FED: Govt set to crack down on middle class welfare
By Susanna Dunkerley11 May 2009 4:21 PM
Subject: FED: Govt set to crack down on middle class welfare FED: Govt set to crack down on middle class welfare EDS: REPEATING AND UPDATING
CANBERRA, May 11 AAP - The cash-strapped federal government is unlikely to deliver its multi-billion plan for widespread pension reform but has pledged to deliver paid parental leave from January 2011.
But in order to avoid a likely political backlash the single age pension is certain to be increased by $30 a week, giving relief to pensioners struggling on $569.80 a fortnight.
To fund the pension rise, expected to cost around $3 billion and the $260 million 18-week paid parental leave scheme, the government has warned it will cut into the Howard government's middle-class welfare.
Last year Labor introduced a means test curbing access to the Baby Bonus and Family Tax Benefit Part B to those earning $150,000 or more.
Families with incomes of more than $110,000 were also limited to the amount they could claim back through the childcare rebate.
Professor Paul Kerin from The University of Melbourne business school says the government is likely to go even further this year.
"There will be tightening of means testing in this budget," Prof Kerin, who wants middle class welfare abolished, told AAP.
On this year's hit list is the Family Tax Benefit Part A, which helps families with annual incomes of up to $160,000 with the cost of raising children.
Also on the list is the Medicare Safety Net, which provides out of hospital compensation for non-medicinal costs.
Prof Kerin says the government could save up to $50 billion a year if it scrapped middle-class welfare altogether.
But he expects it to "scrape the tip of the iceberg" on the politically sensitive area.
"I don't expect huge savings out of the means testing," Prof Kerin said.
Prof Kerin argues that a redistribution of welfare spending would provide short-run stimulus and help the needy.
"Middle-class people are not going to miss the money very much, they will spend anyway, and those who actually need it are more likely to spend."
One needy group who have been granted some reprieve are single aged pensioners who survive on just $285 a week.
The government has promised to lift their weekly payments and is likely to do so by $30 a week, just short of the recommendation in the Harmer pension review.
The Australian Council of Social Services (ACOSS) says the government is likely to spend around $3 billion lifting pensions this year.
But ACOSS chief executive officer, Clare Martin, is concerned that some of the most needy, sole parents and the unemployed, are almost certainly going to miss out.
The group is calling on the government to ensure all pensions are included in the budget.
"Sole parent families and unemployed people struggle below the poverty line because their low payments are simply not enough to live on. Any pension increase in the Budget should include them," Ms Martin told AAP.
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FED: Govt set to crack down on middle class welfare