Tax too hard but welfare in Abbott's sights

Sydney Morning Herald

Friday April 1, 2011

Phillip Coorey CHIEF POLITICAL CORRESPONDENT

TONY ABBOTT has shelved a pledge to increase the tax-free threshold and introduce a flat tax if elected after acknowledging there would be losers from such changes and the budget would need to be in surplus to compensate them.In a speech yesterday in which he also called for a widespread crackdown on welfare, the Opposition Leader repeated his desire to change the tax scales so people on welfare would be given a greater incentive to work.For almost a year Mr Abbott has promised to use as his template recommendations by the former Treasury secretary, Ken Henry, that the tax-free threshhold be lifted from $6000 to $25,000, and for a flat income tax rate of 35 per cent to apply on incomes from $25,000 to $180,000. But it has emerged that two-thirds of workers - those earning between $35,000 and $100,000 - would be worse off and Mr Abbott conceded this yesterday."On this score, Henry's recommendation is a worthy goal but could only be implemented once the Commonwealth's fiscal position had sufficiently improved to implement a 'no losers' version," he said.Amid condemnation from the welfare sector, Mr Abbott pressed ahead with spruiking his welfare proposals.These were abolishing the dole for people under 30 in areas where there were unfilled unskilled jobs, mandatory work-for-the-dole for people aged under 50 who had been unemployed for six months, quarantining welfare payments so at least half was spent on food and other essentials, and creating a new benefit for recipients of the disability support pension who have treatable conditions. The idea would be to lessen the burden to the budget of that pension, which costs $13 billion a year.The government is planning a series of welfare reforms for its May 10 budget to maximise workforce participation and did not criticise the substance of Mr Abbott's proposals yesterday. But the Prime Minister, Julia Gillard, said they were uncosted, had been announced twice before, and were nothing more than an attempt by Mr Abbott to shed his image as a naysayer.She was referring to a shadow cabinet submission Mr Abbott prepared before he was Opposition Leader suggesting similar measures. He proposed mandatory work-for-the-dole for under-50s unemployed for more than three months. He costed this at $10.5 billion and suggested it be funded by increased alcohol and tobacco taxes and a higher pension age.The chief executive of the Australian Council of Social Service, Cassandra Goldie, said Mr Abbott's ideas were flawed and nothing more than stereotypical dole-bludger bashing.She said the amounts of money that would be required for such changes would be better spent training the unemployed to help them find work, and investing in such schemes as subsidising wages to encourage employers to hire the unemployed.

© 2011 Sydney Morning Herald

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