Magazine of Socialist Action in Australia

Punishing the incumbents is not good enough

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Workers need their own party

Speculation that the mining boom is ending has been rife lately prompting the academic Ross Garnaut to warn of a “tough time adapting to falling living standards”. The truth is that the vast majority of us have never seen the benefits of the mining boom. The bulk of the wealth created has gone to lining the pockets of the big mining moguls thanks to the policies of the major parties.

Given that the mining boom is based on exports to China it is of major concern that China’s economic growth rate has fallen for six consecutive quarters. Many economists are predicting that China will not reach its target growth rate of 7.5% this year.

While there is much variation between different figures the overall trend is towards an economic slowdown in China. Even a mild slowdown will have a huge impact on Australia’s mining boom and the wider economy.

Compounding matters, the price paid for iron-ore and coal has recently fallen which has led to a drop in profits for the big miners. This is having a significant flow on effect to the amount of tax collected by the Federal Government. In another hit to tax revenue the mining giants have scrapped plans to construct a number of new projects.

Treasurer Wayne Swan’s promise of a $1.5 billion surplus in this year’s federal budget is under major threat as a result of these processes. In the coming weeks he is set to carry out a mid-year budget review. Standard & Poor’s (S&P) predicts that the budget is on course for a $20 billion deficit unless deep spending cuts are carried out. At the same time S&P are threatening that Australia’s AAA credit rating can only be maintained on that basis. All indications are that Swan will comply and carry out even more cuts.

Even conservative economists like Ross Garnaut are now commenting that not enough was ‘saved’ from the mining boom in the last decade. The solution some pro-business commentators put forward is for an increase to the GST – a tax on consumers to help pay for more infrastructure projects to act as a mild stimulus.

The truth is there is no reason why ordinary people should be forced to pay for the downturn. Goldman Sachs investment bank suggested the big miners would end up $35 billion better off over the next decade after scrapping Kevin Rudd’s proposed Resource Super Profits Tax in favour of Gillard’s much weaker alternative. While Rudd was planning to spend that money on cutting company taxes across the board, it does show the wealth that could potentially be tapped.

While the mining moguls have done very well out of the boom the rest of us have experienced increased costs of living. September was the seventh straight month of declining ‘consumer confidence’ measured by savings versus spending. It seems that most people are not buying goods or the sunny economic forecast put forward by Wayne Swan.

Making matters worse we have already seen rolling waves of job losses this year as well as big cuts to social spending. The housing affordability crisis is also continuing unabated. While on the surface unemployment looks low, ‘underemployment’ is a big problem. Australia also has one of the highest rates of insecure employment in the developed world standing at around 40%.

In light of these problems ordinary people generally reject the idea that bigger tax burdens should be shouldered by them while the top 1% laugh all the way to the bank. Polls show that people want to see a more equal society. The problem is that they are generally blocked at the political level as both of the major parties act as representatives of the big business elite.

In the absence of a genuine alternative, people have tended to defer back to a position of punishing the incumbents. This has been seen in the recent NSW Council elections, in the Northern Territory as well as in Queensland, NSW and Victoria.

To a lesser extent the Green’s have also suffered from this mood to punish those in power. This is especially the case since they are helping to keep Labor in office federally. The Greens for their part have put their loss of support down to the ‘electorate shifting to the right’.

The reality is that the Greens are the ones shifting to the right. They have supported many of Labor’s regressive measures and in places like Tasmania have proposed their own cuts and privatisations. The carbon tax is despised by ordinary people as it has recently been revealed that while costs will jump for consumers emissions will continue to rise for years and the big polluters will walk away richer. Voters are beginning to see the Greens as just another mainstream party.

While we can understand the frustration that people face, simply using one rightwing party to punish another is not a viable strategy to improve conditions for ordinary people. Already the Liberal state governments in Victoria, NSW and Queensland have slashed public sector jobs and made deep cuts to health and education funding. In most cases Labor has refused to pledge to reinstate the funding if returned to power.

The only way to put an end to this madness is to get off the two party merry-go-round. The differences between Labor, the Liberals, and increasingly the Greens, are all style and no substance. We desperately need a political alternative.

The Socialist Party has long highlighted the need for a new mass workers party in Australia. By uniting all of the different struggles against cuts, privatisations and attacks on our rights, it would be possible to pull together the best layers of activists and create the basis for a new organisation to be built.

Editorial from the October issue of ‘The Socialist’


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