The Guardian 17 May, 2006
BUDGET 2006-07:
feast for big business
When introducing the Federal budget last year, Peter Costello said, "This budget is about sharing the benefits of this strong economic management, not just with more Australians, but will all Australians". The Sydney Morning Herald had no such illusions. It wrote: "They’ll be feasting at the top end of town".
In the 2006-07 budget salary earners over $125,000 per year received a weekly tax cut of $86.68 per week while those on $10,000 a year received $80 per year or $1.54 per week. Two-thirds of the $9.5 billion allocated to schools went to private schools.
While there are tax cuts across the board in this year’s budget they are heavily skewed towards the "big end of town".
A single income couple with no children on $40,000 a year receive a tax cut of $510 ($9.80 per week) while those on $150,000 receive $6200, ($119.20 per week) — that is 12 times the tax cut middle income earners receive. For those with an income of $200,000 the tax cut amounts to $138 a week.
Meanwhile the $9.80 a week has already been eaten up by the increase in the cost of the tank of petrol which many workers are obliged to buy every week.
In all respects it remains a class-oriented budget with the government looking after its big business and rich constituents.
The budget is all about strengthening the private enterprise system by rewarding the "individual efforts" of the already rich, continuing the punitive system for welfare recipients, and promoting "private enterprise" in the fields of education, health, child care, telecommunications, transport and every other social obligation the Government can sell off for private profiteering.
It’s also about providing additional investment capital out of the huge superannuation pool. That’s the real reason for the relaxation of the conditions for superannuation withdrawals. The provision of investment capital out of the earnings of workers was the reason for establishing superannuation by the Hawke/Keating Labor Governments in the first place.
Where the money comes from
Costello claimed that "Australia’s sustained economic growth is the result of the Government’s strong economic management and ongoing economic reform. Maintaining this course will secure the achievements of the past decade and provide the foundation for future growth and prosperity."
Yet the actual truth of the matter lies in the fact that the Federal Government is awash with money largely due to China’s economic boom. China has now been elevated to Australia’s second largest trading partner ahead of the US, and is a huge buyer of our iron ore, aluminium, natural gas, uranium, coal, wool and other commodities. The huge incomes flowing to mining corporations from China has, in turn, boosted government revenue from this sector.
Another source which is never mentioned by either the Liberal Party or the Labor Party is the GST. Revenue from this source is listed as netting $37.3 billion while company tax netted $56.9 billion.
GST is a tax that largely comes out of the pockets of wage earners — those Australian families that Costello and Howard claim to be concerned about. At the same time the personal tax paid by workers has to be added to this sum. Without access to highly-paid corporate accountants there is little opportunity for workers to avoid or minimise their taxes, an opportunity readily available to companies and the rich.
Where your money is going
The budget is to spend $19.6 billion on so-called "defence", more than the $16.6 billion on education. In previous budgets the Government had guaranteed a regular 3 percent per year increase in military spending. This rate of increase had been guaranteed until 2010. It has now been extended to 2016.
The shopping list for military and air hardware will pour billions into the pockets of mainly US arms manufacturers and the arms being purchased and the new military forces being formed have little or nothing to do with the defence of Australia. It’s all about waging war in other countries at the behest of the Bush administration. Already Australian military forces are to be found in Iraq, Afghanistan, the Solomon Islands, East Timor, the Sudan and several other countries.
Minister for Defence, Brendan Nelson, says that there had been a real increase in military expenditure of 37 percent since the Howard government came to office in 1996.
When will such astronomical military expenditure be scaled down and eventually stopped? There is obviously going to be no end so long as the present foreign policies of the Howard government and its allies are in power. "Pre-emptive strike", "intervention", "failed states", "rogue states" and the phoney "war on terrorism" are at the core of the thinking of the Howard Government and that means a continuation of military interventions overseas.
The objective has been clearly set down in the booklet Preparing Australia’s Defence for 2020 by Ross Babbage, a former a top military consultant to the Howard Government. The booklet was written after consultation with "senior defence officers, officials and researchers". He sees the economic development of China and India as a "defence challenge".
Professor Babbage writes that for Australian security planners, "major war in East Asia will be a serious possibility in the 2020 timeframe". He goes on: "In the 2020 timeframe, there is a serious risk of the ADF becoming engaged in a major war in Asia for which very few elements of the Australian defence structure are likely to be adequately prepared." It is this lack of "adequacy" that the present and future Australian budgets are out to redress.
Where the money isn’t going
While the amount of budget spending on "goodies" has been hailed by the media, there has been little said about areas of spending that have been neglected.
On skills shortages: Nothing is to be paid to maintain and extend TAFE colleges. Last year the Government announced in the budget a gift of $65.4 million to the private sector to set up 24 technical colleges to compete with TAFE. What has happened to these colleges and this expenditure? There are few budget expenditures which are directed to this severe shortage of skilled personnel in many areas of the economy.
On child-care: Again, while money is to be spent on additional child-care places, it is clear that this will go to the private providers of child care rather than to extend the network of properly funded and publicly-owned child-care facilities.
Writing in the Sydney Morning Herald (10/5/06) Adele Horin noted that the Treasurer has "failed to deliver" on his claim to "create the most female-friendly environment in the world". Liberal back-bencher Jackie Kelly had described the child-care situation as a "mess".
"But", writes Horin, "the budget will hardly touch the sides of such problems as long waiting lists, a 60 percent cost increase in four years, quality and corporatisation concerns and staff shortages".
A people’s alternative
The Howard/Costello budget is a political budget which aims to set the Liberal Party up for Government in Australia into the foreseeable future and it is the resources boom that is helping it achieve that objective rather than any "good management". It is a dim prospect for Australian workers.
An alternative budget is needed. It could win the support of the working people of Australia by showing that it is they who are given priority, not the wealthy.
An alternative would stop the process of shovelling millions into the pockets of private enterprise friends. It would support public education and the public health system. It would maintain Medicare and restore the public dental service destroyed by the Howard Government. It would tackle the skills shortage by investing in TAFE and the universities. It would concentrate on providing a network of public child-care centres and train the necessary staff to maintain them. It would scale back the GST and eventually abolish this extremely discriminatory tax.
It would uphold a society that is motivated by principles of community interest rather than promoting a dog-eat-dog mentality and individualism. It would work consistently for the peaceful settlement of international disputes rather than preparations for war in the region and beyond.