"Dr Ken Henry's proposal to get rid of fringe benefits tax benefits for under-paid workers in community services threatens to decimate the aged care and social services sector," said Australian Greens Senator Rachel Siewert in Perth today.
"While, on the face of it, the idea of simplifying the tax system and reducing the rorting of fringe benefits by well-paid executives seems like a good idea - the reality is that the current FBT arrangements sustain the continuing viability of essential community services."
"In the absence of a comprehensive program to address the manner in which social services are funded, simply removing FBT is likely to result in many of the not-for-profit organisations providing front-line services to Australians shedding large numbers of staff and many services being shut down or seriously scaled back," said Senator Siewert.
"Simply proportionately increasing existing commonwealth funding is not going to plug the gap, as the existing fringe benefits also increase the value gained from charitable donations and direct state funding of services.
"In other words, cutting FBT will deliver a triple whammy, " she said.
"In effect cutting FBT undermines funding from the Commonwealth, States and public donations. When an ordinary Australian drops a couple of bucks into a tin on a street corner the existing tax arrangements help that dollar to go further.
"The simple fact is the NFP sector delivers billions of dollars worth of services to Australians on a shoe-string budget."
"While it might be nice to think that governments might commit to paying the true value of the social services delivered by these charitable organisations, realistically we know this is not going to happen any time soon.
"The clear pattern over the last two decades has been for governments to demand more for less with increasing amounts of red tape.
"Ultimately it is the responsibility of governments to deliver these essential social services - if charities start falling over and are forced to hand back services, we can expect much poorer outcomes at significantly greater cost to the taxpayer."
Senator Siewert called on the Rudd Government to address the latest figures on the contribution of the not-for-profit sector to the Australian economy and to announce how many billions of dollars it intends to add to recurrent budgets for aged care and community services.
"What we need from tax reform in community services is more than a theoretical exercise - it needs to assess and deliver practical tax reforms.
"A simpler, fairer and more transparent tax relief mechanism that only applied to genuine not-for-profit community services or lower paid workers would be a better alternative to simply throwing out the baby with the bathwater," she said.
"Australia's not-for-profit aged care sector is already struggling to get by, with massive increases in services likely to be needed in coming decades. For many services, particularly those in rural and regional locations, cutting FBT could be the final straw," concluded Senator Siewert.
Media contact: Chris Twomey 0407 725 025
