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Issue #1936      12th October, 2020

Bosses’ budget

The “big-spend” budget is noteworthy for not directing expenditure to where it is most needed and of most benefit to the economy. Nor are tax cuts directed to where they are most likely to be spent and so stimulate the economy. This budget will increase inequality and add to the ranks of the unemployed and underemployed.

The budget reads more like a corporate budget as if the government itself were being privatised. By far, most of the spending spree is directed to the private sector. The deficit at $213 billion and debt approaching $1 trillion by 2024 are massive, but they are not an issue with interest rates so low. Or they would not be if the government were spending this money wisely. It is not.

The focus of the budget should be jobs and higher incomes for those who are struggling, who are in need. It is not.

Fails on job creation

Treasurer Josh Frydenberg’s claims that “this budget is all about jobs” ring hollow. The measures fall far short of this claim; in fact, they are more likely to increase unemployment!

The wage subsidy (JobKeeper) and doubling of unemployment benefits (JobSeeker supplement) were critical to the economy not crashing far deeper into an already deep recession. They were critical in keeping unemployment and underemployment from rising higher. As it is, around 2.5 million workers are either unemployed or underemployed. The government even admits that this number will increase by the end of the year but fails to take serious action to prevent it.

The $300 fortnightly cut in JobKeeper that commenced at the end of September remains. The second cut in January 2020 and the ending of the JobKeeper scheme at the end of March also stay. This will see even more families driven into poverty, and businesses that were just hanging in go under.

For the unemployed, JobSeeker was cut by $300 in September from approximately $1,115 to $815, around $58 a day. The $1,115 a fortnight made a huge difference to the unemployed enabling them to pay bills and put food on the table. There is no certainty of the now $250 coronavirus supplement continuing beyond the end of December.

If the government were serious about stimulating the economy to create jobs, the first thing it would have done was to restore these two payments. Its failure to do this is cruel and punitive. With one job vacancy for every eighteen unemployed, the government should stop treating the unemployed as bludgers and punishing them and their families.

The government knows that they are driving more people into dire poverty and reliance on the charities. They do not care one iota about the plight of workers.

A New Deloitte analysis for the Australian Council of Social Service (ACOSS) forecasts the equivalent of 145,000 full-time jobs and $31.3 billion will be lost if JobSeeker cuts proceed as planned. They are proceeding.

Deloitte also estimates that slashing JobSeeker would bleed $31.3 billion from the economy and cost the equivalent of 145,000 full-time jobs over the next two years.

Tax cuts on the backs of workers

The cuts to JobSeeker and JobKeeper payments at the end of September are in effect funding the personal income tax cuts. The tax cuts will do little to stimulate the economy whereas JobSeeker and most JobKeeper recipients will spend every cent they receive. How often has the government said it is giving people money to spend and hence creating jobs!

“Investing $16.9 billion evenly across the employment intensive sectors of university education, childcare, healthcare, aged care and the creative arts would create 210,506 jobs, which is 160,506 more jobs than the 50,000 jobs the government claims the tax cuts will create,” The Australia Institute (TAI) said.

$16.9 billion is the estimated cost of the tax cuts in 2021-22. The total over 2020-21 (half year) and 2021-22 is $23.8 billion.

TAI’s budget analysis also points out just how the tax cuts will increase inequality on a permanent basis:

“In 2020-21, 41 per cent of the government’s tax plan will go to the top 20 per cent of income earners. The bottom 20 per cent gets only 4 per cent

“In 2021-22, 88 per cent of the government’s tax plan will go to the top 20 per cent of income earners. The bottom 20 per cent get nothing

“Those new tax settings favouring wealthy Australians will then be permanent.”

It is well known that people on higher incomes are less likely to spend tax cuts.

Job creation investment

Pouring billions of dollars into tax cuts for the wealthy, tax cuts for big business, investment, “incentives” for business, and the like, will create relatively few jobs and actually destroy jobs where it involves modernisation.

Whereas embarking on a program of social spending, as TAI says, will create many more jobs and be of great benefit to the people who most need it.

The Communist Party is calling for spending on social priorities including:

  • Affordable public housing
  • Public hospitals
  • Public education
  • Universal, free public early childcare education
  • Free, quality public aged care
  • Renewable energy and other environmental projects
  • Universities, with abolition of all fees
  • TAFE, with abolition of all fees
  • Increased spending on the arts and sport.

Further analysis of budget in coming issues of the Guardian.

Next article – EDITORIAL – Berejiklian denies workers’ pay rise

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