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Issue #1611      September 18, 2013

The big business takeover

PM Tony Abbott’s Business Advisory Council will have a direct line to his government’s Cabinet. More and more policy, legislation and other work of government will be contracted out to the Coalition’s big business mates. Teams of business leaders will be advising on everything from coal seam gas mining (fracking) through to managing the Australian Taxation Office. As never before, business will be running government, dictating policy and plundering what remains of Australia’s resources. Their message to the new Abbott Coalition government is “cut deep, cut fast”, deregulate and privatise. As Treasurer Joe Hockey declared, Australia is “open for business”, and it’s going cheap without “red tape” or “green tape”!

The Government plans to attack democratic rights and smash trade unions.

In the lead-up to the elections the Business Council of Australia, the mining magnates, financial institutions and other employer bodies lobbied hard with their wish lists. The Coalition had the full backing of Murdoch’s media empire with hundreds of millions of dollars free advertising and received millions of dollars of corporate donations.

Now it’s time for the Coalition to repay its debts to those who put it there.

As the Guardian pointed out following the Coalition’s victory, “The defeat of the right-wing Labor government and its replacement by the anti-people Coalition partners does not mean acceptance by the people of the Coalition’s reactionary policies. On the contrary, it will spark increased organised resistance in the form of trade union and community action: people will have to stand up and resist the backward policies of the Abbott government.” (Guardian, “Abbott PM: The lines are drawn”, 11-09-2013)

The Coalition and its ruling class backers are very conscious of this and there is nothing they fear more than resistance, especially from the organised working class. Hence its plans to attack democratic rights and smash trade unions. But it still has the problem of selling an anti-people, anti-environment agenda to the wider community.

The sales pitch will be provided by what Abbott calls a “once-in-a-generation” Commission of Audit of government spending and income sources. Nothing will be excluded from the process, according to the government. The Audit is nothing more than a political exercise to sell unpopular policies that are already set in concrete.

“The first task of the new government’s proposed commission of audit will be to establish that there is indeed a budget emergency. Unless this is accepted by the government as well as the broader public, there will be no stomach for the measures required to make a meaningful difference.” This advice comes from David Uren, the Economics Editor of Murdoch’s Australian newspaper. (“Yes, Mr Abbott, there is a budget emergency”, 13-09-2013)

As to what the Coalition has in store for the people of Australia, Hockey gave some insight with his warning of an end to the “age of entitlement”. The “age of entitlement” is neo-liberal spin for government taking responsibility for the well-being of the community by providing such services as health, education, housing, pensions, unemployment benefits, etc, mostly funded through personal and company taxation revenue.

As Uren warns it will not be “an easy argument to win”. Australia is one of very few countries with a AAA credit rating from the major credit rating agencies, Australia’s debt is relatively small compared with other nations. Abbott hardly conveyed a sense of emergency with a promise to improve the budget situation by a $6 billion over four years. plus pay down $16 billion of national debt. As Uren points out, “Set against $1.7 trillion of government spending across that period, it represents a minuscule improvement.”

The fabrication of an “emergency” is one of the Audit Commission’s main tasks. If past audits are any indication, it will discover a big black hole in the government’s budget – far bigger than ever imagined!

There will also be grim warnings that the current level of spending is “unsustainable”, there is far too much waste, the population is ageing, public sector productivity is low, wage rates too high, taxes too high, etc.

All of this translates into slash and burn policies which were kept under wraps, to be revealed by the Audit Commission. This is the approach used by former Liberal Party leaders – Jeff Kennett in Victoria, John Howard federally, and more recently by Campbell Newman in Queensland and Barry O’Farrell in NSW.

Keep the electorate in the dark before the elections. Hold an “independent” audit into government spending and then put your policies on the table. Howard’s predecessor, John Hewson, had foolishly released policy details in the Liberal’s “FightBack” document and lost an otherwise very winnable election in 1993. The lesson was learnt; no Liberal Party leader has since come clean before an election.

Howard audit

The audit commissioned by the Howard government laid the basis for billions of dollars of callous cuts in social spending. It also called for a wholesale reorganisation of state and commonwealth roles, with family services going entirely to the states, along with sole responsibility for school education and health spending.

In particular, it provided a blueprint for the privatisation by stealth of Medicare, public hospitals and education. This involved the gradual blurring of the boundaries and differences between public and private and gradually increasing funding to the private sector so that private and public schools were funded on the same basis, and likewise public and private hospitals received similar assistance.

Medicare would be gradually transformed to cover basic services and payments administered through private health insurance funds. Patients could join a private health insurance fund and receive refunds or be bulk-billed as they are now for basic services. If they wanted cover for additional tests or medial services or gap payments, they could take out additional insurance. Means testing for basic cover was also a consideration.

Australia is headed for the US model. Just how quickly depends on two factors, the political courage as referred to by Uren and the extent that mass opposition can be built to save Medicare.

Likewise with public hospitals; free public care is under threat. Already public hospitals are encouraging patients with private health insurance to “go private” in public hospitals.

The Gonski reforms which involve the winding back of education departments and giving state schools greater autonomy are also part of this process.

Uren has more advice for the government and those carrying out the audit. He identifies big ticket items such as Medicare, payments to states for hospitals, education age pensions and other social welfare payments and points to “spiralling” costs as an argument for massive cuts.

Newman audit

Queensland Liberal National Party Premier Campbell Newman further developed Howard’s approach. His “independent” audit team was led by former Liberal Party Treasurer Peter Costello.

Within months of taking office, 4,500 jobs were cut from the public service and the number climbed to 14,000 when the September budget was released in 2012. Costello’s audit recommended 20,000 public sector jobs should go.

According to Costello the public service has become “a high cost provider of services over the past five years’’ and the state cannot afford to continue business as usual. The commission recommended that the government “review all current service delivery with a view to adopting higher productivity mechanisms, almost certainly with a greater reliance on private sector delivery”.

That is exactly what Abbott aims to do with his “nothing will be excluded” inquisition of the public sector.

Abbott inquisition

There are the same calls for a complete reorganisation of state and federal responsibilities as in the Howard audit, with the federal government handing over more responsibilities to the states. The unfinished business of the Howard audit is still on the Coalition agenda.

Massive cuts to the federal public service and its agencies along with the transfer of more responsibilities for funding to the states provides the excuse for the GST to be increased to 15 or 20 percent to provide the revenue states then require.

At the same time, remaining commonwealth functions will be contracted out to the private sector or just slashed. A great deal of policy development and drafting of legislation is already being done by the private sector. Other areas such as the management of NewStart and other welfare programs will increasingly be carried out by the private or philanthropic sectors. The loss of 12,000 public sector jobs is only the start of a program of privatisation of government.

Military spending and other intelligence and policy operations will be largely quarantined from cuts.

One of the aims of scorched earth budget cuts is to reduce company and higher marginal tax rates to 25 percent and later to 20 percent. The burden of taxation will be shifted to the flat, regressive GST which leaves those on lower incomes paying a far larger percentage of their income in taxation.

Costello’s calls for “higher productivity mechanisms” in the public sector are also on the federal agenda. It is one thing to increase productivity in the mining sector through such means technology, robots and driverless trains but when it comes to human services it is quite different.

It means putting lives at risk, leaving vulnerable children at risk, the aged not receiving home visits they need, a decline in access to and quality of services. Once cut or contracted out to the less efficient and more expensive private sector, services will decline even further. Basic services will increasingly depend on ability to pay.

Environmental regulations will be “streamlined”, developers and mining corporations will have a free-hand to destroy national parks, wetlands, wilderness areas and plunder Indigenous and farming lands.

Existing environmental programs will be slashed, research and development grants will be redirected to corporate interests, including the production of fossil fuels, uranium mining and other environmentally destructive projects. Climate change will be treated as “crap”, in line with Abbott’s previous utterance, and the narrow short-term interests of his corporate mates prevail.

Big business and other reactionary political forces look set to dominate the parliament but the future will ultimately be shaped in our communities and workplaces. As the Guardian article quoted earlier pointed out, “effective resistance will take leadership, unity and a lot of work,” and there is no time to waste in commencing that process.

Next article – Editorial – Towards a more democratic voting system

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