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The address: www.janevashti.wordpress.com
4. 'Race to the bottom': why our poorest pay the most tax |
Crikey intern Jane Vashti Ryan writes: |
Australia’s poorest pay the highest effective marginal tax rates, leading to long-term work disincentives for welfare recipients, according to a brief released by The Australia Institute this week. The document, Removing poverty traps in the tax-transfer system, will be submitted to the federal government in the lead-up to a new tax summit to be held by mid-2011, revisiting the Henry Tax Review. The review highlighted the anomaly, as did the incoming government brief ("red book") handed to finance minister Penny Wong when she assumed the portfolio after the election. According the brief, there’s a whacking great list of benefits that taper simultaneously when someone receiving benefits re-enters the workforce. This can lead to an effective tax rate of up to 100% for some, which translates to absolutely no financial benefit in re-entering the workforce. Welfare Rights Centre director Maree O’Halloran says the system is stacked against low-income families in particular. "In the worst cases, an individual can face five different payments all tapering at once: Family Tax Benefit A, Family Tax Benefit B, Youth Allowance, Child Care Benefit, Public Housing. It’s like a house of cards, with the deck stacked against low-income families, unemployed people and secondary earners, usually women working casually," she told Crikey. A senior policy adviser at the Australian Council of Social Services, Peter Davidson, says if the structure tax system was changed, it would encourage more people on benefits to work: "The structure should be changed and extra work related expenses should be reduced. Income tests for Newstart Allowance should be reduced, and that overlapping of tapers should be removed." Single parent Susan Brown recently re-entered the workforce, and says she could never have afforded to work before her two girls reached school age. "I used to get $630 a fortnight now I get about $300 on top of which I have to pay for child care. If the girls weren’t in school, childcare would cost about $120 a day," she said. One of the most prominent poverty traps shown in the brief is that faced by public housing tenants, whose rent increases incrementally with their income. But O’Halloran says the disincentive to work starts long before welfare recipients actually take up tenancy. "The workforce disincentives embedded in our public housing policies require urgent attention. If you’ve been on a waiting list for public housing for years you become very fearful about jeopardising your place in the long queue," she said. And policy manager at the Community Housing Federation of Australia Eddy Bourke told Crikey the problem is compounded by a chronic shortage of accommodation: "There’s a race to the bottom, when the state is only able to allocate housing to the very most vulnerable people in the community. People just won’t work if they think their chances of getting a place will be affected." Catholic Social Services CEO Frank Quinlan says the problems created by the complicated tax-transfer system are not new, but that the report certainly highlights the stark disparity in effective tax rates faced by people on low incomes. This figure, first published in the Henry Review, shows the level of tax paid by welfare recipients as they enter the workforce. It’s based on the yearly private income of single income couple with two children. Source: Treasury, Australia’s future tax syxtem consultation paper, Chart 4.5, p.94 This graph shows the effective tax rate for a family earning $30,000-$40,000 per year is over 90% when tapering benefits and income tax are accounted for. This compares with the 35% paid by a family earning $70,000 per year. In response to the figures, the brief states: "It is relevant to ask why such an arbitrary pattern of effective marginal tax rates in the welfare system is tolerated when it is surely within the wit of policy makers to design system that claws back welfare entitlements and extracts tax in a smooth and consistent manner." The brief echoes changes to the interaction between the tax system and the welfare system called for by Treasury. Quinlan says while basic human dignity is being called for, there is also an economic imperative at stake. "Purely from an economic point of view it makes sense to improve the standard of living for Australia’s poorest people, and help them into the workforce, rather than deterring them from entering it," he said. But you could have read it first here... |
Jane Vashti Ryan gets a scoop!
4. Our black health gap: less spent on primary aboriginal health |
Crikey intern Jane Vashti Ryan writes: |
Spending on primary health care for indigenous Australians is significantly less per person than for the rest of the population, despite an 11-year gap in life expectancy. The Australian Medical Association says the new data shows mainstream primary health services are failing indigenous Australians, with services not delivering adequate care or value for money. The Australian Institute of Health and Welfare report, commissioned by the federal government and released last Friday, shows primary health care spending for indigenous Australians is $327 per person in 2006-07 (the latest figures available), compared with $563 for non-indigenous Australians. It also shows spending on hospital care for indigenous Australians being treated for preventable diseases such as kidney and heart disease is as much as seven times higher that of non-indigenous Australians. AMA president Dr Andrew Pesce says the figures don’t come as a surprise. He told Crikey: "You would think there is equal access to these services for everybody and theoretically there is. But because of the lack of early access and health literacy in indigenous communities, you only see intervention when there is a crisis. "There’s a gap in service delivery that needs to be closed in order to close the gap in life expectancy between indigenous and non indigenous people that currently stands at about 11 years." And the problem isn’t specific to remote communities. Dr Steve Hambleton, the AMA's Queensland-based vice president, says 75% of indigenous Australians live in regional and metro areas, yet they are failing to access primary health care services. Recently speaking to an urban GP, Hambleton said the GP super clinic planned for that area should be an Aboriginal medical service. The GP said there are no Aboriginal people there, therefore it would be unnecessary. “There are 4500 indigenous people living in that area, they just don’t go to the doctor," Dr Hambleton said. "For too long this issue has been under the carpet, but it’s out there, it’s obvious and we need to do something about it." A spokesperson for the Department of Health and Ageing says the numbers reflect the policy of the previous government, and that Labor has put in place new policies to target these problems: "New funding arrangements under the Indigenous Chronic Disease Package provides substantial additional funding to the Aboriginal Community Controlled Health and mainstream health sectors." The spokesperson also said non-admitted hospital health care for indigenous Australians was 2.2 times higher than non-indigenous people, suggesting not all primary health care delivery is included in the new numbers (read the complete departmental response to Crikey here). But policy manager at the Aboriginal Medical Service Alliance NT, Chips Mackinolty, says the most worrying figures show the level of spending for end-stage kidney disease. "The most startling figures are on renal disease where it’s absolutely clear that the greatest cost is in end-stage renal dialysis; 45% of total hospital spending for indigenous Australians goes to renal disease each year, usually dialysis," he told Crikey. Mackinolty said kidney disease is one of the most expensive conditions to treat in its end stages: "Dialysis and transplants go off the charts in terms of cost. The most cost-effective thing to do would be to put money in primary health care instead of hospitals." But mainstream primary health care services are failing to deliver the right care, according to Dr Hambleton: "Mainstream general practices are pretty scary places for many Aborigines, but when you see an Aboriginal person at the desk, that discomfort is alleviated. Every GP can improve the way they interact with indigenous clients, but the biggest bang for buck will come from community-controlled organisations." More Aboriginal community-controlled health services are on the agenda for medical groups, but the problem won’t be fixed with health service improvements alone, says Mackinolty. “Improvements in primary health care will only improve these numbers by about 30%. The other 70% comes down to social determinants of health -- things like employment, housing and education,” he said. |
10. Farmers will survive, with more than a pinch of salt |
Crikey intern Jane Vashti Ryan writes: |
Could changing irrigation methods in Australia save water, the agricultural sector and ultimately the Murray Darling Basin? “It can go a bloody long way towards it,” irrigation consultant Jeremy Cape told Crikey today. Only 30% of irrigators actually use an objective scheduling method to find out when to apply water. What does that mean? According to Cape, it means that while the debate rages over sustainable cuts to irrigation entitlements for farmers on the Murray Darling Basin, only about half of the irrigated water in Australia is used by Australia’s agricultural plants. The rest is down the gurgler. The alternative on offer is a standardised, water-efficient drip irrigation system, which allows the farmer to measure, within 5%, the amount of water being used. While the loss of water through wastage is contributing to the overall ill-health of the river system, it’s also causing massive hikes in salinity which isn’t just bad for the river system, and has serious repercussions for irrigators and dry-land farmers as well. Wentworth Group environmental engineer Tim Stubbs says water that drains below the root zone and into underground water tables draws the water -- and a lot of salt -- to the surface. "Australia’s landscape has a lot of salt in it. Because of damming and catchments we’re not getting flood planes and carbon moving, and we’re then getting massive build-ups of salt levels which makes the water salty," he explained. “Up in Queensland around the Burdekin catchment they’ve been irrigating for 20 years now, and they’re really starting to see the effects of salinity. Sugar cane production levels are dropping." Cane, who has worked in the irrigation sector for over 20 years, reckons the proposed water entitlement cuts could be easily met by farmers, and salinity levels could be much better managed if more efficient methods of irrigation were supported by the government. “In 1990 we had about 40 people employed in water usage efficiency by the NSW Department Agriculture. Now there are less than five. The support for extension staff who are working to support irrigators has virtually disappeared in the public sector,” he said. “There used to be a rural Water Use Efficiency in Queensland and this program no longer exists. It is possible to change methods of irrigation, meet those targets and maintain the health of the agriculture sector all at the same time.” Sean Hoobin is the fresh water policy manager from the World Wildlife Fund and agrees the cuts proposed must be met if the process is going to carry any real environmental weight. "There’s been a range of cuts recommended, and the ones being looked at by the government aren’t going to do the job. If we're going to do this we may as well do it properly," he said. |
20. Wine producers rue our dollar, and will students stay away? |
Crikey intern Jane Vashti Ryan writes: |
As Australian Institute of Export director Peter Mace put it: "It’s not bloody good." The Australian dollar peaked at 99.2 US cents overnight, the highest it has been since the dollar was floated in 1983. And while Australian travellers are cheering, exporters and educators are bracing for significant fallout. Mace says the wine industry, the education sector and the manufacturing sector will all suffer if this hike is here to stay. "The Australian wine industry has little room to move on pricing with competition now coming from South America and South Africa, and manufacturing will suffer too. We’re a high-cost production country." But the real doozie, according to Mace, will be the fallout for the education sector, one of Australia’s biggest export industries: "With the rising dollar, foreign students have to make the call on whether to come to Australia or look else where." International student housing group International House director Elissa Jans is worried about the ramifications. "Last time the dollar peaked, we had feedback from overseas clients saying the rising value of the dollar really was a serious deterrent," she said. "Students are looking for a bargain when they come and study. Normally they look at the UK or the US but they come here because it’s cheap. When the dollar rises this high they might as well stay at home." Chief economist at the Export Finance and Insurance Corporation Roger Donnelly agrees certain industries will be adversely affected, but points out that rising currency value is a response to a potentially overheating economy. "It’s a safety valve for inflation and the RBA would have to be taking sterner action if we had inflation," he said. The dollar has been boosted by strong unemployment figures and a weakening American dollar, but the threat of an international currency war looms large with fears that major economies are engaging in a "race to the bottom" in a bid to boost export growth. But you could have read it here first... |
“…the functions and powers, including enforcement powers, needed to ensure that Basin water resources are managed in an integrated and sustainable way. The MDBA will oversee water planning considering the Basin as a whole, rather than state by state, for the first time.”
“We want to make sure that the numbers are a draft and that the consultation process is genuine because there’s absolutely no way these numbers can be final.”
“Neither the MDBA nor the federal government has articulated a clear vision for the Basin – specifically, the social, economic and environmental outcomes the Basin Plan is seeking to achieve.
“For farmers, the Basin Plan isn’t an ‘agriculture versus the environment’ debate. It requires balanced considerations – between farm production, environmental needs and local community impacts.”
“It all comes down to stranded assets. If we can’t utilise the land we’ve developed for irrigation we’ll lose out,” he said.
“The direct human cost of reducing irrigation on farms is about one man for every thousand mega liters. Then there’s the multiplied effect of what isn’t produced – work in packing sheds and cotton gins.”
“In less than a century, water extraction from the Basin’s rivers has increased by 500 per cent. This is unsustainable and is driving an ecological crisis.”
“…it is not a final plan, it’s a guide to a draft of the plan…”
“Well, you won’t have an irrigation community if some of these numbers that are being bandied around at the moment go forward.”
“We’ve known for years that the system has been over-allocated, now it’s time to get the balance right.”But you could have read it here first...
4. Farmers anxious over Murray Darling water cuts | |||
Crikey intern Jane Vashti Ryan writes: | |||
Farmers in the Murray Darling Basin are sweating over the prospect of big cuts in water entitlements by as much as 37%. The details were leaked from the guide to the Murray Darling Basin plan, which will be officially released tomorrow by the Murray Darling Basin Authority. The release of the plan will signal the beginning of a detailed consultation process, but the community is already deeply divided over the issue. Australian Farmers’ Federation CEO Ben Fargher says a reduction in water entitlements of 27%-37% would be completely unsustainable for farming communities. "We’re concerned about these numbers. Those levels would have a devastating affect on the whole regional community. We’re really worried we’re not going to see balance," he told Crikey. "We want to make sure that the numbers are a draft and that the consultation process is genuine because there’s absolutely no way these numbers can be final." The Australian Conservation Foundation (ACF) has taken a strong stance in favour of the proposed changes. ACF’s Healthy Rivers campaigner Dr Arlene Harris-Buchan says irrigation of the basin has increased by 500% in the past century. "We need to restore the balance between irrigation and the environment by putting more water back into the rivers of the Murray-Darling Basin," she said, calling for the plan to address the river’s long-term health and include sustainable diversion limits. "All interested parties will have the opportunity to comment, improve, consolidate and add to the information underpinning the plan. This will be the time for making the proposal as good as it can be," she said. Cotton farmer Michael Egan has worked the land around Warren in NSW for 30 years. He's concerned about the proposed limits and says the flow-on effects cannot be underestimated. "The direct human cost of reducing irrigation on farms is about one man for every thousand mega litres," he told Crikey. "Then there’s the multiplied effect of what isn’t produced -- work in packing sheds and cotton gins." Egan says most farms are mortgaged, and there will be a direct correlation between financial loss and further irrigation limitations. "They’ve gone way too far towards the environment. The federal government’s already bought one or two thousand gigalitres, and we’re down to 18% limits on irrigation," he said. "With the drought just broken, we’re only just getting runs on the board this year, and now we’ve got this to deal with." You could have read it here first though... |
While I was knocked back by Triple J program Hack yesterday (in conjunction with a smack down from a certain conservative columnist and falling in poop while I was walking my dog), I was today published in Crikey. (Right after I fetched the coffee.)
10. Call off the razor gang and fix the safety net: welfare groups |
Crikey intern Jane Vashti Ryan writes: |
Treasury’s brief to the incoming government calls for broad-scale welfare reform, among other cost-cutting measures. But welfare groups say the reforms outlined in the so-called Red Book are ineffective and risk discriminating against some of the most marginal people in the community. National Director of Uniting Care Australia, Susan Helyar, says it’s time to break away from welfare reform orthodoxy and deliver adequate payments and effective services if government is serious about reducing individual reliance on welfare and increasing overall labour force participation. "There has been no substantial change in the level of unemployment in the last 15 years and this is because we’re using the wrong approach to welfare changes,” she said. The Red Book -- prepared by Treasury for the incoming government -- does call for an increase in payment rates to people receiving Newstart Allowance and student benefits, but says these increases should be offset by tightened eligibility criteria for the disability support pension. Australian Council of Social Service CEO Dr Cassandra Goldie points to several other government-funded schemes that are plagued by inadequacies and perverse incentives, highlighting the distinction between tax incentives and welfare payments. “On the expenditure side, there are a number of schemes which are poorly targeted, including the health insurance rebate, the Medicare safety net scheme, and the childcare tax rebate. These schemes disproportionately benefit higher income earners. They also generate inflation in service costs, which in turn disadvantages low and middle income earners," she told Crikey. ACOSS is also alarmed by the Department’s call to encourage a “user pays” approach to health and aged care delivery in order to reduce costs. “This seems to us to be the wrong approach,” Dr Goldie said. “Australians should expect governments to provide or fund essential services such as these. But they will only be able to do so if more public revenue is available or less is wastefully spent in other areas.” Finance has also called for a reduction in the tax rate paid by individuals on welfare payments transitioning to work, a point both ACOSS and UCA are in agreement on. The report notes: "Low income families face particularly high effective marginal tax rates (EMRT), yet they are the ones who would benefit most from an increased participation through higher incomes, lifetime earning and, most importantly, breaking the cycle of inter-generational disadvantage." Pointing to the Jeff Halmer Pension Review published in 1998, Susan Helyar has called on a similarly broad and in-depth inquiry into the welfare system. “We haven’t seen that level of comprehension in this debate. The debate going on at the moment is narrow, shallow and not representative of the real problems,” she said. “We want to reduce the disparity in payments and increase incentives for people to work, but this problem won’t be fixed by bashing people over the head with a financial stick.” |
The sum total of my day: