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Issue #1635      April 16, 2014

Abbott’s savage cuts


In the run-up to the May budget the government has been foreshadowing some of the nasties that lie ahead for the aged, sick, unemployed, low income and other disadvantaged groups. Amongst the most recent of these are warning of impending cuts to the aged pension and cuts to nursing home subsidies. Public education is on the chopping block. In fact, all welfare payments are in the government’s sights. Medicare is about to be privatised and a co-payment introduced for GP visits and hospital emergency departments. Everyone knows that the $6 co-payment being floated won’t remain at $6.

(Photo: Anna Pha)

We are constantly being told about a budget crisis and referred to a “blowout” in the budget deficit. The Abbott government has worked hard to inflate the budget deficit, even giving the Reserve Bank of Australia $8.8 billion to put in its reserves. This is a bank that looks set to make $6 billion or more in profits this year.

There is no shortage of money for some budget items. Abbott is set to pour billions more into an already bloated military budget. He shows no concern about the rapidly growing 30-40 percent private health insurance rebate.

Dan Harrison (Sydney Morning Herald, 10-01-2014) notes that its “annual cost has risen faster than any other component of government health spending, from $1.4 billion in 1999-2000 to $5.5 billion in 2012-13.” It is now estimated to be $6 billion per annum – an indirect handout (corporate welfare) to an otherwise unsustainable private hospital system.

Apparently we can afford another round of corporate tax cuts. But the “ageing population” is unsustainable! Rising costs of health services, the aged pension, aged care, public education, the national disability insurance scheme, unemployment benefits, etc, are also portrayed as unsustainable. And we are told that it is necessary to sell off what remains of the Commonwealth’s assets – to fund more tollways.

The “budget crisis” is not only being used to slash social spending and privatise everything in sight, but it is being used to argue for an increase in the GST (see Editorial).

Hiding behind the smokescreen of budget deficits and unsustainable payments is a government hell-bent on a major transformation in the role of government. The democratic processes and sovereign powers of the state are being handed over to the big corporations, including foreign-based ones. This is occurring on many fronts.

For example, Trans Pacific Partnership and free trade agreements with Japan and south Korea, give foreign corporations the power to sue the Australian government for damages if their profit-making capacity is or might be reduced by government laws or regulations. The removal of “red and green tape” gives developers and mining corporations a free hand.

The government is withdrawing from its responsibilities to provide for the well-being of people. Hockey repeatedly reminds us that “the age of entitlement” is over, meaning the destruction of what is known as the welfare state. In the place of government provision of services and pensions, will be “self-provision” by individuals. If you can’t afford to pay to see a GP then you won’t see one. Any pensions or benefits paid by the government will be a “safety net”, carrying a stigma of “charity”, or portrayed as undeserving.

This involves a fundamental philosophical and ideological shift in the government’s role. If this agenda is enacted, the days when people paid their taxes during their working lives and had certain entitlements during different phases of their lives will be over.

The corporate sector does not want to pay taxes on its profits. It has nothing to do with people’s needs being unsustainable. If there were a political and ideological will, they would be very sustainable. There is no shortage of money; never before in our history has so much wealth been created.

Who pays the taxes and how the income is distributed is a class question. The company tax cuts, an increase in the GST, privatisation and cuts to social spending are in the interests of big business. The struggle to defend the public sector and its services and social security is in the interests of the working class. The budget deficit line is a smokescreen to cover up the government’s pro-big business agenda.

In its short period in office, the Abbott government has already sparked a number of protests some, such as against the treatment of asylum seekers, ongoing. Last month’s actions in cities around Australia were a direct response to the government’s slash and burn in next month’s budget..

As the government’s vicious austerity program bites ever deeper, the imperative to grow opposition on the ground will take on great urgency and momentum.

Next article – Editorial – Preparing the ground for GST increase

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