On February 3, the federal government launched its second economic stimulus package of $42 billion, to be spent on special grants to individuals, businesses and schools.
Rudd's $42 billion package faces delay and possible amendment in the senate. The Coalition has vowed to vote against the package, while the Greens have promised to take "a constructive approach" to the package, Greens leader Bob Brown said on February 4.
Brown particularly questioned the government's estimated costing of more than $2 billion for defence housing in the package.
The Rudd government claims that its "Nation Building and Jobs Plan" will "support" up to 90,000 jobs over the next two years. At the same time, it expects unemployment to increase to 7%, with a further 300,000 people losing their jobs by mid-2010.
The larger part of the package — $14.7 billion — will go to fund building works at schools. Of this, $12.4 billion will be spent building new facilities at all primary schools in Australia — including those that are privately owned.
In a gift to some of the wealthiest parents in the country, almost $5 billion of the funds will go to non-government schools, according to the February 4 Melbourne Age.
"We acknowledge that the government's substantial investment in capital infrastructure will greatly benefit independent school communities across Australia", Independent Schools Council of Australia executive director Bill Daniels said on February 3.
Australian Education Union national president Angelo Gavrielatos also welcomed the government's package. However, the funding is a one-off grant and does nothing to redress the ongoing shortfall in federal funding for government schools.
"Public schools require an additional $1.4 billion [of recurrent funding] to restore the 1995-96 funding share of Commonwealth funding", Gavrielatos said on January 16.
The second largest part of the stimulus package is in the form of one-off cash handouts to working people and parents. Payments of up to $950 per working person and $950 to parents for each school-aged child will undoubtedly be welcomed.
However, when coupled with the Rudd government's call for "wage restraint", which will only lead to falling real wages, it's unlikely that the payments will have a lasting impact on the situation of many workers facing increased financial stress and declining job security.
Nothing for unemployed
In a slap in the face to the growing numbers of unemployed, the government has again offered no financial relief to those without a job. "ACOSS [Australian Council of Social Services] is concerned that those most affected by the downturn have received limited support in the stimulus package", ACOSS CEO Clare Martin said on February 3.
"It is only fair that people who are unable to find work get adequate assistance and support and ACOSS has been urging the government to increase unemployment payments by $30 a week", Martin said.
Other features of the package include a commitment of $6.6 billion to build 20,000 new public houses. While this is undoubtedly positive, it is unlikely to significantly reduce the 200,000-strong waiting list for public housing identified by the Australian Institute of Health and Welfare on January 27, as the list will only grow longer as unemployment numbers rise.
PM Kevin Rudd gave his stimulus package a green tinge, by including a $3.9 billion fund for owner-occupiers to have roofing insulation installed, or to receive a $1600 rebate on the installation of a solar hot-water service (but not both). Landlords will also receive assistance in installing insulation in rental properties.
The government claims that the plan will reduce CO2 emissions by 49 million tonnes, according to Newmatilda.com.
The package also pledges $890 million to roads and "community infrastructure" — but nothing to the development of sorely needed public transport infrastructure.
Friends of the Earth spokesperson Cam Walker told Green Left Weekly that he welcomed the promised insulation and solar hot water spending as it would be "job intensive and hopefully lay some groundwork for the transition we do need out of industries like coal and into renewable industries".
Walker went on to criticise the government for its spending on roads at the expense of public transport, however, arguing that it showed the government was pursuing "economics as usual — investing in roads, while neglecting the long-term sustainability investment they need to put into the country's infrastructure".
Labor's package gives business a $2.7 billion handout in the form of tax breaks for the purchase of equipment. In addition to existing offsets for depreciation, companies will be able to claim a special 30% tax rebate for any equipment (valued over $2000 for small business or $10,000 for large) that they buy before June 30.
Profits and jobs
Rudd's post-Christmas package consists largely of a gift to the corporate end of town — particularly to developers and the construction industry.
More than $26 billion of the package will be used to pay for private companies to build public houses, school buildings and roads and to install insulation and hot water systems.
The underlying assumption is that the extra money and new projects will encourage construction and manufacturing industry bosses to keep staff and even employ more.
Full-page ads from Myer and David Jones department stores in the February 4 Sydney Morning Herald (both of which have shed jobs, blaming the global downturn), suggest how they hope the government's $12.7 billion in cash handouts might be spent.
This is where the 90,000 jobs that are to be "supported" are expected to come from. The expectation is that more money for business (whether through direct government investment or consumer spending) will mean more jobs.
However, there is no guarantee.
"We need to see policies that deter employers from laying off workers. It's not good enough to give new tax breaks or taxpayer support to business with no strings attached", Australian Council of Trade Unions secretary Jeff Lawrence said on February 3.
"Too many employers are more concerned about their profits and the interests of their shareholders instead of being concerned about their employees. Some employers are too quick to sack people at the first sign of economic trouble and others are using the global crisis as an excuse to cut pay or reduce the rights of their workers", Lawrence said.
There is nothing in the Rudd government's $42 billion spending spree that requires bosses to take on more workers, or even to keep those that they have. Industry bailouts paid for by the Hawke Labor government in the 1980s gave millions in taxpayer dollars to BHP and the car manufacturers. Instead of retaining jobs, these companies used the money to restructure and shed staff.
Neoliberalism?
In a much-discussed article written for the February issue of Monthly magazine, Rudd lays the blame for the current global financial crisis on neoliberalism. Nevertheless, his promise to restore the federal government's budget to surplus as the economy recovers comes right out of the neoliberal handbook.
While predicting federal government budget deficits of $118 billion over the next four years, Rudd promised to "deliver budget surpluses, on average, over the course of the economic cycle" on February 3. The government would do this by: "banking any increase in tax receipts associated with the economic recovery, while maintaining its commitment to keep tax as a share of the economy on average below the level it inherited; and holding real spending growth to 2% a year."
While sounding off against "extreme capitalism" Rudd's formula is for more of the same. While happy to throw $42 billion to corporate profits, he remains an "economic conservative".
While many may feel buoyed for a while by the extra cash, it's working people in Australia who will pay for the package in the longer term: whether as increased inflation in response to increased unmet demand, lower wages as a result of Rudd's call for "wage restraint" or falling government services as the government slashes spending to pay for the deficit.