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Issue #1639      May 21, 2014

Budget 2014-15

War on the poor

The 2014-15 federal budget is the most reactionary and blatant attack on the working people of Australia in recent history. Millions of low-income workers, families, young and old people, Indigenous Australians and people with a disability will be thrown deep into poverty. Dreams of a good education will be shattered, visits to a GP or a blood test will be put off and the number of homeless will rise. The budget lays out the first steps in a fundamental change in the role of government along the lines spelt out in the National Commission of Audit report. The gap between rich and poor will become a chasm.

March in May, Adelaide. (Photo: Greepo)

People were fed nothing but lies before the election, and that deceit continues in the budget statements and refusal of the Treasurer and government ministers to accept accountability for their actions. Millions of Australians are now fearful of what lies ahead of them. Overnight, they have been hit by a bombshell that could cut through their lives.

Opposition to the budget is mounting. Tens of thousands of people took part in March in May protests on Sunday in major cities. The opinion polls have turned dramatically against the government and Tony Abbott as PM.

Seven state and territory leaders met in Sydney – five Liberal and two Labor. The West Australian Premier was the only absentee. The angry ministers were united in their rejection of the cuts which they could not possibly absorb. These include $80 billion in health and education over the next 10 years.

They demanded an urgent meeting of the Council of Australian Governments (COAG) which Abbott arrogantly rejected. They are furious over the cancellation of agreements and steadfastly refuse to call for an increase in the GST – three of them have elections within the next 12 months. It would be political suicide.

The corporate media deceitfully hammer the “budget emergency”, “Labor’s mess” and “tsunami of government spending” line as fact. The budget deficit and government debt as a proportion of GDP are amongst the lowest of any industrialised nation; the envy of many governments. It is pure fiction.

The Audit Commission’s target of a budget surplus (profit) of an arbitrary, one percent is adopted and used to defend cuts, but without any justification for such a goal. The government is not a company with shareholders seeking profits, It should be responsible for raising income and providing services and governing for its people.

Community, welfare and church organisations and the wider population have seen through the lies. “We are not in the throes of a fiscal crisis but if we embark on this treacherous path of US-style austerity we will be staring down the barrel of a social crisis,” said St Vincent de Paul Society CEO Dr John Falzon.

Brazen lies

“Frankly I have never witnessed such a brazen attempt by any Prime Minister to ruthlessly and so quickly impose such a vindictive, hard, right, cruel and ideological agenda on the Australian people and our environment [and] then to try justify it by deliberately concocting a fake national budget emergency,” Australian Greens leader Christine Milne said in her budget reply speech.

“It’s breathtaking to watch the Prime Minister and his cigar smoking Treasurer together with their hand-picked commissioners of Audit, aided and abetted by the Murdoch press, try to con the community into believing that everyone has a moral obligation to share the burden of a confected crisis, arguing that the burden is being shared fairly, whilst making absolutely sure that the full weight is carried by those who have no power to fight back, the young, the sick, pensioners, students and those least able to shoulder it, not to mention the natural environment and future generations.”

“If you are privileged, the Liberals will protect that privilege. If you are already struggling they will stamp you down and make your life harder,” Senator Milne said.

Big business stands to gain in coming years from privatisations, outsourcing of government functions, tax cuts and concessions, abolition of the carbon and minerals resource rental taxes, and infrastructure construction. The big mining companies, banks and insurance companies, construction companies and Big Pharma, in particular, will make a killing.

“To improve business opportunities, we are cutting company tax by 1.5 percentage points for around 800,000 businesses,” Hockey shamelessly told Parliament.

The ABC and SBS are lined up for a death by a thousands cuts despite pre-election promises to the contrary, some still to be announced. The ABC’s $220 million, 10-year contract with the Department of Foreign Affairs and Trade (DFAT) to run the Asia Pacific television service, Australia Network, is being cancelled. This is the contract that Rupert Murdoch missed out on, now being taken off the public broadcaster.

Gutting social spending

It cannot get much crueller than denying young people the right to unemployment benefits for six months and then an obligatory six months of “work for the dole”. What options are they left with? Begging on the streets, prostitution, joining the black economy on starvation wages and no workers’ compensation cover, or suicide?

Those unemployed who manage to qualify for the dole face a whole new, punitive regime. (See Abbott govt promotes climate change, rewards polluters)

There are massive cuts to the family tax benefits scheme. At the same time families face the loss of bulk-billing with a $7 co-payment for medical services and higher prices for pharmaceuticals.

The co-payment is a tax on the sick, including young unemployed with no means of support, that will only result in more serious illness, longer hospital waiting lists and even deaths. (See The attack on Medicare)

The budget totally neglects dental health and lays into preventative health programs. National Partnership Agreements with the states are also on the chopping block including a back-down on commitments to the National Disability Insurance Scheme.

Public education is in the firing line, with deregulation of university fees, higher interest rates on and earlier repayment of student loans (HECS/HELP), abandonment of Gonski funding, and axing of the “Tools for your Trade” apprenticeship assistance program.

Across the board, pensions, benefits, allowances, public sector salaries, Medicare rebates and other payments are being frozen, reduced by changing the method of indexation, abolished or eligibility requirements tightened to deny people access.

Seniors are looking at the loss of important concessions with federal subsidies being wiped. Another 16,400 public service jobs will be axed as departments and programs are shut down or gutted.

In sharp contrast to the permanent cuts hitting the most disadvantaged, the two percent “deficit levy” on taxable incomes above $180,000 only runs for three years.

One hundred and fifty programs for Indigenous Australians are replaced by five and more than half a billion dollars stripped, including from health programs.

Trashing the environment

“… this government has become medieval in their attack on science and research and evidence based policy to the extent that CSIRO, Bureau of Meteorology and its environmental science programs have lost $142 million. But compare this with the funding of $250 million which has been directed to the school chaplaincy program with the added restriction of requiring it to be delivered by a religious provider with no option for secular welfare providers,” Christine Milne pointed out in her budget reply.

“Our natural environment will suffer a vicious assault as environmental powers are to be transferred from the Commonwealth to the states, or even local government or anyone for that matter. Decades of environmental protection and the legal work of environmental defenders offices has been trashed.”

The mining sector will continue to receive billions of dollars in subsidies – increasing from $13 billion to $14 billion – including the fossil fuel rebate.

The billions of dollars that can be found for infrastructure are mostly directed to building roads and tollways. Public transport and environmental programs come a poor last.

Military budget

At the same time as cutting 1,500 civilian staff, the government plans to give military spending a big boost in line with the Audit report. It is set to rise from just under $30 billion to the equivalent of two percent of GDP within 10 years –$40 billion or more in today’s prices.

According to research done by the Australia Institute, the “government would have had an additional $38 billion for last year’s federal government budget and would have collected an extra $169 billion over the past seven years had it not been for unsustainable income tax cuts that were made in the lead up to the GFC.” (, Matt Grudnoff, “Tax cuts that broke the budget”) These tax cuts primarily benefited those on high incomes.

Add to that the billions of lost revenue due to company tax cuts, it clearly reveals that there could have been a large budget surplus if the ideological and political will had been there.

The aim is to eventually wind back company taxation, with the government relying on the regressive GST and other indirect taxes.

Govt change in role

The federal government is attempting to divest itself of basic social responsibilities, of raising central revenue and funding social needs and infrastructure out of that income. It is abrogating its responsibilities to the people, its international responsibilities (foreign aid, international treaties, etc.), turning its back on the environment, responsibilities that bourgeois democratic governments have, to varying degrees, held to.

The main thrust of the Audit and this budget is down a very reactionary, narrow and dangerous path. The Abbott government sees itself responsible to big business, not the people who elect it.

It also holds tightly to the US-Australia military alliance. As can be seen by the planned massive hike in military spending, the government is preparing for war. The intelligence, policing and other security organisations are also spared destructive cuts.

Another extremely concerning aspect of the budget is the lack of accountability for the government’s actions, the secrecy and deceit surrounding the budget and following its release. Hockey, Abbott, Education Minister Chris Pyne and Finance Minister Mathius Cormann all treat the public with utter contempt; they are dismissive and arrogant when questioned about their lies.

This horror budget is only the first step with much worse to come if the Abbott government is not defeated. It should be seen in context with a number of other reviews and whitepapers in the pipeline, the Royal Commission witch hunt into the trade unions, industrial relations legislation, and plans to slash or abolish the minimum wage and penalty rates.

Defeating the budget

The task now is to defeat the budget and throw out the Abbott Government. If the Labor Party, Australian Greens and populist-sounding right-winger Clive Palmer hold to their post-budget statements, then that should be possible.

Abbott remains as arrogant and confident as ever that he can do deals and push the budget through the Senate. One of the big questions will be supply, whether any of these parties are prepared to block the supply bills that are required by the government to carry on its day-to-day business – particularly if Hockey tries to slip specific measures such as the Medicare co-payment in them.

This government was elected on the basis of large-scale deceit and cover-up of it anti-people, anti-environment policies. It cannot be allowed to implement those policies which would cause untold suffering, cost lives, destroy the social fabric of society and take Australia back to the conditions of 19th century Britain.

The strength and unity of the struggle outside of Parliament is critical. This includes taking to the streets such as in the March in May actions last weekend, joint community trade union actions, and lobbying hard all MPs and Senators. There are clear divisions within the ranks of the Coalition and there is nothing like an MP facing electoral loss to build pressure within government ranks.

Further analysis and a People’s Budget in coming issues of the Guardian.

Next article – Editorial – Research Fund hoax

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