Magazine of Socialist Action in Australia

Wayne Swan’s ‘Costello lite’ budget

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Despite all the rhetoric Kevin Rudd and Wayne Swan’s first budget was not a budget for working families. This was a neo liberal budget full of cuts and full of incentives to the private sector. It looks after the big end of town and because of this business groups have given the budget the thumbs up.

Massive surplus

Swan unveiled a surplus of $21.7 billion for 2008-09 (1.8 per cent of GDP), Australia’s highest surplus in nearly a decade. The government estimates that economic growth in 2007-08 will average 3.5 per cent, but will slow in 2008-09 to 2.75 per cent. This is figure was revised down from the original forecasts because of higher interest rates and slower global growth.

At 4.2 per cent, inflation is at a 16 year high. Unemployment is also expected to rise to 4.75 per cent, adding 75,000 people to unemployment queues next by the middle of next year. This is hardly good news for workers.

The truth is that every dollar of new spending was matched by spending cuts which will affect ordinary people. The razor gang, led by ‘left winger’ Lindsay Tanner, made cuts of $33 billion over the next four years.

Budget papers reveal more than $7 billion in funding has been slashed across federal programs and departments over the next financial year alone. It is estimated that $2.6 billion was slashed from areas including mental illness, dental health and nursing training.

Much has been made of the tax cuts aimed at low and middle income earners. While any tax cuts for workers are to be welcomed we should do so with a sense of proportion. These tax cuts mean that workers on Australia’s average wage of $48,000 will only get $20 a week in relief! This goes nowhere to covering the increased costs of groceries, petrol, rent and interest rate rises.

The child-care tax rebate will rise to 50 per cent from 30 per cent at a cost of $1.6 billion. But this will only deliver benefits of $500 – $2500 per year to the average family. Given the fact that childcare costs are so high for ordinary people this is a mere drop in the ocean.

Spending on defence and law and order has been increased at the expense of basic services. Increased spending for the Australian Defence Force is aimed at supporting the interventions in Afghanistan and Iraq as well as in East Timor and the Solomon Islands. Australian Federal Police numbers will also be boosted by an extra 500 officers over the next five years.

Labor not serious about climate change

On environmental issues the budget was a big disappointment for those who thought Rudd was serious about climate change. The Government will only invest $2.3 billion over five years to tackle climate change. In fact there is forty times the expenditure on defence than there is on climate change, which is a much bigger threat to Australians than the threats faced in Iraq or Afghanistan.

Some of the biggest winners from this budget are the bosses in the coal industry. Not only has ‘clean coal’ been prioritised over renewable energy but the government has also set aside significant funds to pay for capital works such as new port facilities, roads, and rail to move their stock.

At the moment coal ships often have to wait off Australia’s coast for weeks to be loaded because of port and rail bottle necks. The investment of the budget surplus in new ‘nation building funds’ will pay for infrastructure projects which are aimed at assisting the coal industry to expand. With prices for coal and iron ore tipped to rise because of demand from China and India, the coal industry bosses can expect more mega profits under the Rudd government.

If you thought Rudd might use some of the budget surplus to fund the ailing public transport system, think again. Some 75 per cent of the transport budget is going to roads and only 25 per cent to rail and public transport.

The ACTU ‘response’

In between clinking champagne glasses with her Labor mates ACTU President Sharon Burrow said that “the first Labor budget in 13 years was a welcome relief”. She said that “the budget shows the government’s on the job”. If ‘on the job’ means looking out for your big business mates I suppose she is right.

Unfortunately Burrow failed to mention anything about the 1200 commonwealth public sector jobs that will go due to cost cutting. In fact the Community and Public Sector Union estimates the losses will be closer to 3200!

Also no mention that the Government has continued the funding of the anti-worker and undemocratic Australia Building and Construction Commission (ABCC) until 2010. The Workplace Ombudsman, who has some similar draconian powers, also gets an increase in funding. It seems everyone except Burrow and Blind Freddy can see that this budget is fundamentally the same as the previous Costello budgets.

Students have also been disappointed by the budget as it fails to address years of chronic under funding and neglect. Spending on higher education will actually go backwards in real terms in 2008-09. It is estimated that in the funding to universities not a single cent has been put towards restoring and protecting essential student services.

Aged pensioners were totally ignored by Swan in this budget with absolutely no increase in their weekly benefits. Currently they are living on the poverty line at $273 a week. The $500 one-off bonus is a mere token gesture when the elderly need an overall increase in their weekly pensions. The elderly are perhaps struggling more than most with the increased costs of food, rent and petrol.

The $250 million in new funding for indigenous Australia has been overshadowed by the $323.8 million pledged in 2008-09 to maintain the funding of the racist Northern Territory intervention. This will include $69.2 million to keep implementing the discriminatory welfare payment control programmes.

Slashing middle class welfare or taxing young people?

Despite Swan’s rhetoric about slashing middle class welfare by means-testing family payments, the budget papers show that the biggest savings decision was the higher tax on pre-mixed alcohol!

This tax hike, for the so called alcopops, will rake in an additional $3.1 billion over four years! Clearly this is a hidden tax on the mainly young people who consume these drinks. Rudd and Swan clearly don’t expect binge drinking to decline over the next few years as they have already budgeted to rake in the cash from these taxes.

In reality this is far from a ‘Robin Hood’ budget as most of the capitalist press would have us believe. This budget maintains all of Howard and Costello’s neo liberal programmes. At best it could be described as a Costello lite budget. The diet of cuts, privatisations, free trade and anti worker IR laws all stay under Rudd and Swan.

The types of things working families would genuinely benefit from are totally missing in this budget. A $20 per week tax break for the average worker is nothing when you consider what is possible with a $21.7 billion budget surplus. It is massive investment in public housing, public health, public education and public transport – not spin – that is required to improve the lot of working families.

If investment was made in these areas as part of a democratic plan to run society this would not only improve services dramatically but provide thousands of jobs. This could be paid for by using the huge budget surplus, ending corporate welfare and cutting military spending. This of course would require a fundamental shift away from the Liberal/Labor approach of stealing from the poor to pay the rich.

By Anthony Main


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