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Issue #1594      May 22, 2013

Budget 2013-14

Mean, cruel and dishonest

Behind the façade of sound economic management and social reform lies a mean, cruel and dishonest austerity budget. The pre-election centrepieces are DisabilityCare Australia (the national disability insurance scheme – NDIS) and the so-called Better Schools – National Plan for School Improvement (Gonski education reforms). It is touted as a budget for jobs, stronger growth, a smarter nation and a fairer society. Its main victims are the unemployed, single parents, asylum seekers, the poor and homeless, the chronically ill, families, public servants and the environment.

“We make these historic investments from a position of economic strength,” Treasurer Wayne Swan said in his budget speech. “Australia chooses a stronger, smarter and fairer Australia.”

“We’ve made a values judgement and I’m happy to be judged by it myself,” says Prime Minister Gillard, in a similar vein.

What are the values of a government that cannot increase the dole by $50 a week? That continues to punish children by not restoring cuts to single parent payments? That can spend close to $3.2 billion incarcerating, traumatising and destroying the lives and health of asylum seekers (refugees)? That plans to increase spending on war preparations by close to 25 percent in the coming years while redirecting almost $1 billion of overseas aid over the next four years to incarcerating refugees?

A government that cuts more than $1 billion from renewable energy, energy efficiency and the environment, but can find $2 billion for the diesel fuel rebate for mining companies.

These read more like corporate values.

Unfair

St Vincent de Paul Society chief executive John Falzon said the budget failed to recognise that the paltry level of Newstart has become a path to despair instead of a path to employment.

“We do not accept the falsehood that people in poverty have only themselves to blame or that you can help a person find work by making life harder,” Dr Falzon said.

“The unemployment benefit has not seen an increase in real terms since 1994. In an effort to catch up, we implored the government to lift Newstart by $50 a week. The failure to do this is yet another kick in the guts of the people who are doing it tough.”

The Society’s national president Anthony Thornton, pointed out that “Along with the human tragedy of abandoning people to poverty comes the economic cost of squandering, rather than harnessing, the enormous productive potential of 800,000 people.”

Abandoned they were, despite the campaigning and pleas from welfare organisations, churches and other groups for a modest $50 a week increase in the unemployment benefit.

Unemployment set to rise

The budget is noteworthy for its lack of serious measures to create jobs. Swan’s claim that more than 950,000 jobs have been created since Labor came to office in 2007, neatly overlooks that this figure has not kept up with population and workforce growth. The number of officially unemployed has risen by almost 200,000. Under-employment has risen along with the increase in casualisation and part-time jobs. Close to half of those new jobs were part-time.

They were also let down by the failure of the government to come up with a serious, sustainable job creation program and to provide the necessary training and skills development for (re-)entry to the paid workforce. TAFE is being decimated by the states as the federal government promotes inferior private training colleges and fees continue to rise.

The government admits that unemployment is set to rise, but still persists with what is a contractionary budget and one that neglects the lessons that could be learnt from the failure of tax revenues to meet its expectations.

The tragedy is that Australia is being deindustrialised, deskilled and job creation is left to the environmentally destructive mining sector and resource exports, in particular, to China and India.

Of course, all of this is dependent on Labor being re-elected. There is little in this budget to suggest that Labor’s prospects will be turned around. The prospect of an Abbott government is even more worrying.

No one would be surprised (other than the PM and Treasurer) that a mining tax designed by the Big Three global mining corporations only brought in a few hundred million dollars. Rio Tinto didn’t pay a cent!

Mean

The government’s treatment of the unemployed is humiliating and punitive. How can anyone survive on $35 a day. The unemployed will be allowed to earn up to an additional $19.23 a week before their dole is reduced! That will raise the amount from $31 to $50 per week – or an extra $2.75 on top of their $35 a day. How generous!

Despite enormous outrage across the community the government refused to back down on its punitive treatment of single parents.

Hitting the sick

The deferral of indexation of the Medicare rebate for doctors is petty and hits those on lowest incomes the hardest. Doctors will charge more, some will abandon bulkbilling and more patients will either not seek treatment, risking a more serious condition and more expensive treatment later, or turn to the public hospital system. It aims to save $664.4 million over four years.

The government is raising the Medicare safety net threshold from $1,221.90 to $2,000. At present when the gap between doctors’ fees, Xrays, pathology etc and Medicare refunds reaches $1221.90, the gap becomes much smaller, usually leaving the patient a few dollars out of pocket. This means that people with chronic illness or receiving regular treatment for a condition and are not bulkbilled will be another $778.10 out of pocket. Fortunately, the government is not raising the concessional (card holders) threshold of $610.70 which should be abolished.

In the overall picture, the money saved, $105.6 million over four years, is peanuts, but for its victims it is cruel and could result in treatment and tests being delayed or not carried out at all.

This comes on top of the cancellation of dental treatment under Medicare which benefited people with chronic illness – the majority on low incomes.

And as medical costs are set to rise, the government is phasing out the tax offset (rebate) of 20 percent of net medical expenses above $2,060. (Eligible medical expenses include pharmaceuticals, dental, medical, hospital, optical, physiotherapy and a number of other services and expenses.)

Swan claims “more people go to the doctor”. Of course more people go to the doctor. The population is growing and people are being encouraged to have health check-ups and see doctors instead of going to a hospital. He has not produced an iota of evidence that the system is being abused by patients.

On the positive side there is some more money for cancer prevention, treatment and research.

“Simple reform of primary care with more care provided in the community by better paid and supported GPs, would have saved the health budget billions and have been a win-win, i.e. reducing government spending on expensive hospital care and resulting in more and more appropriate health care for our patients in the community,” Dr Con Costa from Doctor’s Reform Society told The Guardian.

The cuts are cruel and unnecessary. The $5 billion plus subsidy for private hospitals through the private health insurance rebate should be abolished. That would provide more than enough to fund a universal dental scheme under Medicare.

Unfortunately, dental care, housing and the homeless seemed to have dropped off the agenda.

The $5,000 baby bonus, of most benefit to the poor, is being abolished but its means tested replacement for those on Family Tax Benefit Pt A is reduced to $2,000.

Deception

The actual details of how much the government will be spending in 2013-14 are buried in the fine detail. They often bare little resemblance to the headline amounts which may be estimates over three years, four years, seven years or even 10 years. There is no consistency nor is there much publicity as to how the additional spending might be allocated over a particular period.

For example, references to billions in additional spending give little indication of what is going to happening in the year or two ahead. It might be a few million or a few billion. In some instances the initial flow is a trickle.

The impression is given that the cuts (referred to as “savings” or “offsets”) in the 2013-14 budget are funding large increases in other more important areas.

With a headline figure of $9.8 billion in new spending on the Better Schools program anyone could be forgiven for thinking that the nasty cuts were to fund billions of dollars for schools. New spending on the program over the next four years is $2.8 billion. Over $2 billion of that funding will come from “redirection” of existing school programs. Another $2.6 billion (over 4 years) will be sourced by hitting universities and students. This will result in course closures, larger classes, sackings and will put uni out of reach of more working class kids and workers.

Likewise, the $14.3 billion for DisabilityCare, is deceptive. Over the next four years (2013-14 to 2016-17) the government has allocated a total of $1.65 billion for the scheme.

Perhaps the biggest deception of them all is the Treasurer’s claim: “We’ve seen almost $170 billion wiped off our tax receipts since the GFC [global financial crisis – Ed].” And the media ran with it as though it were the gospel truth!

Tax revenues have continued to rise at a steady rate. The only writedowns are in last December’s pie-in-the-sky, grossly inflated government/Treasury estimates. Government receipts are expected to increase by 5.8 percent in 2012-13 and are forecast to rise by 7.3 percent in 2013-14. Admittedly it is down from 9 percent the previous year during the peak of the mining boom. But hardly a wipeout!

When measured in terms of a percentage of GDP, government income is 23.5 percent (this year) and forecast at 23.9 percent (next year), higher than in the previous five years. (This figure is preferred by some economists as it measures the government’s income as a percentage of national income for the year.)

The “writedown” makes a great excuse for continuing to advance the neo-liberal agenda of public servant sackings and the abominable treatment of single parents, the unemployed and other austerity measures. Medicare and Centrelink offices, already overstretched, have been told to reduce their workforces by the equivalent of 1,341 full-time employees.

Not very smart

The $2.3 billion cuts to universities and student support are hardly a step towards becoming the “smart country” that Swan talks about.

Australia’s public investment in universities already ranks 25th out of the 29 advanced economies. The Greens and independent MP Andrew Wilkie have announced their support for the National Tertiary Education Union’s “uni cuts - dumb cuts” campaign and declared their intention to vote against any enabling legislation.

Around 70 percent of the $24 billion allocated for road and rail infrastructure to tackle “traffic congestion”, is to be spent on roads. Instead of encouraging more cars and trucks onto the roads it would be smarter to invest in greener rail freight and public transport.

One of the craziest decisions is to restrict spending on measures and programs that promote renewable energy and energy efficiency to the amount raised by the sale of carbon permits. As a result of this “revenue neutral” approach, funding for environmental programs has been cut in this budget! This is at time when scientists have revealed that the earth is warming at a much faster rate than previously understood.

“Since 2010-11, Labor has paid $5.7 billion to the states to support disaster relief,” said Swan.

“We expect to pay a further $6.2 billion over the five years from 2012-13.” The government is making (inadequate) provision for future extreme weather events which again scientists warn are going to increase.

The carbon price under Australia’s emissions trading system is due to be linked to Europe’s in 2015-16. The European system is in crisis, with questions being raised about its future. It has failed to deliver and the price has plummeted to $4.30 a tonne. This is a real “writedown”. The Treasurer, however, is confident that by 2015 the carbon price will be around $12 a tonne.

“As is widely accepted, putting a price on carbon pollution is the lowest cost and most efficient way to tackle dangerous climate change,” claims Swan. The “widely accepted” is a bit rich, and the rest of his claim is outright dangerous and irresponsible.

In Europe there are no such illusions: “since the adoption of the EU ETS, emissions have risen; there is increased reliance on coal; the price of consumer energy has risen along with the profits of many industrial actors (as a direct result of the EU ETS) and millions of euros of public money have been lost in VAT [GST – ED] fraud,” according to the publication,“EU ETS myth busting: why it can’t be reformed and shouldn’t be replicated”, published by more than 40 organisations, including Corporate Europe Observatory. (corporateeurope.org)

Billions for war preparations

If Australia faced a military threat, there might be some justification for the massive amounts being thrown at enhancing the US Alliance and war preparations. (See Guardian, 15-05-2013, #1593, “Defence White Paper – Toning down the rhetoric while still preparing for war”). By the government’s own admission it does not.

While pensioners, the unemployed and the sick are on the receiving end of the cuts, military (referred to as “Defence”) spending is set to rocket. The headline figures are far more modest than the actual spending buried in the budget papers.

The Department of Defence is being allocated an extra $10 billion over the next three years – $113.1 billion from 2013-14. Then in the following six years the department can expect $220 billion!!

Total resourcing for 2013-14 will be $29 billion rising to $36 billion by 2016-17.

The aim of this increase is to prepare for war, for the US imperialism’s wars.

Alternatives

While Gonski and the NDIS enjoy considerable support in the community, the budget has failed to address the rising level of poverty and the pressing needs of the unemployed, pensioners, struggling families, single parents, migrants, Indigenous Australians, higher education students, the chronically ill, the homeless and small family farmers. It also failed dismally on climate change and the environment.

The promise of more money for schools and disability support (albeit in six or eight years time) is very popular, but at this stage does not look like enough to buy off an electorate, especially when the Coalition supports them.

Swan talks about “choices”, but confines his choices to within a narrow, neo-liberal big business-driven framework. Australia needs a People’s Budget, a budget that puts the needs of people and the planet first. That looks at savings such as cutting the diesel fuel rebate, reducing military spending and raising more income by taxing the big corporations. More on that in a future issue of The Guardian.   

Next article – Editorial – Robbing Peter to pay Paul

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