Magazine of Socialist Action in Australia

Cuts to welfare not necessary, tax the rich instead!

Reading Time: 3 minutes

In the latest effort to undermine the welfare state, the Turnbull government has combined several previously blocked welfare “reforms” into a single package – the “Omnibus bill”. They hope to push through nearly $4 billion in cuts over the next four years. The biggest planned cuts are aimed at family tax benefit recipients.

The government claims that a $20 family tax benefit increase per child (per fortnight) will offset the cuts but this doesn’t add up. Families with annual incomes below $80,000 will lose around $200 per year per child, plus an additional $350 per year if they are a single-earner household.

In an attempt to disguise cuts as “reforms” the government says that if the cuts to family tax benefits are pushed through, there will be a $1.6 billion increase in funding for childcare.

In the same manner, the package also includes a change to the paid parental leave scheme. The government wants to stop parents from receiving the payment if their employer also offers paid leave. They are selling the cut as an extension from 18 weeks of eligibility to 20 weeks.

What this really means is that the government would only top up what employers had already paid for up to 20 weeks. In essence about 68,000 new parents will have their payments reduced under the new plan, while another 4,000 will have their payments cut altogether.

The Omnibus bill also includes more attacks on young people. The government wants to force young people aged 22 to 24 from Newstart onto the Youth Allowance. This would result in a cut to payments of $91 a fortnight. Unemployed young people would also have to wait four weeks before getting any payments if the government is allowed to push this legislation through.

Many of these changes were first foreshadowed in the Abbott government’s hated 2014 budget. This time around however Turnbull has tried to blackmail people by saying that unless the cuts are pushed through the National Disability Insurance Scheme (NDIS) will not receive funding.

Despite these scare tactics, the proposed changes are extremely unpopular. The widespread animosity that exists towards them has forced the Labor opposition, as well as the Greens and Nick Xenophon, to oppose them, at least for the moment.

This opposition does not stem from a principled position. Labor, the Greens and Xenophon have all supported cuts like these in the past. Their main concern is not for ordinary people but for their own positons. They are worried that if they support these attacks they will be punished come the next election.

The government claims that these cuts are necessary in order to balance the budget. Ultimately though, the question is who should pay for the budget deficit? Socialists argue that ordinary people are not the ones responsible for the worsening economy. It is big business that have been making record profits in recent years, they should be the ones to cover the shortfall.

The budget deficit could be addressed and social services could be well funded if big business and the super-rich were forced to pay more tax. Instead Turnbull is talking about cutting company taxes further, which would result in a $50 billion boost to business coffers over 10 years!

This government is only interested in servicing the needs of its rich backers. We need a government that puts the needs of ordinary people first. By bringing the key sectors of the economy into public ownership, and removing the profit motive, the vast amounts of resources that exist could be utilised to increase the living standards of all. On the basis of profit-driven capitalism the exact opposite happens. Side by side with fighting attacks on the welfare state we need to fight for a political alternative to this system.

The Socialist Party demands:

-Not a single cut to public services. Increase taxes on big business to fully fund the welfare state and all social services.
-Oppose the demonisation of ordinary welfare recipients. Focus on closing tax loopholes that benefit the super-rich and big corporations.
-Increase welfare payments and link them to average earnings to ensure everyone has a decent standard of living regardless of their capacity to work.
-A public works program to create thousands of jobs while expanding the services and infrastructure that society needs.
-Bring key sectors of the economy into public ownership and introduce a democratic plan of production to ensure society’s resources are used for the benefit of all – not just the rich.

By Tim Tran


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