SVA Budget response 2021

Missed opportunity for transformative change: Federal Budget lets lessons from crisis go to waste 

Australia’s charities have again been sidelined in the budget despite employing one in 10 workers and providing vital services that are crucial for communities to recover and thrive.  

Charities stepped up to support communities during bushfires, floods and the pandemic but did not rate a mention in the Treasurer’s budget speech. Measures to support businesses to invest including further asset write–offs, deregulation initiatives, and tax concessions to encourage innovations will be of little use to charities despite their crucial role in the economy and improving Australians’ wellbeing. 

‘We ask the government to revisit these business initiatives to ensure that charities can benefit from similar supports intended to drive innovation and productivity,’ said Suzie Riddell, CEO of Social Ventures Australia (SVA).  

‘The analysis released by SVA and CSI this week in our fourth Partners in Recovery report has shown that many charities were in a vulnerable financial situation leading into the pandemic and more than half are concerned about their ongoing viability. 

They will need further, targeted measures to continue delivering vital services that people, communities and governments rely on.’ 

The 2021 Budget contains some welcome and overdue investments in the caring economy and in service sectors employing large number of women including in aged care, early learning, mental health and domestic and family violence services. But rather than taking the bold decisions to ensure all Australians can thrive, it reverts to pre-Covid policy settings which risks locking some Australians out of the recovery. 

‘Through the Covid-19 crisis and initial recovery phase, we have learned a lot about our society. These are lessons such as the life-changing effect of appropriate rates of income support on children and families, the positive impact of free childcare and the vital role charities play in supporting communities through dark days and delivering key services.’ 

‘The government has continued to invest in physical infrastructure that will benefit generations to come but in the social sector action has been focused on temporary fixes, not the transformative change Australia will need to ensure that everyone can thrive in this new world order.’  

There are several portfolio areas, such as First Nations, early childhood, impact investing, housing, income support and employment, where big ideas have been left on the shelf. 

The Covid pandemic showed us that dramatic positive changes can be achieved, and this Government was a key part of the success of our response through measures like JobKeeper and the JobSeeker Coronavirus Supplement. We are disappointed the government has overlooked the chance to take this knowledge and turn it into transformative, lasting change. 

Charity sector

Charities can – and should – be part of Australia’s economic recovery. 

We are pleased to see the investment into skills and workforce development in some parts of the social sector, some of which will flow to charities. Charities provide vital services in the aged care, disability, housing, mental health and community service sectors, with a focus on quality as well as financial sustainability. As these sectors also disproportionately employ women, this investment will begin to repair the gender imbalance in Australia’s Covid-19 policy response. 

We also welcome the establishment of the new National Recovery and Resilience Agency to support Australians through recovery from national disasters, including the commitment of $4.5 million for a national recovery capability package. We look forward to seeing the agency work closely with charities, which are critical service providers in the wake of disasters, and a major force for community resilience and rebuilding. 

But charities have been treated as an afterthought when it comes to broader economic recovery.  Charities can be a vital part of Australia’s economic and social recovery, if they are appropriately supported to do so. Many are struggling in the wake of falling revenues, rising costs, increasing demand and depleted reserves due to the effects of the pandemic and the unique constraints they face as charities. This Budget is a missed opportunity to support their productivity and resilience. 

In this year’s Budget, the $1.2 billion Digital Economy Strategy is entirely focused on commercial organisations, even though charities are critically important for our digital future. More than 80% of charities reported shifting to online service delivery last year. But the incentives provided to ‘stimulate investment in digital technologies to enhance their productivity and grow and create jobs’ will not be available to charities, because they are structured as tax breaks and charities do not pay company tax. 

The government is also spending $20.7 billion to extend the tax breaks it gave businesses during the pandemic, to encourage them to invest in their own future productivity. Again, this support won’t be available to charities, even though we know they need support to build back better and create jobs. 

Similarly, although we know that red tape is a major challenge for charities, there is little in the new deregulation package to help them operate more efficiently. There are straightforward changes that could be made to fix fundraising laws that would assist charities, and government has missed the opportunity to do so. 

Charities will need further supports including measures targeted specifically to charities, as well as appropriate funding for contracted services, simpler fundraising rules, and the establishment of a Resilient Charities Fund to enable charities to invest in capability building and operational transformation. These supports are vital to ensure charities can continue to strengthen Australia’s economy and society beyond the immediate recovery.  

First Nations

Nearly one year on from the government signing the seminal Closing the Gap agreement by the National Federation Reform Council and the Coalition of Peaks, we would hope for more progress in commitments to action to see First Nations people and organisations supported. Instead, many of the announcements in this budget that claim to support First Nations communities are repurposing existing funds. 

Strong and sustainable First Nations community–controlled sectors are pivotal to achieving the Closing the Gap goals. Investing in a strong and sustainable sector is a long–term process that needs to be progressed as a priority to set the foundations early for Closing the Gap success. 

We are disappointed that government has not taken the opportunity in this budget to commit to the establishment of a First Nations Voice enshrined in the Constitution. This is a missed opportunity for First Nations people to lead good policy reform and alleviate systemic racism.  

In acknowledgement of the Reconciliation Week 2021 theme, “More than a word. Reconciliation takes action”, we believe an Indigenous Voice to parliament is an important step in the right direction to achieving a reconciled Australia, developing better policy and empowering First Nations people and communities.  

Impact Investing

Government has a significant opportunity to leverage private sector funds to help achieve social outcomes, by creating the right enabling environment to grow the impact investing market in Australia. We are disappointed that government has not yet publicly responded to the report of the Prime Minister’s Social Impact Investing Taskforce chaired by former SVA CEO Michael Trail. 

We welcome the valuable investment of $13.9 million over four years to establish an Early Stage Social Enterprise Foundation for social enterprises that improve the safety and economic security of First Nations women. However, this initiative is on a small scale compared to the size of the opportunity on the table. 

When the Taskforce was announced, we were excited by the Morrison Government’s commitment to developing the impact investing market. SVA is the largest dedicated player in the Australian social impact investing market, with over $200 million funds under management. We have engaged with the government over many years as well as with the Taskforce to present a comprehensive suite of policy directions that can support a robust impact investing market in Australia. This includes the effective implementation of outcomes-based funding; attracting appropriate private capital to the provision of social, affordable and disability housing; and growing the social enterprise ecosystem. In each of these areas, government has an important role as a market facilitator, regulator and investor. There is currently significant investor demand for investments with meaningful social impact, but without a strong ecosystem there will continue to be a shortfall of investable opportunities.  

Without government stewardship, social impact investing will not fulfil its economic or social potential.  

Housing

The over $780 million of funding provided in this budget for housing could be better targeted to those who need it most – renters who are already experiencing housing insecurity, who are not in a position to take advantage of assistance for home ownership.  

The government is missing an opportunity to generate better social and economic outcomes by investing specifically in social and affordable housing. It should be looking at structures similar to the model for Specialist Disability Accommodation, that attract private capital to supply new housing, for housing other groups at risk of experiencing housing insecurity. We are particularly concerned about older women, who are the fastest growing group of people who are homeless. We believe there is a significant opportunity to tackle this problem by creating a dedicated Women’s Housing Fund to develop new supply for this group.  

School education

We are delighted to see the Australian Education Research Organisation (AERO) included in this year’s budget following earlier commitments from Commonwealth and State Governments to provide $50 million over four years to establish this essential piece of our education system. SVA has been an advocate for many years for the creation of a new national evidence institute, which will work to ensure that teachers and educators in schools and early learning centres have access to the best available evidence to improve learning. We are pleased to see the formal allocation of funding, and look forward to engaging with AERO as it continues this important work.  

The Covid-19 crisis has significantly affected schools, teachers and students right across Australia. As with economic inequality, there is a risk that those who were already experiencing educational vulnerability may fall further behind. While government has continued its existing funding for schools, we would like to see them do more to support schools, wherever they are in the country, to systematically collaborate to improve outcomes and equity. 

Early childhood education and care

We are pleased that government has recognised the economic and social importance of investing in education and care for young children. 

SVA welcomes the commitment of $2 billion of ongoing funding for universal access to preschool, and the recent announcement to increase funding by $1.7 billion for early childhood education and care (ECEC) for families who have more than one child in care. 

However, while the added childcare subsidy tackles out-of-pocket costs for some families, it does not deal with access and equity issues facing our most vulnerable children, nor the broader issue of women’s workforce participation. The children who are likely to benefit most from ECEC are the ones most likely to still miss out under this policy. 

Investments in early childhood pay significant dividends, both for happier healthier children in the short term, well and productive adults in the long term, and in reduced costs to governments. 

Income support

We are disappointed to see that government has not taken the opportunity to support young children and families by increasing the JobSeeker payment beyond the $50 per fortnight announced as the Coronavirus Supplement payment ended. 

This is a missed opportunity to increase income support and reduce child poverty levels across the country. New modelling commissioned from the Australian National University indicates dire outcomes for child poverty among families relying on social security payments. Alarmingly, 66% of children in families whose main source of income is JobSeeker, are living in poverty.  

The modelling shows that a modest increase in funding can make substantial reductions in the most severe forms of financial stress and poverty to those who need it most. SVA therefore recommends an immediate increase to the working age income support payments in line with the relatively modest 10% increase to social security spending modelled in the research, which would allow an increase in JobSeeker by $190 per week. 

It is critical that the government commits to sustained investment in the future of our children and families to prevent disadvantage in later life.  

Employment

We commend the Government’s actions, particularly through last year’s implementation of JobKeeper, to avoid large scale retrenchments across the economy. Now, JobTrainer is making it possible for many to reskill or upskill, while the Boosting Apprenticeships Commencement scheme has shown that, with support, many employers are willing and able to contribute to the development of a skilled workforce. 

We welcome the $2.7 billion extension of the Boosting Apprenticeship Commencements scheme, and the additional $500 million for the JobTrainer Fund. However, these are being described as temporary measures. Problems of skills mismatches, underemployment, lack of income mobility precede the pandemic. Long–term reforms are needed to address problems of stagnant wages, under-employment and skill mismatches across the economy.  

In particular we urge the Commonwealth Government to take the lead in improving economic mobility for young people who have recently entered, or are entering, the labour market. The labour market for this group was poor pre-Covid, and has deteriorated further since. Before the Covid crisis, the Productivity Commission reported that, on average, young peoples’ incomes have been in decline since the Global Financial Crisis. We want government to use its capacity as an employer, funder and purchaser to create career pathways for young people. 

We are encouraged to see that the Community Development Program is to be replaced by a new remote jobs program. We hope that government will live up to its commitment to a genuine co-design process of the new program with First Nations people and organisations.