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Issue #1595      May 29, 2013

A People’s Budget

Just a couple weeks out from the May 2013-14 federal budget, the Treasurer’s claims that the budget was made from “a position of economic strength” are looking even less credible than they did at the time. Fifty-five billion dollars was wiped off the value of shares on the stockmarket, the value of the dollar fell, coal and iron ore prices continued to fall and the cleaning firm Swan Services went belly up, leaving almost 2,500 workers with uncertain futures and likely loss of their entitlements. Ford added to the grim economic news by announcing it would cease production in Australia in 2016.

The nationalisation of the mining sector would direct billions of dollars into government revenue.

The Chinese economy is not growing at the rate anticipated by Western economists. It has been affected by recession in the EU and the US. Australia is also feeling the impact of the US and EU’s economic woes.

Now demand is shrinking, with prices falling and investors pulling back resulting in a crisis of overproduction on global markets. All the warning signs are there. It is not surprising that capitalist economists are now warning of recession in Australia. Apart from the mining and finance sectors, most of the Australian economy has been stagnant or recessed for the past five years.

In the present conditions, if the Australian economy is to avoid being savaged and hundreds of thousands of workers lose their jobs and see their incomes shrink, it is imperative that the government adopt an expansionary, pro-people budget.

Australia needs a budget which increases incomes, raises living standards, ends poverty, creates jobs, provides quality education and health services for all, builds Australia’s skills base and a more diversified economy (including a strong manufacturing sector), makes big business pay its share of tax, and provides the necessary infrastructure for a sustainable future.

The 2013-14 budget does exactly the opposite. It is a pro-big business budget. It is contractionary, with cruel cuts in social security payments, job losses in the public sector and massive cuts in university funding. In line with its economic rationalist underpinning, the budget continues the shift from public to private and from centrally funded services to self-provision and user pays.

The one area where funding is being increased is military spending with a total of $113 billion over the next three years and a whopping $333 billion over nine years! It provides few new jobs, and destroys lives and the environment. It robs the economy of funds that could better be spent on health, education, social security and other socially and environmentally desirable, job creating activity.

Additional funding should be invested in sustainable, renewable energy projects, desalination, restoration of dying river systems, and other projects to reduce Australia’s emissions of greenhouse gases and repair the huge damage that has already been done through reckless land and water use.

The trickle of new spending on the disability insurance scheme and Gonski education reforms will contribute little in the next few years to job creation or increased spending. Sackings, plant closures and bankruptcies will continue as long as people do not have the income to purchase what is produced. (See “The cyclical crisis of capitalism”, The Guardian, #1412, 27-05-2009, for a description of the capitalist production cycle.)

The budget continues the ongoing process of transferring wealth from working people and small business to the powerful transnational corporations and the rich, compounding the lack of purchasing power of the people to buy what is produced and stimulate demand for goods and services.

The alternative, which the mass media and major parties pretend does not exist, is a budget that puts the interests of ordinary people first and protects the planet – a People’s Budget.

Higher incomes

The government plays an important role in the distribution of income through the taxation system and its budget spending.

Cutting corporate taxes, as successive governments have been doing for several decades, boosts profits and leaves the government with less money to spend. Then the government cries poor, cannot balance its budget and cuts social security and other vital programs.

Raising corporate taxes and higher marginal rates to make the rich pay, would provide the government with additional income to fund an increase in age the pension, unemployment, single parent, and other social security payments.

Consumption would also rise and poverty be reduced if housing costs were reduced. This requires a massive investment program in public housing which offers affordable accommodation and puts downward pressure on private rental markets and results in job creation.

Every extra dollar a pensioner or single parent receives is spent on goods and services. An extra $50 a week in the dole would increase consumption by around $30 million a week.

Such measures serve two important objectives: address pressing humanitarian needs and act as an economic stimulus, as their recipients spend most if not all of their additional income.

The provision of public transport to outlying suburbs that presently have none or at best an infrequent private service would remove many vehicles off the roads. So too would the development of rail freight and rail passenger services. The benefits would be many: employment, the environment, health and safety, as well as the convenience of having access to public transport for work, school and other activities.

Expand the public sector

The government is missing out on tens of billions of dollars in profits because of its privatisation of the Commonwealth Bank, Telstra, and other services and agencies. The Communist Party of Australia is calling for an expansion of the public sector with the restoration of permanent employment, good wages and working conditions and well paid apprenticeships and other paid training.

The public sector is far less costly and more efficient because of the elimination of layers of profit. It also removes any conflict of interests that can arise, such as a private water or electricity company which has a vested interest (more profits) in higher usage.

The prime purpose then becomes service provision, not profit churning with all the cost-cutting short-cuts in safety and quality and attacks on workers.

Public ownership would facilitate the winding back of coal mining accompanied by the necessary development of alternative energies, manufacturing and other enterprises in its place.

The development of infrastructure projects by the public sector, whether it be roads, bridges, ports, housing, hospitals, schools or alternative energy sources, means more jobs for the same investment dollar and better quality outcomes.

Job creation

The Australian economy requires planning with the development of alternative sources of renewable energy, a strong manufacturing sector, educational opportunities for all and the return of the benefits of mining and production to the people who create the wealth – the workers.

Privatisation has played a big part in undermining the apprenticeship system. For example, Telecom (now Telstra) once employed 94,000 workers, it was unionised, was a major employer of apprentices, offered secure employment and relatively good working conditions.

Today, Telstra and the other communications outfits, contract out much of their work, some of it has gone offshore, they do not provide the same training, jobs are not secure and much of the work has been deunionised. “Competition” and contracting out has seen a deterioration in services as well as wages and working conditions.

Health

Medicare and the public hospital system require a large injection of funding to reduce the long waiting lists and nurse and doctor shortages. More funds are required for preventative health care, aged care, community and mental health services.

Dental health should be fully incorporated within Medicare. The decline of bulk-billing has resulted in people putting off or going without treatment or advice, with disastrous consequences, including death.

Education

Education is a basic right. Free, secular, public education from pre-school through to higher education should be universally available. That includes universities and TAFE with income support provided to enable students to study.

Public money should be used to improve resources, increase teacher numbers, ensure adequate salary increases, and ending contract employment and the exploitation of casuals.

Funding the budget

So where will the money come from to fund such an ambitious program? The government cries poor, there is a budget deficit and government revenues look set to fall short of government predictions as recession sets in.

The key question is priorities. There is in fact no shortage of possible funding. The Communist Party of Australia proposes the following reforms to raise the necessary funds for a People’s Budget:

  • Nationalisation of mining sector with billions of dollars in profits flowing straight into government revenue
  • A National Superannuation Scheme that workers could join on a voluntary basis and roll over existing funds. This scheme would be government guaranteed, members would receive a defined benefit – a regular specified fortnightly payment – on retirement for the rest of their life. These funds would be invested in public housing and other infrastructure projects and other areas of social benefit
  • Superannuation funds obliged to invest a minimum of five percent of their investments in public infrastructure – close to $30 billion
  • Abolish the multi-billion fossil fuel tax credits program and other fossil fuel subsidies in the resource sector, aviation, transport, etc, saving around $8 billion a year and in the longer term countering climate change
  • Phase out government funding of private schools, including church schools
  • Raise corporate tax and close loopholes and end rorts such as through superannuation funds
  • Abolish private health insurance rebate – $5 billion per annum and rising
  • A genuine super-profits tax on mining corporations and the financial institutions
  • Cancel the increases announced to military spending in the 2013-14 budget, saving more than $10 billion over the next four years and more than $75 billion over 10 years. A reduction of 10 percent in present levels of spending would raise another $2.5 billion per annum on top of the savings
  • End cruel, inhumane and costly off-shore processing of refugees.

The CPA also calls for the establishment of a People’s Bank and a public insurance company with strong social charters (including low or no-fee services), making home loans and insurance coverage cheaper and providing loans to the government.

A People’s Budget based on the above proposals would provide the basis for economic recovery for the people. Of course it cannot halt the boom-bust cycle or result in permanent gains for the working class. This cycle is a systemic feature of capitalism and has only ever been and can only ever be eliminated by socialism.   

Next article – Optimism on justice campaign

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