ACOSS targets super, landlords to bolster welfare

Changes to the tax treatment of super and investment properties are being targeted by ACOSS to help generate revenue to bolster welfare payments such as Jobseeker.

Tax changes are needed to boost the rate of Jobseeker and other welfare payments, ACOSS says. Picture: istock.

Taxing income earned from superannuation investments after retirement and cracking down on tax deductions for landlords with vacant properties and short-term Airbnb rentals would help fund a bigger social safety net and more services, the nation’s peak welfare advocacy group says.

The Australian Council of ­Social Service also wants to reduce capital gains tax benefits and progressively ditch negative gearing on new investment properties so the federal government has more money to raise social security payments such as JobSeeker from $55 to $80 a day.

In its pre-budget submission, ACOSS says Australia is “witnessing a level of financial distress not seen since the recession of the early 1990s”, with one in six people – about 3.3 million residents – living below the poverty line.

The submission warns that 2024 is shaping as a “perfect storm for financial hardship … with higher living costs (especially for housing), weak growth in incomes (especially JobSeeker and related payments, as well as wages) and the ongoing impacts of climate change (especially storms, fires and overheated homes) combining to directly threaten community living standards”.

Key among its proposals for the 2024 budget is an immediate and significant boost to the rate of JobSeeker, currently $55 a day, and Youth Allowance, $45 a day, to match the pension rate of $80 a day to provide cost-of-living relief for the people who need it most.

This would come with a price tag of about $10bn next financial year, the submission says.

“This budget must outline policies to boost jobs and incomes, as well as reform our tax system including by reducing outdated and perverse tax breaks for investors and making the tax treatment of superannuation fairer,” ACOSS chief Cassandra Goldie said.

“Australia is the ninth-lowest taxing among 40 OECD nations and needs more revenue to fund quality essential services and social safety nets over the long term,” Dr Goldie said.

Dr Cassandra Goldie, CEO of the Australian Council of Social Service.

The submission proposes a range of changes to the tax treatment of super during the accumulation phase to combat inequity between low income earners (disproportionately wo­men) and higher income earners.

And when people reach retirement, the “extraordinarily generous” current tax rules for super should be changed, with a 15 per cent levy on investment income to be progressively introduced from July 2025 in return for a guarantee of free quality aged care or all older Australians.

Such a change would generate $2.5bn in revenues in the first year alone, the submission says. It also proposes changes to capital gains tax, including halving the capital gains discount from 50 to 25 per cent over the next three years.

And negative gearing should be revamped so deductions can only be offset against income from the same class of investments, the submission proposes.

It also says the housing crunch would be eased if owners of investment properties could claim only for expenses on properties that are currently let on long-term leases.

Dr Goldie said the upcoming budget was an opportunity to bridge “the stark divide between those with wealth and those in ­severe financial distress”.