How will the carbon tax affect disadvantaged Australians?

Mission Australia recognises the reality of climate change and supports the Australian Government’s efforts to tackle the problem and prepare for the challenges ahead.

In terms of its carbon tax proposals released on Sunday, Mission Australia has a range of perspectives.

Firstly, Mission Australia is strongly supportive of the package’s suggested changes to the tax system.

Lifting the tax-free threshold from $6,001 to $18,201 in 2012 and then $19,401 in 2015, and lifting the marginal tax rates at the lowest level from 15% to 19% and at the next level from 30% to 32% are very significant.

For many years, one of the greatest barriers to people contemplating entering or re-entering the workforce has been a lack of incentive. What’s the incentive in getting off income support when you’re financially worse off simply by working an extra few days?

These changes go a long way to addressing that perversity in how Australia’s taxation and income support systems interact.

For example, under the package, a single mum wanting to return to work part-time would not have to pay tax until she earned more than $20,000 – a result of both the lifting of the tax-free threshold and a further low-income tax offset.

Similarly, a person on a low-income working two days a week could work an extra day without paying any tax on the extra day’s effort.

It’s about improving people’s passage from income support into work and we congratulate the government on these aspects of its proposals.

We also welcome the government's measures regarding compensation, including payments to help low-income individuals and families adjust to the carbon tax.

However, we are concerned that a 1.7% increase in the various pensions and income support will not be sufficient to insulate these vulnerable groups from the impact of the tax as well as the rise in prices expected from the enormous infrastructure maintenance and upgrades that are due for Australia’s power network.

We’re particularly concerned given that those on lower benefits receive the least amount of compensation.

As a result we intend to keep a close eye on its impact among our clients and will report to government if we find that vulnerable groups are worse off.

Similarly, we will also be assessing the impact of the tax on our capacity to deliver our services to those most in need.

For example, as one of the nation’s leading providers of services to job seekers, we’ll be monitoring the impact of the carbon tax on employers – both in terms of jobs lost or created.