Increasing hardship demands long term change

Thousands of low income Australians received an early Christmas present from the Rudd Government last week with the announcement of a $10.4 billion package to boost spending in the face of global economic downturn.

While the government must be applauded for being prepared to act swiftly and decisively, questions must be asked about the long term effects of these spending announcements.

The vast majority of money, about $8.7 billion, will be delivered as one-off payments to low income pensioners and families. This will be very welcome, and will deliver some relief in the short term, but unfortunately will offer no lasting change to the 2.5 million Australians who use the services of welfare agencies each year.

For some time now, this group of families and individuals have been suffering hardship brought on by the affordable housing crisis, the increasingly precarious jobs market and the rising cost of essentials such as food, transport and heating.

In the past 12 months, financial counsellors at Anglicare Victoria have experienced a staggering 65 per cent increase in demand for material aid such as food parcels. They have also seen a 14 per cent rise in clients behind in their rent or mortgage and a 19 per cent rise in families and individuals requesting assistance to pay for gas and electricity.

Rather than $1,000 handouts to low income families and pensioners, Anglicare Victoria would prefer to see the Australian government commit to reducing income tax for individuals earning less than $30,000 and bring forward their planned review of pension and carer payments to significantly raise payments in line with the cost of living.

The other big ticket item in the government’s package is a $1.5 billion investment in housing through a doubling of the First Home Owners Grant for established properties and a tripling of the grant for the construction of new homes.

This initiative will immediately pump money into the construction sector, generate employment and indirectly deliver funding to state governments via stamp duty.

Unfortunately, it will also artificially inflate house prices and encourage the construction of new homes in fringe suburbs with little infrastructure and limited services such as public transport, child care and family support.

In fact, the First Home Owners grant, in conjunction with tax incentives for investors, has been partly responsible for Australian cities becoming among the least affordable in the world to buy a home. The average home in Sydney now costs 8.6 times the average household income, up from three times in the early 1980s.

Combined with this, successive federal government’s have favoured a shift away from the provision of public housing towards a subsidised private rental market resulting in a serious lack of affordable rental properties.

Vacancy rates in capital cities are roughly 1 per cent and the waiting list for public housing stands at about 180,000. Even caravan parks have waiting lists of up to four months.

The Rudd Government has announced a range of initiatives including first-home buyer savings accounts, tax credits for investors who provide affordable rental housing, and a $500 million Housing Affordability Fund, but none of these address the immediate and serious lack of public housing options for thousands of families and individuals at risk of homelessness.

We desperately need greater investment in public housing and a full review of tax provisions including capital gains and negative gearing to discourage investors from competing with low income earners to purchase housing at the lower end of the market.

Perhaps the only part of the package with an eye on the long term future is the creation of 56,000 new training places at a cost of $187 million. Anglicare Victoria welcomes this initiative but calls on the Rudd Government to commit further funding for programs targeted towards the long term unemployed and marginalised workers, often suffering from disability or mental health issues.

This group of people do not have the ability to fill skills shortages in the short term but through more intensive training and employment in a transitional workplace they will build skills to bolster the workforce in the future.

The Rudd Government has shown it is prepared to spend money to stabilise the Australian economy. These initial measures will inject cash and encourage spending but will do little to protect the most vulnerable in the community from ongoing hardship and rising unemployment.

We look forward to the promised infrastructure funding to be invested in skills training, affordable housing and capacity building programs to protect the most vulnerable in the community and build a more robust and stable economy in the future.