Reissuing to clarify 4th par.

By Cathy Alexander

SYDNEY, July 27 AAP – Everyone on the dole could have half their payments quarantined for spending on essentials if the coalition wins the election.

Opposition leader Tony Abbott says he would like to extend an existing scheme under which the federal government quarantines welfare payments to people in the Northern Territory.

Half of each payment is set aside for food, rent and other essentials; the money cannot be used for alcohol, gambling or cigarettes.

The scheme was originally brought in for the NT’s indigenous communities and is now being extended to cover up to 20,000 Territorians.

Mr Abbott says if the scheme is good for the NT, it’s good for the country.

“If it’s right and just in the Territory … why not elsewhere?” he said in a speech to the Sydney Institute.

“It should produce a better life for long-term unemployed people,” he said, adding that it would also reassure taxpayers that welfare payments were being put to good use.

Mr Abbott said if he won power at the August 21 election, the coalition would review the NT scheme in July next year with an eye to extending it, possibly to more regions or possibly “more generally, right across Australia”.

This was the type of reform that “real economic conservatives” should engage in, Mr Abbott told the audience of about 200 people at a Sydney hotel.

His dole quarantining proposal is likely to be unpopular with some social and welfare groups who argue the NT scheme is paternalistic, doesn’t work, and takes away people’s right to control their finances.

Mr Abbott also flagged that the coalition would like to reform the tax system in line with recommendations Treasury chief Ken Henry made in his tax review.

Dr Henry came in for some praise from Mr Abbott, who said the economist had devoted most of his professional life to thinking about improving the tax system, so his recommendations on tax should not have been ignored by the government.

Dr Henry’s suggestion that the tax-free threshold be raised to $25,000 and personal tax rates be made lower and flatter “should be considered a priority once budget surpluses are big enough to afford them,” Mr Abbott said.