The 2016-17 Budget comes at a challenging time for public policy. Economic growth remains sluggish as the economy transitions away from the mining boom. Governments face fiscal pressures both from this economic adjustment and from the ageing population. At the same time, core Government services and payments are not meeting the community’s needs. Our health, education, disability, aged care and community services are under strain and the gaps in our social security system are leaving many vulnerable people exposed to poverty and financial stress.

Consistent with the consensus view emerging from last year’s National Reform Summit, ACOSS believes the only fair and sustainable way to resolve this problem is to simultaneously raise revenue and improve the cost-efficiency of high-growth expenditure programs such as health care. The Budget cannot be restored by cutting expenditure alone, and it cannot be restored by shifting costs to people on low incomes and State and Territory Governments, as was attempted in the 2014 Budget, without severe and damaging economic and social impacts.

The new measures in the 2016-17 Budget have little overall impact on the bottom line over the next four years: they reduce revenue by $1 billion and cut expenditure by $3 billion. The biggest impacts come from measures announced in 2014 which this Budget ‘locks in’, including $13 billion in unlegislated Commonwealth spending cuts, and cuts to health and schools funding that were originally estimated to cost the States and Territories $80 billion over the next decade. The Budget confirms the Government’s previous announcement that $3 billion of the health cuts and $1 billion of the schools funding will be restored over the next four years, but there is no commitment beyond the forward estimates on schools funding.