Investing in their future

May 11, 2007

Treasurer Peter Costello's May 8 federal budget was aimed at investing in the future of big business. It cements the government's privatisation agenda, further running down already neglected public services and throwing money at private-profit alternatives. It fails to even begin to address global warming, and contains a further major hike in military spending. At the same time, the government feathered its re-election bid with a rash of small to middling tax cuts.

Costello's 12th budget may well give the Coalition a bounce in the polls. There are no substantial cuts to social spending and it's brimming with small bribes for lower-paid workers.

A centrepiece of the budget is the creation of the $5 billion higher education endowment fund. The fund will provide $912 million for capital works and research facilities for universities over the next four years.

However, universities will receive grants from the fund based on their willingness to meet the government's requirements for "specialisation, diversity and responsiveness to local labour market needs", according to federal education minister Julie Bishop in the Australian Financial Review on May 9. According to Dr Carolyn Allport, national president of the National Tertiary Education Union, "In the long run, [the government's] message is a privatisation message".

Privatising education

The privatisation theme is strengthened by the government's removal of the cap on the number of full-fee paying students that universities can enroll (the fees themselves were deregulated in 2005). "With the cap on full-fee entry places removed, some courses could become completely full-fee pay entry and some universities could in the future close their doors to Commonwealth supported students", said National Union of Students national president Michael Nguyen. The government has also reduced Commonwealth funding for degrees in accounting, administration, economics and commerce, allowing universities to increase HECS fees on students to make up the gap.

In primary and secondary education, the government's solution for students with low literacy or numeracy skills is to provide a $700 voucher for private tutoring, directing further funding away from public schools and into the pockets of private tutoring colleges. "This scheme takes money out of public schools and dissipates it", said Maree O'Halloran, president of the NSW Teachers Federation.

The budget also throws wads of cash to the private school system. "Over the next five years, public schools will only receive an increase of $300 million. Private schools will be given almost six times as much - $1.7 billion", O'Halloran said. For the second year in a row, spending on education as a proportion of the budget fell relative to military spending.

Dental and health care

The budget's major health initiative is to shovel cash to private dentists and specialists. The budget substantially increases the Medicare rebate for dental work, allowing for up to $2000 in any calendar year, but only for those with a chronic medical condition.

At the same time, it ignores the fact that 650,000 people languish on dental hospital waiting lists. "As a result, most of the 215,000 people now waiting on public dental waiting lists in NSW will not be treated unless they pay for private dental care themselves", said Dr Tony Burges, president of Australian Dental Association NSW. "Children, the elderly and low-income earners who do not have a chronic illness will all miss out."

Similarly, specialists will be given financial incentives through Medicare to provide lengthier private consultations with patients with chronic diseases. No extra funding was provided to improve specialist services in public hospitals.

The childcare bribe

The crisis in the availability of affordable child care, particularly for children under two, was largely ignored by the budget. The government continues to rely on the market to provide child care, refusing to invest in these services or change fringe benefit rules to make work-based child care more attractive.

In an attempt to boost the government's electoral fortunes, the budget did, however, increase by 10% the Child Care Benefit (CCB), which is paid as an hourly subsidy on child care fees. In a blatant bribe, the government also changed the way it pays the child care tax rebate, making it payable at the end of each financial year. As a result, parents who have had children in care for the last two years will receive a lump-sum payment of up to $8000 early in the next financial year.

The slight increase in the CCB and the quicker payment of the rebate will do little to defray costs for parents in a market dominated by profit-driven childcare services. In the last seven years, childcare costs rose by 67.5%. The slight increase in the CCB is likely to fuel a further increase in fees.

Ignoring the environment

Costello's response to the global warming crisis was purely cosmetic. The government extended and doubled rebates for individual households to install solar panels. "The solar rebate, if fully taken up, will assist 14,000 of Australia's 7.5 million households and might prevent around 32,000 tonnes of CO2 from going into the atmosphere each year", said Don Henry, executive director of the Australian Conservation Foundation. "That would reduce Australia's greenhouse emissions by about 0.01%. The best available science is saying we need to reduce our emissions by 30% by 2020."

The budget put off the thorny political problem of confronting agribusiness in the Murray Darling basin, at least until 2009. The government is projecting to spend only $27 million in the next financial year to buy back water licenses. "Costello is obviously expecting the drought to end soon, otherwise the 'future' of this budget is extremely limited", Deb Foskey, ACT Greens MLA, said.

Money for war

One of the largest funding increases went to the military. An increase of $2 billion takes military spending to $22 billion for 2007-08. This increase is the largest in the 11 years of the Howard government, which is implementing the biggest military build-up since World War II.

The military spending increases are likely to be maintained into the future with $14 billion earmarked for "equipment", including a new fleet of air force jets. The budget also allocates $703 million for the Australian government's occupation of Afghanistan and $389 million for its military intervention in Iraq over the next four years.

The poor miss out

The government's major pre-election bribe in this budget is the promise of $7.2 billion in tax cuts. For the majority of Australian workers, this is - at most - a $21 per week break, nowhere near enough to make up for the slashing of allowances and penalty rates that many workers face under Work Choices.

The large tax cuts are reserved for those with annual incomes of $180,000 or more, who will receive an extra $52 per week beginning in the 2008 financial year. The Australian Greens have called on Labor to join with them in the Senate to block this second round of tax cuts. Aged pensioners, carers and those making voluntary contributions to superannuation funds also receive election-motivated once-off payments.

While privatising, pork barrelling and pumping the military, Costello's budget once again failed to address the needs of the poor. Indigenous health continues to languish at Third World standards, yet the budget allocated only an extra $30 million. Indigenous housing was boosted by $241 million, but only where land tenure is returned to governments or granted to individuals. Federal housing spending was slashed by $61 million and no initiatives were introduced to help low-income earners squeezed by skyrocketing rents.

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