Magazine of Socialist Action in Australia

The Federal Budget – A socialist analysis

Reading Time: 5 minutes

The May 2005 budget is another salvo in the class war that Howard and the Liberals say
does not exist. After several years of economic upturn and with a Senate that blocked the Liberals full proposed agenda, this is a budget for a new era. The Liberals are now getting ready for a full scale ripping into the guts of the working class. The budget is designed to get the most out of the working class now and also as a preparation for laying the burden of any economic downturn of the bosses system squarely onto the working class.
SP National Secretariat
The most obvious attack is the tax cuts. For those on low and middle incomes the princely sum of $6pw for those on the highest incomes $86pw. And of course it is already the low and middle income earners that supply the bulk of revenue from the GST.
The real issue is not tax cuts and who does or does not get them, but that the money being used on tax cuts should have been used on health , education, social welfare and social infrastructure.
The tax cuts also reinforce the notion of the single bread winner family with 2 parents and children. The highest gains for tax cuts and family tax benefits fall to those who can bring home a large income from a single pay packet. Less well off are those who are on low to middle incomes with both partners working.
The worst off of all are those who are single mothers. Not only do they have to try to get jobs after their children turn 6 , but they also have the burden of having to do child raising and housekeeping by themselves. Here again there is another divide, with those already getting Sole Parents Pension able to continue to do so with current conditions and those after 1/7/06 having to go on to Newstart payments.(With much lower payments and worse conditions)
The attacks on Welfare are further evidence of the class nature of this attack . From July 2006 parents both single and partnered who receive the parenting payment will have to look for work after their youngest child turns 6. If they already get Parenting Payment they can keep on getting it until their youngest child turns 16.
But those who apply for Parenting Payment after 1/7/06 will be moved to the lower paid and more severely income tested Newstart payment. Putting at risk the most vulnerable children and women in society.
The same applies for the disabled who are declared able to work more than 15 hrs per week, they will be forced onto the lower paid Newstart Allowance and forced to look for work for 15 hours a week. Those on Disability Support Pension at the moment will be exempted, but those applying after 1/7/06 will have these new rules apply. This of course completely neglects the fact that employers do not want to hire those who have disabilities or those that have child care responsibilities that might interfere with getting the most profit out of a worker.
All these people will have to go and work for employers who will shortly have the backing of Howards new Industrial Relations laws – such as no unfair dismissal laws for small business. Meaning that people who are forced in to these low paying jobs will have to do as they are told with no protection of a union or a welfare system, because if they do not and they are sacked because of something which is regarded as their own fault then they will have to serve a waiting period to get back onto Newstart payment.
Supposedly there will be some carrots offered to get people back to work. This will mainly be in the form of incentives (i.e. cash payments) for bosses to take on workers with disabilities. No doubt there will be a few bosses milking this one for all it is worth.
The budget also allocates $210 million for child care, but this funding will not create any new places for children on child care waiting lists around the country. It will merely help subsidise those parents who have existing places. What is needed is an injection of funds to create new child care centres or create new places in existing child care centres, as well as providing decent wages and conditions for current and potential child care workers.
Other attacks for low and middle income earners include the cuts to the Pharmaceutical Benefits scheme – general patients will have to spend an extra $228.80pa and pensioners an extra $36.80 pa to get cheap or free medicines. This is on top of the previously announced increases to the Medicare safety net thresholds which will increase to $500 pa for concession and family tax benefit recipients and $1000 for singles and those earning too much to get the family tax benefit concession.
In other words people will have to spend these amounts before being eligible for the 80% rebate from Medicare. Again this is more of an impost on the poor than the rich.
Much has been made of the governments Future Fund an estimated $16 billion now with more to go into it from the sale of Telstra, money earned from this fund and future budget surpluses. The plans are to invest the monies from this fund in the financial markets – just like a super fund in order to be able to pay unfunded liabilities for public service superannuation. However as any one who has money in a super fund can tell you they do not always go up. Also the current budget surplus is the result of a windfall of revenue from company profits driven by booming coal and iron-ore sales to China.
There are no guarantees that such a windfall will continue. And with increased personal debt levels and the possibilities of interest rate increases- made more likely due to tax cuts and possible investments from the future fund- this may mean a slow down in the economy.
Howard and Costello are operating this future fund under the illusion that the boom will not go bust.
Kim Beazley’s reply to the Budget was not a reply geared to the needs of the working class. Apart from the meaningless gesture and posturing of giving lower income earners a bigger tax cut of $9 to $12pw instead of $6, his reply was squarely aimed at telling big business that the ALP , could produce the reforms that big business wanted better than the Liberal Party. There was no criticism of the attacks on the welfare system and the continued running down of health, education and other public services. Instead Beazley talked with pride of the ‘reforms’ of the Hawke -Keating years and of how it was the ALP who had pushed through unpopular neo liberal policies like market deregulation and productivity based and workplace based agreements and that it was the ALP that could deliver new ‘reforms’ that the Liberal party was unable to deliver. The ALP may be an Alternative Liberal Party but it is not a real alternative for working class people.

The only way working class people are going to have a real alternative to the Liberals and the ALP is a new mass workers party based on progressive unions, community groups and individuals within which the Socialist party would work with other like minded individuals and groups to put forward a socialist platform that would produce a real alternative to the neo liberal big business agenda of both the Liberals and the ALP. (See What We’re fighting for)


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