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Democrats reject Treasurer's attack on social security increases.

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Senator Meg Lees Parliamentary Leader and Senator for South Australia Australian Democrats spokesperson for Treasury

Press Release Dated: 10 May 2000

Press Release Number: 00/260 Portfolio: Treasury Related: Income Support

Democrats reject Treasurer’s attack on social security increases The Australian Democrats today angrily rejected the assertion by the Treasurer this morning that the $1.6 billion cost of the Democrats changes to social security payments for the GST were to blame for the reduced surplus.

Democrats’ Leader, Senator Meg Lees, said the changes the Democrats made to the Government’s GST package were fully paid for out of other revenue measures. She said that part of the surplus was used only to fund the improvements to social security payments and environment programs.

“The Democrats are very comfortable with - and more than happy to defend - the use of the surplus to fund improvements to social security because the harsh Budget cuts in the first two Costello Budgets were largely worn by low income earners on social security,” she said.

“Let’s be clear about this. Low income earners bore an unfair share of the pain in 1996 and 1997 and the Democrats are proud that we were responsible for them sharing in the gains in the 2000 pension increases.

“Independent modelling by NATSEM shows that the changes that the Democrats won to pensions and social security payments will result in pensioners and other beneficiaries becoming real winners even after the GST takes effect on July 1.

“The 1999 Budget carried $1.1 billion of social security. We consider that the $750 million of additional social security payments we negotiated, combined with the benefits flowing from GST-free food, as giving back the unfair cuts that Peter Costello took away,” said Senator Lees.

“The changes we had to force on the Government delivered the real gains in the living standards of low income earners. These gains were conspicuously

absent from the Coalition’s election policy and from Labor’s election policy.

“Yes, we used part of the surplus to repair the damage done to the social security Budget in 1996. And no, we do not resile from that one bit.

“But the great failure of Peter Costello’s Budget 2000 is that the damage done to education and employment programs during the life of this government has not been undone in this Budget.

“It remains the single biggest piece of ‘unfinished business’ for next year’s Budget,” Senator Lees concluded.


Over the next three years, the cost of making food GST free($11.5 billion) is more than met by other revenue and diesel savings ($11.85 billion), made up of income tax changes ($3.8 billion), diesel excise changes ($2.1 billion) and not abolishing some state taxes ($5.8 billion).

Of the rundown in the surplus ($2.9 billion) - this is to fund the increases in social security compensation ($2.1 billion), new environment programs ($0.7 billion) and the book industry package ($0.2 billion). The cost of top-up grants to the States for the GST is fully met from revenue measures.

This is entirely appropriate, as the build-up of the surplus in the 1996 Budget relied very heavily on cuts to social security payments, environment programs, schools funding and the abolition of the printing bounty. The surpluses from 2001 are forecast to grow rapidly.

Revenue: 2000-01 2001-02 2002-3

Income Tax -1110 -1234 -1435

Diesel changes -399 -388 -401

GST payts from States -60 -60 -60

TOTAL -1569 -1682 -1896


Environment 223 234 245

Social Security pyts 737 445 875

SAAP 15 15 15

Books plan 60 60 60

Env, Soc Sec SubTot 1035 754 1195

Local Govt Grants 1316 1364 1413

Top-up State grants 967 238 337

GST admin 60 60 60

Diesel Grants saving -262 -294 -314

TOTAL 3116 2222 2691

NET COST 1547 540 795


GST-free food -3289 -3855 -4136

Local Govt Grants 1316 1364 1413

State tax deferrals 1091 2326 2420

Top-up grants 967 238 337

Cost GST collection -60 -60 -60


(Budget Paper No. 2 p.3 & 39; Budget Paper No.3 p.50, letter from PM 28 May 1999)


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