The federal government’s upcoming budget should focus on investing in critical services rather than tax cuts for the wealthy, says Australia’s peak welfare advocate group.

In its budget submission to the federal treasury, the Australian Council of Social Service (ACOSS) asks the government to take advantage of a “historic opportunity” to address longstanding inequality.

Instead of tax cuts, such as the $16 billion a year already committed, going mainly to people on higher incomes, Treasurer Josh Frydenberg must invest in tackling poverty, unemployment, the housing crisis and climate emergency, ACOSS says.

Chief executive Cassandra Goldie says payment programs such as JobKeeper brought in at the start of the pandemic show the government has the resources to solve poverty in Australia.

“We halved poverty with the fiscal response that was delivered in 2020 – it meant fewer kids went hungry, made child care affordable and saved hundreds of thousands of jobs,” she said.

“What sustains economic growth is putting more money into the hands of people who need it and will spend it in the real economy.”

ACOSS is calling for the budget to invest in essential services, safety nets and housing affordability.

As part of this, it wants rent assistance lifted and income support payments to be increased to at least $69 a day, up from the current $45 rate.

“(In 2020) we had the real-life experiment of what it means for the economy when you properly prioritise putting resources into the hands of people who will actually spend it,” Dr Goldie said.

“We’d be much better off investing in ongoing supports for people on low and modest incomes.”

The current crisis in aged care – where the army has been deployed to assist the overstretched workforce – is because Australian governments have consistently underinvested in critical care services, ACOSS says.

Dr Goldie said the last thing Australia needed was – as the treasurer has signalled – a budget that had more cuts and an “irresponsible focus” on paying down debts.

“The right economic strategy is a government that invests and acts from a place of care and compassion and focuses on lifting up and protecting the incomes of people with the least,” she said.

“Debt and deficit is not the high priority right now, it should be to continue to sustain employment growth to be able to respond to uncertainties yet to come from the pandemic.”

ACOSS also warns a genuine response to climate change is needed to stop people on the lowest incomes being hit hardest from its effects.

It recommends the government invest in energy efficiency improvements for low-income households and establish an energy transition authority to support workers and communities dependent on fossil fuels.