Magazine of Socialist Action in Australia

2009 Budget: Swan calls on workers to pay

Reading Time: 4 minutes

Treasurer Wayne Swan delivered the 2009 budget against the backdrop of the worst economic crisis since the Great Depression. While Australia is yet to feel the full effects of the downturn, Swan used this budget to outline a plan for ordinary people to pay for the crisis while protecting big business profits.

This budget was mild Keynesianism, with some new contracts for the private sector to build infrastructure projects. But any new construction jobs created will only maintain employment levels in that sector and not make up for lost jobs elsewhere. The new spending will be paid for by hidden cuts and a longer wait for retirement – as well as new debt.

In May 2008 the government predicted a $22 billion surplus in 2009. Now they have announced that in fact they will face a deficit of $57.6 billion. This is largely because government revenues have been decimated as company profits have declined. This has been particularly pronounced in the mining sector.

Cuts to welfare

While there has been much talk about attacks on “middle class welfare”, this ambiguous description is in fact code for all welfare payments including unemployment benefits and pensions. There will be a general tightening of non-means tested payments making it harder for people to qualify. This will also apply to the private health insurance rebate.

A range of medium to long term spending cuts were announced including an increase in the pension age and reduced superannuation concessions. These will especially impact on older people. While the pension will rise for singles by around $30 per week, this will hardly cover what has been lost in recent years.

What Labor give with one hand they take with the other. They want people to start working longer and harder to pay for this meagre rise. Swan announced plans to progressively increase the pension age to 67. Anyone now aged 52 or less will have to work until they are 67 before getting the age pension. This is also likely to be a precursor to lifting the age at which people can access superannuation payments.

The tightening of the means test for the aged pension will actually save the government $1.2 billion by the end of 2012-13. In other words some people will get a slight increase but many more will be left behind.

Young people are big losers in this budget. The government announced that from July young people aged 16 to 20 will be denied youth allowance unless they are at school, in training or have finished Year 12. The parents of young people who fail to meet these criteria will also loose their family tax benefit.

Students will be adversely affected as the budget has doubled the number of hours a student must work to prove their independence and encourages them to earn more before affecting their benefits. This means longer hours and less money for students who are already doing it hard.

Single parents and the unemployed will see no rise at all in their benefits despite the fact that Treasury has predicted that unemployment is set to rise to 8.5 per cent by 2011. Even this conservative estimate will mean 1 million people out of work and hundreds of thousands more underemployed.

While ordinary people were called on to pay, there was money to be found to significantly increase defence spending. More than $26.6 billion will be spent in 2009-10 alone. This figure represents a 20 per cent increase in spending over the last year.

Most of this money is earmarked for the disastrous intervention in Afghanistan, but there is also $240 million for Australia’s mini-imperialist adventures in East Timor and the Solomon Islands. While hospitals and schools crumble, 12 submarines, 100 joint strike fighters, 8 new frigates and new cruise missiles have been ordered.

Unrealistic growth expectations

The government has suggested that the economic growth for this year will be zero and next year the economy will contract by 0.5 per cent. Swan claims that the economy will return to 4.5 per cent growth by 2011-12 which is highly unlikely.

These estimates are extremely optimistic and are based on the assumption that China’s growth will improve dramatically over the next few years. The reality is that China is heavily dependant on exports to the US. Any increase in growth will be dependant on the strength of the US economy which at the moment is on very shaky ground.

The budget saw tax cuts but once again it was the rich who get the biggest tax cut of all. The government kept these cuts to ‘maintain election promises’, yet is quite willing to break election promises when it comes to industrial relations. For those on annual incomes above $180,000 they will receive an extra $41 a week but taxpayers on less than $30,000 will pocket no more than $3. This is a slap in the face to low income earners.

$22 billion was pledged for infrastructure spending but some of this has already been earmarked for existing projects. Swan claims this will lead to the creation of thousands of jobs but it will be the private construction companies who will benefit the most. Building and construction stocks surged after the announcement in anticipation of a massive profit windfall.

Propping up profits

The reality is that the Labor government spent the budget surplus and more on stimulus packages that were largely aimed at propping up company profits. The big banks and car companies as well as retail and construction bosses have been the real beneficiaries’ not ordinary people. Not one employer has been forced to protect jobs despite all the rhetoric.

Low income earners, sole parents, the unemployed and youth have all been left behind in this budget. The measures outlined by Labor are aimed at protecting profits and making ordinary people pay for a crisis that they did not create. The only way out of this mess is to replace the failed capitalist system with a planned and democratic socialist system that puts people before profits and provides for all.

By Anthony Main


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