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Magazine of the Socialist Party in Australia

2006 Federal Budget: A budget for the rich

The 2006 Australian federal budget is a banquet for the rich and ?well to do? with a few scraps and bones for the rest of us.
The Coalition government budget once again is geared for the greed of the wealthy and offers nothing for health, education and finances of those not so well off.
Editorial from the June edition of ‘The Socialist’. Monthly newspaper of the Socialist Party (CWI Australia)After years of surplus budgets with each surplus generally exceeding its predicted amount, with the government being debt free (although this does not apply to Australia as a whole with a Foreign debt approaching half a trillion dollars) you might of thought that the government would start paying back some of the money it has stolen from working class people in the form of the GST, cuts to health education and welfare. You may even have thought a few extra tax cuts for the less well off would be in order considering the massive tax benefits given to the rich in preceding years. You’d be wrong. Against a background of rising interest rates, increasing oil prices and industrial relations laws designed to at very least keeps wages steady if not to cut them, this budget again gives very little to working class Australians.

The budget reduces tax rates for the very rich from 47% to 45%; the threshold from which these apply has been raised to $150,001. This means that only the top 2% of earners pay the highest tax rate. (Assuming that they have not got some kind of a tax dodge). The next highest level is also cut from 42% to 40% and cuts in at $75001. In combination with existing tax cuts this means that the tax bill of some one on $150000 a year is cut by 11% or $6200 but that of a person earning average weekly earnings only 4% or $520pa.

Spending for Defence will increase by 13.1% to $17.8 billion, while spending for education is only increased by 6.5% to $16.6 billion. Obviously the larger increase in defence spending is to help fund Australia’s mini imperialist role in the local area.

Much has been said about the superannuation changes that the budget has made but again these are aimed squarely at the well off. Now those receiving super after the age of 60 will not have it taxed ? assuming of course that you are going to be receiving an adequate amount of super in the first place. The benefit also applies not matter how much super you receive so a worker getting a meagre amount from a 9% employer contribution will not pay tax as will a boss who has been able to put away the $50,000 a year under the new proposals. (There are not many workers who can afford to put aside $50,000 a year for super). The ASFA (Association of Super Funds of Australia) has estimated that the benefit of the changes will amount to about $9,000 extra super lump sum for an average worker on 9% super contributions over a 30 year period. While the most immediate benefit would be for those with super savings over the $129,000 tax free threshold. ASFA while in favour of the changes also noted that the benefits of the changes appeared to be modelled on a continuous 40 year working life with no interruptions. A rare event with increasing casualisation.

The benefit of both the tax cuts and super changes also flows to money management companies such as AMP, AXA and Macquarie Bank. This also applies to the Futures Fund with $18 billion in assets which is estimated to generate $1.7 billion in capital gains in 2006/2007 and $1.8 billion in income from dividends and interest. The Futures Fund is likely to increase by a further $25 billion with money from the full sale of Telstra.

Beazley and the ALP have no problem with the largess given to the rich. When asked about whether he was happy with the rich receiving such large tax windfalls he replied that the ALP had reduced top rate from 60% to 49% a much bigger percentage increase than the coalition government had managed to achieve. His budget reply was basically to tinker a bit at the edges with education training and childcare.

The budget with its generous tax cuts and super payouts to the rich has only been possible because of the commodities boom and the continuing growth of China’s needs for commodities. This will not last forever, and it is no doubt certain that when the crunch comes and the generosity of the tax cuts and super payouts to the rich can no longer be sustained, that it is the working class that will be forced to shoulder the burden. If the Coalition government cannot be relied upon to enforce such a burden because of an industrially active working class then the bosses Alternative Liberal Party (ALP) will be called on and more than happy to take up the task.

What working class Australians need is a party which will defend their interests. Free education for all, a free and universal health care system, and a welfare system that will ensure all its citizens have a decent retirement not just those wealthy enough to put aside thousands of dollars. Working class Australian need a new workers party which will fight for their class interests.