Australia’s main national welfare group is urging federal Labor to cut nearly $6 billion from the budget by clamping down on superannuation tax breaks, health insurance rebates, and the tax treatment of trusts and capital gains.

As lobbying heats up before the May budget, the Australian Council of Social Service says it has identified a range of ”wasteful” spending and tax ”loopholes” that could help fund better services.

The group’s chief executive, Cassandra Goldie, said on Monday that closing loopholes that allow the wealthy to pay less tax should be a key priority for the government.

ACOSS is arguing some of the money saved should be used to increase the Newstart allowance for single people and increase the payment in line with wage growth, rather than inflation, at a cost of $2 billion.

On superannuation, she identified ”churning” of income through super by workers over 55 who are paying the top tax bracket.

By sacrificing part of their salary into super, then paying themselves an equivalent super benefit, these workers were able to reduce their tax rate without making any additional saving for retirement, she said.

”This is a widely-known arrangement. It’s currently very lawful, but it also is not achieving anything other than enabling people to seriously minimise their tax arrangements,” Dr Goldie said.

ACOSS also said some health care rebates had become too generous to people on higher incomes who could afford private health care cover.

It called on the government to remove the health insurance rebate for ”extras” cover such as dental and physiotherapy, saying this would save $1.25 billion.

It also said the government could save a further $300 million a year by cutting the medical expenses tax offset, which provides a 20 per cent tax break for medical ”gap fees” of more than $2060 a year.

Trusts were also targeted by the lobby group. Dr Goldie said trusts were used by people on high incomes to legally avoid tax, and tightening the treatment of capital gains through trusts could save $1 billion in 2014-15.

”Everybody knows that this is a vehicle used typically to just minimise your tax,” Dr Goldie said.

Treasurer Wayne Swan said on Sunday that this year’s budget would highlight savings to pay for the government’s Gonski school funding reforms.

”As a country, we’re kidding ourselves if we think we can stroll complacently into the Asian Century assuming we’ll enjoy economic wealth without developing the skills we need to harness its opportunities,” he said in his weekly economic note.

”Our Gonski school reforms are central to this and we will put in place the savings to ensure it’s a key part of this year’s budget.”

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The original release of this article first appeared on the website of Hangzhou Night Net.