future.

Mr Minchin said the government "has already started down that track" with the Medicare Levy increase to fund the NDIS.

Family payments, including the Baby Bonus and a promised $300-$600 increase in Family Tax Benefit A, were also slashed in Tuesday's budget.

Increased demand for the Aged Pension and disability spending account for the largest increases by category of $15.3 billion and $8.6 billion respectively.

Disability spending includes the cost of the Disability Support Pension, which is continuing to rise despite government reforms which have slightly reduced the number of recipients from almost 832,000 people to just over 824,000 and dramatically decreased the grant rate.

Four years ago, the government forecast the DSP would cost $13.2 billion this financial year but the bill instead will be $14.8 billion, rising to $17.8 billion by 2016-17.

The jump between now and 2016-17 was blamed on higher payment rates due to indexation with the cost of the dole and assistance to the sick also set to jump from $8.5 billion to $9.8 billion.

"You will have to squeeze spending seriously in other areas of the budget in order to sustain these levels of spending or eligibility for a lot of these welfare measures will have to be tightened," Mr Minchin said.

"I suspect over the medium to long term it will be a combination of both."

Mission Australia chief Toby Hall said the growing bill would become unsustainable and he warned of the consequences of an unmanageable welfare billl in Europe where spending commitments became so large governments faced with financial crises slashed assistance.

"We have absolutely got to get in and deal with the welfare system, we have to have an environment where we are working with people on Newstart to get back into work," he said.

"We have to have an environment where we are working with people on the DSP, where possible, to get back to work."

Martin Wren, head of disability employment provider NOVA, said it was essential for people's welfare that where possible they be "turned into taxpayers" rather than languish on welfare.

A spokeswoman for Disability Reform Minister Jenny Macklin said: "We currently have a negative (DSP) growth rate of minus 0.8 per cent.

The grant rate has dropped from 63.3 per cent to 42.4 per cent since government reforms started in 2010


"Prostitute" a forbidden word

I guess it sounds bad.  But what if it sounds bad because it is bad?

MISSY Higgins is locked in a bitter Twitter war with sex workers - because she used outdated language to describe a dream.

The popular Australian singer-songwriter posted on Twitter: "I dreamt I fell in love with a prostitute. She was young & I wanted to save her. Related to my thoughts about The Voice perhaps?"

But her seemingly innocent comment angered some in the sex industry.

A Twitter user with the handle WhoresEyeView snapped: "We don't need you to save us. Don't be so condescending. We are real people not extensions of ur ideals. Learn."

Missy replied: "It was a dream dude, chill out."

That sparked furious feedback.  One tweeted: "Cram the chill pill. If you bothered to learn the issues you'd understand why we can't chill."

Another fired: "If you had any idea how we hookers get treated you'd understand why I'm defensive. Grow some empathy."

After learning the term "prostitute" was offensive, Higgins later said: "I meant absolutely no disrespect by dreaming what I did. For the record, I do not, in reality, want to save any sex workers.

"I had no idea 'prostitute' is an offensive term, 'sex worker' being the preferred term by those in the field.  "Apologies to those I offended."


ALP figures on Libs' 'black hole' don't add up

IT is high time that the government dropped the rhetoric about the Coalition having a "$70 billion black hole" in its funding commitments. The numbers do not support such an attack.

Apart from the hypocrisy of a government that has failed to deliver its surplus forecast continuing to engage in such rhetoric, the $70bn figure is based on outdated assumptions.

All the more so now that the budget has been handed down and Tony Abbott has intimated that Labor's "saves" will largely be adopted by the Coalition.

Initial reports about the Coalition's $70bn funding black hole claimed that the calculation related to four years' worth of forward estimates, based on leaked internal Coalition documents. In fact it was six years' worth.

There were three main areas that accounted for the so-called black hole: the lost revenue from abolishing the carbon tax ($35bn) and the mining tax ($29.5bn), and compensation that would need to be paid to companies that had purchased carbon credits ($24bn). The remainder was made up from shortfalls pertaining to the Coalition's Direct Action Plan and various tax cuts.
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But the document was never anything more than a worst-case scenario the finance team mapped out, in the event that it retained the spending attached to the carbon and mining taxes that it always planned to abolish. That hasn't eventuated.

The carbon tax has had its revenue raising potential significantly downgraded in this year's budget. Labor's initial forecast of $29 a tonne for international carbon pricing in 2015-16 has been lowered to $12.10.

Most experts predict it is more likely to end up around $5 to $6. But it matters not because the Coalition has made it clear that it won't retain most of the compensation attached to the carbon price if it wins office.

Abbott does, however, plan to retain the pension increases and some of the family payments and higher tax thresholds, understood to the tune of $4bn annually. That said, the downgrade in the carbon price is more Labor's problem than the Coalition's, although some of the compensation has already been scrapped by the government in this year's budget.

Given that Treasury has included some heroic assumptions of where the carbon price will go after it floats in 2015-16 - $18.60 the year after, hitting $38 in 2019-20 - if Labor finds a way to win re-election, thereby retaining the carbon price, the budget is likely to again be overly optimistic in its revenue assumptions. The Coalition will face no such problem if it scraps the carbon price.

The mining tax was initially projected to collect $22.5bn during its first four years of operation, before it was downgraded to $9.1bn in the most recent midyear economic and fiscal outlook. Instead it is now expected to collect just $3.3bn, according to Treasury. But even that estimate is rather bullish, given that it only collects $200 million this financial year. Despite the fact that both the terms of trade and the dollar are not expected to change very much, Treasury estimates still suggest that the mining tax will collect 1000 per cent more in the final year of the current forward estimates ($2.2bn) than it did this year.

The only spend Labor announced that was attached to the mining tax that the Coalition has said that it will retain is the superannuation increases. But they are largely paid for by business, not the government.

Over one-third of the supposed $70bn black hole in Coalition budget planning the government has sought to attack relates to a government assertion that Abbott will need to refund the big polluters for the carbon permits they would have bought. The refund may be required if the permits are considered a property right. But the Coalition rejects this will be necessary, pointing out that carbon permits won't have even been purchased by companies by the September 14 election day.

There will be some funding shortfalls that Joe Hockey and his team will need to plug.

The Direct Action scheme and various tax cuts do remain unfunded (the Coalition rejects this). And retaining pension and family payment increases, along with the upping of the tax threshold attached to the carbon price, won't come cheap.

But the total of such shortfalls is a fraction of the $70bn black hole figure that Labor has again been trotting out this week.


Sir Lunchalot told ICAC he had a choice of either eat for free or starve

"I WOULD'VE gone broke very quickly" Ian Macdonald - aka "Sir Lunchalot" - told ICAC yesterday as he digested the prospect of paying for his own meals while a minister.

The conversation came up as ICAC asked why Mr Macdonald regularly had people seeking contracts with the government pick up the tab for meals and why the Department of Primary Industry paid for a dinner with union boss John Maitland where no departmental officials were present.

Stories have flowed during the inquiry of meals at Est, Prime and a $1800 dinner, complete with $500 magnum of pinot noir, at Catalina's in Rose Bay on December 15, 2008 as the Doyles Creek mine documents were signed.

Macdonald found himself defending one of Sydney's most famous eating establishments - Beppi's - during yesterday's evidence as he explained he did not want to meet Maitland there because it was too noisy. Perhaps it was the thought of no more prosciutto and watermelon that caused him to mount a defence.

"I shouldn't say this because Beppi's are an established old Australian firm ... but it was a noisy place when it was full," he said.

The former minister frontfooted the fact his daughter Sacha won a job through Mr Maitland in Mongolia, saying Sacha got "$29,000" for "20 months' work" and lived in one of the "most difficult places in the world, Ulan Bator". It was "not a reward".

Although there were plenty of hits in the Macdonald evidence, there was no killer blow. No sensational "ICAC loan" allegations and no sign of any payment to an offshore account or any other inducement for Mr Maitland winning a $15 million profit, other than a few fancy dinners and the job provided to Mr Macdonald's daughter.

At one point Macdonald, being criticised by Commissioner Ipp for accepting dinners, said: "Just like the current Premier going to a New Year's function on a boat on the Harbour owned by James Packer. I don't have any problem with him doing that."

By the end of the day, Mr O'Farrell had tweeted back: "Macca doesn't seem to understand lying to ICAC is an offence - I've never been on a Packer boat!" #diggingabiggerholeforhimself.

The Premier didn't reply to a question as to whose boat he was on New Years Eve. He has previously said it was with "family and friends".


1 comment:

Paul said...

A (very) quick walk around some of Cairns shittier suburbs will tell you all you need to know about the future welfare (and corrections) burden.