above: Treasurer Wayne Swan looking very satisfied with the 2012-13 Federal Budget
In this 'Left Focus' article Labor activist Tristan Ewins examines what Labor got right in its Federal Budget; what it got wrong; and the what the Conservative Federal Opposition's response says about Liberal Party Ideology. Debate welcome!
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Tristan Ewins, May 24th 2012
Recently at this blog we discussed what would be desirable
for the 2012 Federal Budget. A few
weeks after we ask the question: Was this the ‘battler’s budget’ Swan and
Gillard have claimed it to be?; and on the other hand – have there been missed
opportunities?
Summarising the coverage in ‘The Age’ and elsewhere the
following features were notable:
Firstly there was a threadbare surplus of $1.5 billion –
with over $30 billion of savings – but nonetheless a surplus. Whether a surplus was actually necessary or
desirable at this point is open to question. On the southeast coast there appears more of a
need for stimulus rather than austerity. Bringing forward infrastructure projects there
would therefore seem advisable. Certainly achieving a surplus has loomed as a political
imperative for Labor, and despite recent (and rare) questioning of this
‘imperative’ in the media, past coverage had consolidated the impression that
consistent and continuous surpluses were equal to “sound economic
management”. Liberal claims that Labor
had not delivered a surplus since 1989-90 were hurting in the wake of that
past, basically uncritical media discourse.
On the other hand a balanced budget over the course of the economic
cycle is desirable; with debt servicing weighed against growth, improved
capacity and productivity stemming from social investments.
Some of the largest savings were made from Defence – “Cut by
$5.5 billion over four years”. Certainly
this was preferable to savings in social programs and welfare; although a
growing Australian nation holds the prospect of more self-reliance in Defence
over the long term. This also could mean
the prospect of greater foreign policy autonomy.
The Government has also saved approximately $1 billion,
cutting by half Superannuation tax concessions for income earners on over
$300,000/year: which surely was welcome, but arguably did not go far enough.
Indeed the Australia
Institute has argued that the cost of superannuation concessions has blown
out to about $30 billion a year; and Richard
Denniss specifically has claimed that $10
billion of this goes to the top 5% of income earners. (!!!) This money
could have provided a fair go for single parents; improved the shamefully
regressive ‘Newstart’ unemployment allowance by $50/week, and radically
improved the quality of Aged Care for those needing high intensity care; and
those preferring low intensity care in a more social environment. It also could
have been redirected into mental health services where the government has a
record of “robbing Peter to pay Paul” rather than sufficiently expanding
funding for all areas of real need.
Setting the ‘high income benchmark’ at $300,000/year is being far too
generous for many who are on ridiculously high incomes: and yet single parents
are singled out to be pushed on to the Newstart Allowance if they do not find
work – with the welfare of their children cast into serious doubt. The rationale is not to upset so-called ‘aspirationals’
– But arguably there is more to gain electorally by consistently and visibly
assisting low to middle income groups.
(See: http://www.abc.net.au/news/2012-05-08/swan-scrapping-company-tax-cut/3998784
; http://www.tai.org.au/?q=node/277
; and http://www.abc.net.au/pm/content/2012/s3499255.htm
)
A key theme for Swan was ‘spreading the benefits of the
boom’; and yet the mining tax was not expanded in scope or degree. Previously the Greens had been on record
claiming that the cost to the Budget bottom line, here, was in the vicinity of $100 billion over ten years. This
begs the question: What kind of
social and infrastructure investments could have been gained through a revision
of this policy? And what kind of
effective cross-subsidies could have been provided for manufacturing, retail,
tourism, education – all sectors struggling in the wake of the high dollar
driven by the mining boom? (See: http://greens.org.au/content/mining-tax-needs-review-ensure-revenue-australias-future
)
The projected cut in Company Tax has been deferred – but
should have been shelved entirely. By
‘trumping’ Abbott with a similar 1.5% levy on big business as planned with his
own paid parental leave scheme, Labor
could redirect that money to further initiatives in Aged Care, mental health or
further cost of living relief for low and middle income Australians. This would ‘back Abbott into a corner’, making
it hard for him to justify his priorities; and making it difficult for him to
impose a further Company Tax levy on top of Labor’s levy.
Money could also have been directed in future social finance
and ownership of transport, energy and other infrastructure – with the savings
from lower borrowing costs, productivity agreements with unions, and a
non-profit footing – delivering very significant savings for consumers.
Meanwhile – though Foreign Aid is rising by $300 million,
Labor’s promises to more radically increase aid have been reneged upon – at
least for the time being. This will save
an approximate $2.9 billion annually. But the question nonetheless looms: with
more far-reaching tax reform could Labor have avoided having to make such “Hard
Choices” on Budget priorities? (See: http://www.smh.com.au/opinion/blogs/the-party-line/should-a-promised-boost-to-the-foreign-aid-budget-be-deferred-for-a-year-to-help-return-the-budget-to-surplus-20120510-1yei6.html
)
Other crucial
policy areas included $1 billion over four years “to kickstart the National
Disability Insurance Scheme (NDIS)” ; “$577 million over five years to help
aged Australians remain at home” and additional payments “of up to $210 a year
for unemployment and similar benefits.”
(‘The Age’, May 8 and 9 2012)
Providing
tangible results for the NDIS ahead of the next election could be crucial in
establishing the credentials of the government as being based on more than just
‘talk and distant commitments’. So
bringing forward the NDIS as much as possible is a very welcome
development. Though as this author has
also argued in the past: the proposed Aged Care reforms while welcome do not go
nearly far enough to provide for the basic needs of some of our most vulnerable
aged Australians. More financial support
is needed for Carers; and more funding is necessary for residental care for
those who choose it – and those who require high level care and do not have a choice.
Sustainable quotas are also necessary for aged care workers and nurses;
and resources to improve quality of life for all kinds of aged Australians
suffering social isolation, financial stress, difficulty with day-to-day
living, and the indignities that come from an under-resourced, sometimes
profit-driven and under-regulated residential care sector.
Over at ‘The Conversation”, meanwhile, there has been the
observation that the Federal Budget
“includes $515.3 million dentistry package” with “$345.9 million…used to treat patients on
long waiting lists and providing other vital services to adults.” See: http://theconversation.edu.au/what-the-budget-means-for-dental-care-in-australia-6792 But the Greens were justifiably critical of
Government plans to axe the Medicare Chronic Disease Dental
Scheme, and have argued for means-testing
of the scheme instead.
However the flagship programs of Labor’s 2012 Budget were definitely its Cost-of-Living initiatives. The Labor website proudly proclaimed the following initiatives on May 8th” aimed squarely at “low and middle income families”:
- An expansion in FamilyTax Benefit A with an increase of the benefit to low and middle income families with two children to $600/year, and $300/year for families with a single child.
- A “Schoolkids Bonus” to help 1.3 million low and middle income families meet the costs of schooling: $410 for each primary school child, and $820/year for each child in high school.
- Support for
“the most vulnerable Australians”; Cost of Living Assistance for a million Australians: “$210 a year
for singles or $350 a year for couples”; with “lump sum payments will be
paid twice yearly”
- “tax cuts will be delivered in 2015‑16
for all taxpayers with incomes up to $80,000” through an increase in the
tax-free threshold”
In ‘The Age’ such
new initatives were given a price tag of about $5 billion – So they are
inarguably very significant!
The government
also stood on its record of increasing pensions in past years, promising “a new
Low Income Supplement of $300 per annum” for “Any low income households that do
not receive enough assistance through tax cuts and increases to payments to
cover their average expected price impact”. (presumably in reference to the
Carbon Tax) (See: http://www.alp.org.au/federal-government/news/helping-households-with-the-cost-of-living/ )
Imaginably this
could be the beginning of an ideological offensive by Labor on the issue of
distributive justice. For years now the
monopoly mass media have reinforced the perception that redistribution equals
‘class war’; while attacks upon welfare and organised labour apparently do
not! Abbott and the monopoly mass media
have directed salvo after salvo against the very principle of
redistribution to correct injustices inherent in unregulated laissez faire
capitalism. Facing very little criticism
or scrutiny in the media, Abbott even
begrudged the very basic social solidarity of the once-off flood tax – to
assist those effected by the Queensland disasters.
Meanwhile
important social initiatives have been dismissed in the press with the loaded
expression “cash splash” – the intent clearly being to infer economic irresponsibility
in a blatant piece of popular-psychological manipulation.
Yet as against
this cyncial and socially damaging political tactic this author remembers very
clearly former PM John Howard supporting the principle of progressive taxation
some time before being defeated by Kevin Rudd in 2007.
And a very different
Tony Abbott seemed to emerge from the Opposition Leader’s book
‘Battlelines’. The following
observation was made at the ‘Left Focus’ blog in 2010:
Interestingly, Abbott raises the opposition between
compassionate conservatism and the kind of ruthless neo-liberalism that cares
nothing for the social consequences of austerity (pp.xii-xiii). Here the author
juxtaposes the “[single-minded] cutting [of] public expenditure … striving to
deliver smaller government” to “compassionate conservatism, stressing
solidarity with those who are doing it tough” (pp.xii-xiii). By this reckoning
the “social fabric … has to be respected and preserved”, while individuals
should enjoy such circumstances that they are “empowered, as far as reasonably
possible, to live the life that he or she thinks best” (p.xii). (references
from ‘Battlelines’ by Tony Abbott)
The Conservatives
need to decide whether to pursue a mix of economic conservatism and political
liberalism; or whether to adopt a ruthless neo-liberalism which cares little
for the poor and disadvantged; and for the political and civil liberties of
citizens. It is important to observe,
also, that ‘economic conservatism’ need not imply economic liberalism, but
rather could accept Keynesian assumptions (in past accepted by Liberal
governments) on the mixed economy and counter-cyclical demand management. Yet Joe Hockey seemed to be quite clear
recently on QandA that he cared little for the traditional Australian spirit of
egalitarianism.
But for Labor
stronger action is necessary to place class faultlines and class interests in clearer
relief. The principle of class struggle
is seen by many as being discredited even on the Left – which has reverted to a
kind of modest social liberalism. But when we speak of class interests and
class struggle this need not imply terroristic Stalinism; or to begrudge
citizens their human and civil rights on the basis of class. Rather the purpose of democracy is at least in
part to set free oppositions of interest and provide a framework for their
peaceful resolution. Or where
this does not work, to contain conflict to forms of civil disobedience which do
not descend into an escalating cycle of violence.
It warrants the
question: What problem does Tony Abbott
and the Liberal Party have with workers and disadvantaged groups organising industrially
and politically to pursue their legitimate interests; Indeed – to pursue
justice, compassion, and ‘the fair go’?
And if he desires
an agreed class peace, how does Abbott suppose this is possible on the basis of
ruthless neo-liberalism – as opposed to the kind of Centrist Catholic Social
Welfarism (or a ‘Social Market’ such as exisited under the Christian Democrats in
post-war Germany) this author had hoped (but not dared to believe) he may have
been open to? *
Further, if
redistributive policies are nothing but a ‘bribe’ (as according to Abbott) what
are we to make of the ‘upper middle class welfare’ of the Howard years: and of
Abbott’s own paid parental leave which offers leave with full pay to workers on
as much as $150,000/year? (See: http://www.news.com.au/money/cost-of-living/paid-parental-leave-scheme-stays-abbott/story-fnagkbpv-1226286894077
)
For Abbott,
though, this is ‘non-negotiable’ as the polls consitently inform him he ‘has as
problem with women’…
Conclusion
Having to achieve
more but with less can drive efficiency – so there is some benefit in a
government operating under tight fiscal circumstances. Indeed, a comrade in the Socialist Left of
the ALP recently commented to me that rather than spending billions more in
areas like Aged Care that we could achieve more ‘electoral kudos’ (my term)
with well targeted and innovative initiatives.
But sometimes there
is no getting around the need for an injection of greater resources. Much of this year’s Federal Budget was just
reprioritisation – with little new money. Again: In accepting this framework
Labor will repeatedly find itself in the position of ‘having to rob Peter to
pay Paul’. In public education, aged
care, mental health, welfare, public housing, disability support and services,
and crucial transport and other infrastructure: ‘trying to do more with less’
can only take you so far. For instance:
the Gonski recommendations for Education simply cannot be implemented without
billions in new funding; nor can a sustained introduction of Medicare Dental.
By comparison –
moving initially from 100% to 75% Dividend Imputation, further cutting superannuation
concessions for the wealthy top 5% of income earners, reforming the Mining Tax,
and applying an ‘Abbott-esque’ levy on business via Company Tax – along with
other reforms – could have grown social expdeniture by 1.5% of GDP – or approximately $22 billion in new and
improved initiatives.
And yet with $5
billion of largely redistributive, social-justice, Cost-of-Living oriented
policies - this is arguably a traditional Labor Budget. It puts many of Labor’s core low to middle
income constituencies first in way we haven’t seen so much in quite some time.
Now, though,
Labor needs to turn the to source of
the Cost-of-Living crisis. Firstly, this
must include implementation of the Gonski recommendations – so low and middle
income families can feel secure sending their children to State and poorer
Independent schools – at peace in the knowledge they will not be disadvantaged,
and that there is no need to ‘go beyond their means’ in providing a private
school education. And reversing privatisation, and promoting
public housing and infrastructure for emerging new suburbs also need to find
themeselves to Labor’s ‘policy radar’ with policies that attack Cost-of-Living
pressures at their very root.
(*though for the record this author supports an
outlook of sustained class struggle; even though it is notable that the kind of
semi-corporatist structures such as have existed in Sweden provided channels of
mediation of interest to citizens across class lines)
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