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Issue #1773      April 12, 2017

The zombie cuts

52,100 low-income families poorer

Last month, with the support of One Nation, the Xenophon Team and some independent senators, parliament passed the Turnbull government’s $1.6 billion revised version of its original childcare “omnibus” legislation.

The new Social Services Legislation Amendment Bill, (nicknamed “Omnibus 2”) provides improvements for some families, but restricts access to childcare for certain minimum income families, and includes $2.4 billion in cuts to other welfare areas, brutally penalising people who are already experiencing financial hardship.

A graded means-tested family childcare subsidy, paid to childcare providers not parents, replaces the existing childcare rebate and benefit. Low-income parents receive the maximum subsidy of 85 percent, but under a new “activity test” they have to prove they have completed four hours of work, training, study or some equivalent activity each week.

Parents who satisfy the test are entitled to a maximum of 50 hours childcare subsidy per week. However, 52,100 families earning less than $65,710 will get a reduced subsidy because of the test.

Minimum-income families failing the test can still get 12 hours subsidy per week, but that’s half the number of hours to which they were formerly entitled. At 85 percent they’re only entitled to a subsidy equivalent to a full-rate childcare fee for 10.2 hours per week.

To get the legislation through the Senate the government very grudgingly agreed to place an upper income limit on entitlements. However, the limit is $350,000. Those who earn this amount and pass the four-hour test (which they’re much more likely to pass compared with minimum income earners) still qualify for a 20 percent subsidy for a maximum of 50 hours care per week.

That’s equivalent to 10 hours at the full childcare rate, almost as much as minimum-income parents can claim if they can’t meet the four-hour test!

And the legislation doesn’t just affect childcare. Welfare payments have been subjected to an indexation freeze and cuts. Cassandra Golding, Chief Executive Officer of the Australian Council of Social Services, declared:

“Overnight the lives of people in over 1.5 million households have been altered for the worse. Young unemployed people and parents in need will have to wait for income support for seven days.

“It will now also be harder for them to show they need an exemption to the one week [rule] because of financial hardship. ... this will harm people escaping domestic violence and throw people who are in financial hardship into destitution.

“Families will see their Family Tax Benefit drop by hundreds of dollars over two years because of the indexation freeze. The biggest impact will be felt by low-income families, especially single parents at a time when already 40 percent of children living in one-parent households live in poverty.

“The freeze of income-free indexation for working age and student payments will see a student lose around $4.70 per fortnight. This may not seem like a lot of money but for 60,000 young students who will be affected, it is”.

The zombie threat

The original “Omnibus 1” legislation, which would have stripped funding from an even wider range of welfare programs, was defeated in the Senate. However, certain welfare cuts included in the original bill or the notorious 2014 budget remain as deferred economic policy.

Known as “Zombie” measures, they include cuts to energy and pensioner education supplements, the elimination of portability for pensions, a four-week delay before young people can receive unemployment benefits, the abolition of Family Tax Benefit end-of-year supplements, and the removal of Family Tax Benefit for sole parents in the year their youngest child turns 17.

The government is simply waiting for the right moment to reintroduce these initiatives, which are specifically aimed at hitting people on low incomes. Golding declared: “We want an assurance from government that they will bury the one-sided ‘zombie’ measures once and for all.”

According to Golding, since 2015 $3.6 million has been taken out of the family payments system. Children’s early years are crucial for their development, and childcare should form part of the public education system. But the government cynically treats childcare as a bargaining chip to help it impose welfare cuts.

The Omnibus 2 legislation was only passed by unprincipled “horse-trading” under which the government offers legislation to improve social welfare, but only on condition that an equivalent or greater amount of funding is slashed from existing programs.

The government seeks to set the interests of parents in general against those of the poorest families. It poses the rights of the present generation against those of their descendants, with the false claim that welfare costs will have to be paid for by borrowing money it doesn’t have, while it squanders billions on armaments deals, offshore immigration processing, fossil fuel subsidies, low business tax rates, and other wasteful and reactionary policies.

High rates of unemployment suit the government because it wants people to compete for work, which will drive down wages and blunt campaigns for better working conditions.

Before Omnibus 2 was passed, Senator Lambie suggested fund-raising alternatives to the legislation, including a financial transactions tax, a death tax for estates exceeding $5 million, and a cap on capital gains tax concessions.

She commented: “... when you continue to go after the poor when you could be going after the money of the top 1 percent of Australian earners ... it just makes me feel sick to the guts.” But the government has the interests of the top 1 percent at heart and it ignored her.

Few if any coalition MPs are likely to have had the experience of being on welfare. But Senator Lambie has, and in parliament she passionately opposed Omnibus 2 in a speech that was applauded around the country.

She declared:

“Saying ‘we’re not taking money off them, we’re just going to freeze it’ – well, are you going to freeze bread and milk, are you going to freeze fuel, are you going to freeze groceries? Are you going to freeze their rent? For you to take money off those people, you have no idea how tough it is. What you are doing is shameful.”

And that just about sums it up.

Next article – No one is a stranger

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