Homelessness services will be nearly $40m worse off under the federal budget and may have to shed hundreds of jobs, as new modelling shows the government’s cost of living measures will disproportionately benefit higher-income earners.
Treasurer Josh Frydenberg announced on Tuesday that the budget would include $8.6bn in one-off cash payments and temporary changes to petrol and income taxes to help ease the rapidly rising cost of living.
But modelling from the Australian National University has revealed that 56% of the dollar value from the measures would go to middle and higher income earners, most of it coming from the one-off $420 tax offset, the largest of the Coalition government’s three major cost of living measures, valued at $4.1bn.
Households with the highest amount of financial stress – those in the lowest 20% when ranked by income – received only 15% of the financial gains from the measures.
In his speech on Tuesday, Frydenberg said the Morrison government was tackling “higher fuel, food and shipping costs” with a “temporary, targeted and responsible cost of living package”.
Associate Prof Ben Phillips from ANU’s Centre for Social Research and Methods, who performed the analysis, said the income tax offset, which applies to those earning up to $126k per annum, “probably wasn’t really needed”.
“Financial stressors in Australia are much more focused on low and middle income families [who have a lower taxable income],” Phillips said.
The median income in Australia is $62,400 per annum, with those earning over $100k in the top 20% of earners in the country.
“Savings rates have increased quite substantially among middle and higher income households, and retail spending has been very strong recently too,” said Phillips.
“That suggests higher income families probably aren’t struggling very much. They don’t need tax cuts. The cuts may also put additional pressure on the Reserve Bank to raise interest rates.”
Phillips’ analysis also found the impact of the fuel excise reduction was lower for households than was stated in the budget papers, which estimated the impact on both households and business combined.
The $250 one-off cash payment to people on low incomes, worth an estimated $1.5bn, failed to address systemic issues with the rate of welfare payments, Phillips said.
“$250 is nice but not much in the scheme of things. For people on welfare payments, the problem is not just about the fact that petrol prices have grown sharply in the last few months; I’d be more concerned about the long-term problem, which is simply that they don’t receive enough money on a weekly basis, regardless of what happens with inflation.”
At the same time, the budget failed to renew supplementary funding to homelessness services designed to address the historic underpayment of the largely female workforce in the social services sector.
The $39.4m shortfall from July 2023 marks the end of a decade of supplementary federal support for homelessness services as part of a 2012 equal remuneration order (ERO) made by the Fair Work Commission to increase wages in the community services sector.
The ERO meant wages for those working for homelessness services increased, but the sector has expressed fears that without that funding continuing as a matter of course, they will need to either reduce vital services or shed employees, leaving vulnerable Australians with even less support.
Jenny Smith from Homelessness Australia told Guardian Australia that unless it was made up by extra contributions from the states, the federal funding gap would mean between 400 and 560 jobs would probably be lost from the sector after July next year.
“Homelessness services provide crisis responses, support to people trying to find a permanent home, and they provide support for people with serious mental illness,” Smith said.
“This affects every homelessness service provider in the country, funded by a state or territory government. It’s breathtaking, really. That’s fewer people to answer the door, and taking support away from people who are relying on it.”
Along with the funding reinstatement, Homelessness Australia is calling for an increase in federal investment in social housing and for jobseeker to return permanently to the increased rate it was at the start of the early pandemic lockdown period.
“We’re already turning away 250 people a day without giving people what they need. That was before Covid. It’s even worse now,” Smith said. “But there is no policy or plan from this federal government to do anything about it. And now it’s kicked our organisations in the guts.”
