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Issue #1624      January 29, 2014

Unsustainable policies

The nation’s welfare system is too large and “unsustainable” according to Social Services Minister Kevin Andrews, attempting to soften public reaction to the austerity measures in the forthcoming May budget. Urgent changes must be made to the disability pension and the general unemployment benefit, as well as Medicare, Andrews warned. This is the same man who had the carriage of the anti-union WorkChoices legislation in the Howard government and is now launching an offensive against the most vulnerable in the community.

Andrews is one in a chorus of minsters, employer bodies and media commentators singing the same line about so-called “unsustainable” spending.

Health Minister Peter Dutton claims spending on Medicare has grown at a rapid rate over the past decade and is becoming “unmanageable”. Dutton pointed to an ageing population, warning of the additional costs of an increase in dementia, diabetes and other conditions. ‘’It’s hard to understand where we are going to find money to pay for these services’,” Dutton said.

Dutton acknowledged that single mothers (not parents) who were forced onto Newstart are struggling, but “the problem we’ve got now is a huge government debt.”

The unemployed are also “unsustainable”. We are told the numbers on Newstart payments have ballooned and are putting pressure on the budget. This is not true.

The number of people receiving unemployment payments (Newstart for people aged 22 years and over and Youth Allowance for people aged 16 - 21) was lower in 2012 than in 2002 (633,000 compared with 645,000). There was a jump in the number between December 2012 and February 2013, mostly attributable to parents being transferred from parenting to payment to the dole.

The government has raised the work-for-the-dole scheme, in which the unemployed work for nothing under threat of losing their payment.

The sick, people with disability, single parents and the unemployed are all in line for cuts.

Chief executive of the national council of St Vincent de Paul society, John Falzon said, “It’s always been therapeutic for welfare bashers to put in the boot to people who are excluded and blame them for their exclusion from the workforce.”

The age pension, the government has reassured us, will not be cut in this budget. But that does not mean there will not be other measures to cut spending on pensions.

The Sydney Morning Herald (20-02-2013) headline, “Unsustainable pensioners”, said it all. Michael Pascoe’s article had an all too familiar ring – questioning the right of pensioners to pass on their family home to future generations. They should be mortgaging it to fund their retirement.

Never mind how hard they have worked, how much they have been exploited or what taxes they have paid during their working lives, the age pension is becoming “unsustainable” because of an ageing population, or so we are supposed to believe.

The banks made billions out of workers’ mortgage repayments during their working lives and now they want to come back for a second round!

“Unsustainable” is the new buzz word being used to try to justify the closure of and withdrawal of funding from important community services and programs that provide vital services to Indigenous Australians (see story page 4 and #1623 of the Guardian), people with mental illness, the homeless, single parents, etc.

The abolition of the “unsustainable” school kids bonus has stalled in the Senate, legislation to axe the payment of $410 for eligible primary school children and $820 for secondary school children is before the Senate, waiting for the Coalition’s majority in July. The amounts involved are relatively small in relation to the federal budget, but to families on low incomes attempting to find hundreds of dollars for books, stationery and uniforms it is yet another blow they cannot afford.

It is interesting to reflect on what the government sees as unsustainable. There is a striking pattern to these budget items. Every single one of them affects the most vulnerable, those on low incomes, those in need and their families – ordinary working people doing it tough.

The rich, the insurance companies, the banks, the mining corporations, and other profit-gouging outfits will not lose one cent if these and other planned cuts go ahead. Their homes will be safe, they will still be able to afford $30,000 a year for each child’s fees in an exclusive private school as well as private health insurance and their overseas holidays. In fact, their incomes stand to increase significantly.

The billions of dollars saved by these austerity measures will lay the basis for future tax cuts for companies and the wealthy and advance the neo-liberal agenda of privatisation and deregulation.

Really unsustainable

But that is not to say there are not a number of unsustainable budget items which could and should be cut. The following are a few examples:

The bloated military budget fast approaching $30 billion a year with automatic indexation – a very minimum cut of 10 percent could be used to fund an increase in unemployment benefits of $50 a week, restore single parent payments, and still leave around $1.5 billion towards reducing the budget deficit. It would not harm our security.

The $6 billion uncapped private health insurance rebate – it is nothing more than a subsidy to otherwise financially unsustainable private hospitals (and insurance companies) which is bleeding the public health system. It could be used to adequately staff and equip public hospitals, increase Medicare rebates to doctors, and provide full coverage for dental services under Medicare.

The billions of dollars in diesel fuel rebates paid to mining companies is environmentally unsustainable and financially irresponsible. This money could be diverted to research and development of environmentally responsible renewable energy sources, creating jobs as well as making a positive contribution towards addressing climate change.

The $9 billion being paid by the federal government to non-government schools (only $4.4 billion to government schools) – phasing out this subsidy would provide much needed funds for the public school system and inservice training and support for teachers. The remainder of the $9 billion could fund free preschool for all children and afterschool and holiday programs for children.

Negative gearing is costing the government $5 billion per annum, while subsidising property investors and pushing up the cost of housing. If phased out, this money could be redirected to building public housing and debt reduction.

Ongoing cuts to company taxation – commenced by Labor in the 1980s. These cuts have cost hundreds of billions, around $35 billion alone last year. No government can go on cutting income and maintain spending. Company tax should be increased, not cut as planned by the Abbott government. All industries should be subjected to a genuine super profits tax – banking, insurance and mining in particular.

Self-assessment of company tax by the largest corporations – Abbott’s latest announcement will result in even less income - is unsustainable.

Cutting 900 jobs from the Australian Taxation Office – this is just as financially irresponsible. The ATO needs more staff to chase up the tax cheats, especially the largest corporations.

Offshore processing and incarceration of asylum seekers – it is not only illegal and inhumane but is costing billions of dollars every year. Asylum seekers should be placed in the community and allowed to work while their refugee status is assessed. The money saved could be used to provide English language classes and assistance with accommodation, finding work, education, etc.

Spending billions of dollars on roads – transport emissions are now 18 percent above their 2000 levels, and 41 percent above 1990 levels. The money should be spent on sustainable transport such as rail freight and buses and trains for passengers resulting in lower environmental, social and economic costs.

Any government recklessly handing out billions of dollars in corporate welfare to the military industrial complex, private hospitals, the mining industry, etc, at the same time as slashing taxation revenue, will not have enough funds to provide basic public and social services. They cannot be provided from thin air.

It is the corporate welfare that is unsustainable.

As pointed out above, there is a pattern to what the government calls “unsustainable”. The unsustainable policies of the government are ideologically based. They work in the interests of the rich and big business and hurt the working class, in particular, the most vulnerable.

The struggle to defeat the government’s economic policies and win support for pro-people policies is part of the class struggle. Central to these policies is who pays taxes, how much they pay and how they are spent. The government with its neo-liberal, austerity measures, is serving the interests of the capitalist class.

Gareth Hutchens (Sydney Morning Herald, 21-01-2013, “Richest 85 boast same wealth as half the world”) notes that “In the US, the wealthiest one percent of the population grabbed 95 percent of the post-financial crisis growth between 2009 and 2012, while the bottom 90 percent became poorer.” There is nothing fair, democratic, or sustainable about these outcomes.

A similar process is occurring in Australia and the gap will only widen if the government is allowed to go ahead with its planned cuts.

The task now for left and progressive forces is to turn the slogan “One term Abbott” into a reality. This requires the building of a broad movement, united around defeating neo-liberalism and replacing it with a new type of government committed to pro-people policies.

For more on the government’s social agenda and the forces behind it, see Undermining democratic rights.

Next article – Editorial – A dangerous posture

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