Tuesday, June 17, 2008

Fringe benefits changes to hit low paid workers - ABC News - 17th June 2008

The Federal Government has been warned its planned crackdown on fringe benefits for high income earners will hit the low paid as well.

Senior ministers are being bombarded with emails from charity and community sector workers who stand to lose up to $50 a week in family and child care payments because of a tax measure redefining what constitutes "income".

Amid claims some 200,000 low income families will be left worse off, the Government is now trying to stem the damage, promising to look into the effect on the "working families" it pledged to support.

From the Prime Minister down, the Government has made much of its focus on helping "working families", touting that they will be $52 a week better off under recent Budget measures.

But charities, benevolent institutions, domestic violence services, non-profit hospitals and ambulance services are up in arms over a tax measure that will hit so-called working families hard, and in some cases, wipe out the tax cut altogether.

Frank Quinlan, the chief executive of Catholic Social Services, has told the AM program that the new treatment of fringe benefits tax could have a very nasty effect.

"In some cases for workers earning about the $40,000 a year mark they might well be $40 a week worse off which is a very substantial impact on people who are often doing some of the hardest work in the charities and communities sector," he says.

Salary packages

The sector uses salary packaging to make up for poor pay rates. Now the Government's changing the way it calculates income for family benefits. So a charity worker who's paid $36,000, including salary packaging of $16,000, will be treated as though they earn $50,000. That means less in family and child care payments.

Linda White from the Australian Services Union says it's the result of a policy from the previous government, but one which Labor supported, that comes into effect in a fortnight.

"The net effect has got to be that people will vote with their feet and march out of these services not for reasons that they don't want to work there but economically they cannot afford to feed their families any more," she says.

The union is waging a campaign, clogging the in-boxes of three cabinet ministers with hundreds of emails.

"We're hoping that they can hear what we're saying because it's going to affect people from the 1st of July and it's going to see people leave their jobs that they love," Ms White says.

More than 500,000 people work in the community welfare sector. The union says all those with children, as many as 200,000 will be affected.

One source has told AM the "classic working family will get it in the neck".

The Families and Community Services Minister Jenny Macklin says the Government was only recently made aware of the problem.

"We've certainly asked the Department of Families, Housing, Community Services to look into the issue and to provide us with advice as to house we might address this issue," Ms Macklin told AM.

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