Another budget for the rich

The ALP government’s fifth budget, handed down by treasurer Wayne Swan with much fanfare, is a continuation of neoliberal polices, relying much more on stick than on carrot. It headlined in many newspapers as a Labor budget with Labor values, but there was little to differentiate it from any of the budgets of the Coalition when it was in power.

A great deal of mythology surrounds the budgets of capitalist governments. They are often seen as a panacea for a country’s woes and a projection of what is to come, but are really cheap conjurer’s tricks — smoke and mirrors melded with the imagery of prosperity. “Surplus, surplus, surplus!” are the current catchwords of budgets, and a surplus takes primacy over people. This budget, coming after five years of large deficits, has the aim of carving out a $1.5 billion surplus, an insignificant amount in terms of GDP.

Yet that is what is put on the mantle, the goal that all workers must sacrifice for. The budget’s success is measured, not by how many hospitals, schools and homes are built or how many jobs are created, but by its contribution to “business confidence”. That phrase is a euphemism for the logic of bourgeois politics, which is all about how to transfer more wealth from working people into the hands of the rich, while simultaneously attempting piecemeal reforms to arrest social ills. Above all, budgets are an exercise in political expediency. They never work for the poor.

Swan made much about it being a family-friendly budget, but there is little in it of benefit to working people. This is a budget that will increase homelessness and rates of suicide and harden social divisions. A “school kids bonus” of $820 a year for each child in high school and $410 for every child in primary school will automatically be paid to parents who are eligible for the Family Tax Benefit Part A. This was billed as a new measure, but in reality all it does is replace the Education Tax Refund, which entitles claimants to a maximum tax refund of $397 for each primary school child and $794 for each secondary school child — hardly a huge gift to families. In any case, most of it will be spent on utility bills, medical expenses or groceries as the cost of living soars.

What’s given with one hand ...

Wayne Swan in his address to parliament acknowledged that Australia was suffering from inequality, stating that many people felt that “it was someone else’s mining boom, someone else’s prosperity” and that the “benefits of the boom needed to spread out through the economy”. But reformists shouldn't get too excited, because there’s not much tinkering at the edges of the capitalist economy. The personal taxation changes legislated as part of the Clean Energy (Carbon Tax Relief) Package will take effect on July 1, 2012, and July 1, 2015. These changes will mean modest tax savings for people earning less than $80,000. For someone on an income of $60,000, it will mean an extra $300 or so. The flood levy will cease on July 1, 2012, so people earning over $50,000 will get a bit extra as well.

Some of the measures are aimed at winding back some of the gains that fly-in-fly-out workers currently have, such as the living away from home allowance. The government is proposing to cap this allowance at a maximum period of 12 months for individual employees, for any particular work location. This will hit many industrial workers and those in the social services sector, particularly in the Pilbara region, where rents are over $1500 a week for a small fibro three-bedroom house. Houses in the Pilbara, if you can get one, sell for over $1 million, well out of reach for many workers, even those on the BHP Billiton or Rio Tinto payrolls. The reality is that mining companies will continue to buy up housing in order to sustain fly-in-fly-out work arrangements.

The budget also attacks migrant workers, removing the lowest tax threshold for foreign residents and increasing the rate of tax foreign residents pay on Australian-sourced income. Over four years the government will increase taxes on migrant workers by more than 4%.

Balancing the books

Labor’s latest budget is supposed to put the government back in the black, but that is based on projected economic growth of 3.5% per annum, which is overly optimistic given global circumstances.

In order to return to surplus, the government has cut back on projected spending for 2012-13. The budget only superficially deals with structural weaknesses in the economy that have been exacerbated by the commodities boom. The direct cash payments to families with schoolchildren is the government’s idea of redistribution. It is hoping that it will win back its base, who, as shown by recent state elections, are completely disillusioned with the ALP. Economists have said that the cash payments may provide a boost to the retail sector by increasing consumer spending, but they are too small to have any large effect.

The budget proposes almost nil investment in infrastructure, despite every capital city in Australia being a commuter’s nightmare and a dystopia for people suffering from mental illness, the sick and the elderly. Neither is there any significant investment in research and development, new university scholarships, technology or renewable energy. The government has actually made cuts to these areas, with CSIRO, the government-funded research organisation, slashing more than 100 jobs. The fanfare over the National Disability Insurance Scheme was bewildering, considering its lack of substance. Its main selling point was the questionable notion that elderly people need to remain in their homes for as long as possible, presumably after working for as long as possible. This will probably result in the further privatisation of essential services for aged care. The government has committed only $1 billion over four years to this scheme, a tiny amount. Much of the debate following the treasurer’s speech was on how this scheme would be financed in the future and why it was not included in this budget’s documentation.

Surplus by a thousand cuts

With projections that revenues will be down by $12 billion, the government made cuts of $32 billion over the forward estimates, and a net cut of $17 billion over four years. This is a big cut made up of many small cuts, spread over four years. The government has set itself up for failure, staking its dubious political future on a questionable achievement. Neither has it factored in the likelihood of natural disasters, future slumps on the world market, wars, pestilence or drought. The budget assumes high commodity prices, good terms of trade, high economic growth, no increase in unemployment and strong consumer spending, all of which are unlikely.

However, this is perhaps irrelevant given that Labor is unlikely to make it past the next election. In that case, the Coalition can always cook the books to produce a deficit and blame Labor for the economic woes of the country. The Coalition responded to the budget in a predictable fashion, labelling it “reckless” and harmful to business, even going so far as to call it “class warfare”. If the Coalition were in power, it would be a very similar budget with possibly greater cuts and not likely to be in surplus either. The next election will most likely be an orgy of cheap bribes and xenophobia from both parties, with politicians and the corporate media praying at the altar of “the economy”.

Direct Action — May 21, 2012