PASSWORD RESET

Magazine of Socialist Action in Australia

Federal budget: A plan for profits and cuts

Scott Morrison’s budget is the second most unpopular for decades. The government failed to fool most people as they had hoped to.

In particular half of women and almost two thirds of young people between 18 and 35 disapprove of this budget. Research by Essential Media Communications revealed especially telling attitudes: approximately half of respondents said the budget was not fair or balanced, it favoured big business over workers, it didn’t do enough on multinational tax avoidance, and it is not the right budget for the time.

Central to the budget is a cut to company taxes. Phased in over ten years it will lower company tax to 25%, down five percent. Last year Labor Party leader Bill Shorten was first to suggest this tax rate for profits. The government says this will result in increased business investment which will grow the economy and the tax base while boosting employment and wages.

However the government’s own modelling shows the tax cut will only produce a miniscule increase in jobs and growth over 30 years. Many other commentators have thoroughly debunked the government’s claims. They rightly say that historically low interest rates have failed to spur investment. The main problem isn’t that companies can’t afford to invest, but instead that major companies are hoarding cash.

But the rich are set to benefit from this budget immensely. The tax cut would add approximately $50 billion to profits over the next decade. The federal budget is predicted to be $16 billion a year worse off once the tax cut is fully implemented.

Future capitalist governments will be compelled to make up for that with new taxes on workers or social spending cuts. All of that wealth could be better directed to meet social and environmental needs, especially through a socialist system of real democratic economic planning.

This budget cuts Medicare by $925 million by extending a freeze on annual increases to general practitioner funding. Doctors warn the effect will be less bulk billing and higher fees for patients. The outcome is similar to Hockey’s proposed GP co-payment fee. Labor’s criticism of this measure is fake: they initiated the freeze while in government.

A focus on exploiting youth to subsidise profits continues. A new ‘work for the dole’ scheme, called “Prepare Trial and Hire” (PaTH), pays $4 an hour to long term unemployed youth to take part in “internships”. It also incentivises companies to churn through unemployed “interns” by giving handouts up to $10,000.

Experience of similar schemes in the UK and Ireland shows that businesses simply replace already low-paid workers in low-skill jobs with free labour funded by the government. The main problem for youth struggling to find a job is not a lack of work experience, it’s a lack of jobs.

Women also bear the brunt of this budget. Changes to superannuation contribution caps heralded to help women will not benefit most. The main problem women face is lower wages and more domestic burdens than men, leaving nothing extra to save. A $1.2 billion cut to nursing home funding will also disproportionately affect women.

All of the regressive cuts in the budget should be opposed. There is no reason to accept any of them. Wealth exists that could be harnessed to improve and expand social services. The fossil fuel industry receives $7.7 billion annually in government subsidies.

The banks have been making record profits while BHP and Rio Tinto have been shifting riches offshore throughout the mining boom. Fully ending negative gearing and capital gains tax subsidies for property speculation would free up vast sums. Halting income tax avoidance by the hyper-rich could raise billions more. The problem is the blatant class bias of the budget in favour of the wealthy.

Working people, especially women and young people, should organise campaigns and actions to defend themselves against Morrison’s attacks. The mass disapproval of this budget means that such campaigns would readily find sympathy and support. In the medium term campaigns against cuts could be the foundations for an alternative political movement to the regressive agenda of the pro-capitalist parties.

By Kirk Leonard