Social Security Reform

The welfare and tax systems have evolved separately, with little coherent thought about how they should interact. The tax system as it now operates penalizes hard working people and frustrates attempts by the under-employed from seeking financial self-reliance.

It must create transparency and proper accountability between the taxpayer, the paymaster, the ATO and Centrelink.

We need a social security system that encourages people to work, not discourages them. We believe that people on social security should retain 60% of their earnings after tax and withdrawals. Currently some people lose more than two thirds of their income in trying to get back to full employment.

Under this proposal social security recipients would still be in receipt of some benefit up until they’ve earned 2.5 times their benefit.  Whilst this may seem very generous such people are already in receipt of other assistance which could be downwardly modified.

We need a seamless transition between unemployment, underemployment and full employment.

For example, once a social welfare recipient earns more than $62/fortnight, he or she forfeits 50c in the dollar and pays 15% income tax, which is equivalent to an effective marginal rate of tax of 65%. Whereas others have an effective marginal rate of not higher than 45%.