Labor’s budget 2012: ‘Good economic management’ for who?

For weeks, Labor Prime Minister Julia Gillard and treasurer Wayne Swan have focused on one thing: using the coming federal budget to prove that they are “good economic managers”.

But good managers for who?

The Labor government is determined to deliver a surplus and cut public debt at the cost of more public sector jobs, services and cuts even to the meagre welfare support for single parents.

This, explained Gillard in her April 19 speech to the Western Australian Chamber of Commerce and the Western Australian Chamber of Minerals and Energy, was so that the government can build up reserves so that they can, if need be, bail out big business again, just like Labor did when the great financial crisis first hit. The budget is set to deliver more tax cuts for the rich and continue the billions of dollars in corporate subsidies for the biggest polluters.

When Labor politicians proudly boast they are “fiscal conservatives”, this is what they mean.

But Gillard had to acknowledge a growing disconnect between all this talk of the current economic “good times” and the reality faced by pensioners and workers outside the mining sector.

The bigger part of our famously “two-speed economy” is, according to the latest Reserve Bank statement, “subdued, and investment intentions in the non-mining sector remain weak”.

The expected budget cuts will increase the pain for most people, yet the politicians call this “good economic management”.

If we had a government prepared to deliver good economic management in the common interest — instead of the interests of the tiny super-rich minority — we would probably see a budget that significantly raised public borrowing to invest billions of dollars in a transition to 100% renewable energy.

Beyond Zero Emissions has estimated that about $37 billion a year is needed for investment in large-scale solar power and wind generation over the next 10 years.

Some of that could be obtained by slashing corporate subsidies and tax breaks for the rich. State and federal governments pay an estimated $12 billion a year in subsidies to the fossil fuel industry. Generous superannuation tax breaks for the richest 12% cost $7 billion a year.

Billions more a year could be saved if Australia did not buy the expensive submarines, warplanes and other military resources that maintain its offensive capacity to attack and occupy other countries.

But “good economic management” for the majority would also require serious investment in repairing the public health, education, housing and welfare systems that are in tatters after decades of conservative neoliberal vandalism by ALP and Liberal-National governments.

Closing the shameful gap between Aboriginal and non-Aboriginal people also requires serious public investment.

A community and environment-first budget for 2012 would probably increase the public debt. A recent OECD report revealed that Australia has the lowest government debt of any of the 28 rich countries studied.

Gross government debt is a bit over 20% of GDP in Australia, compared with 49% in Sweden, 53% in Norway, 81% in Germany, almost 100% in the US and more than 200% in Japan.

Public social spending in Australia (16% of GDP) is also lower than the OECD average of 19.3%.

Capitalist economists often urge the public to compare the government budget to that of their own households. “You know that you cannot spend beyond your means,” they preach when they want to justify more cuts to public services and public sector jobs.

But out of the other side of their mouth their support the calls by retail moguls such as Harvey Norman to use our credit cards and go shopping for stuff we don’t need — for the “good of the economy”.

But if we take our own experience with our household budgets we know that there are good debts and bad debts. Borrowing to make a good investment for the future is fine if we can manage the repayments.

Collectively, we need to make a big investment in our common future. We can easily manage the repayments and, on top of that, these investments can create useful jobs for the hundreds of thousands who are unemployed even in this “economic boom”.

That’s the view at Green Left Weekly, an independent media project that campaigns for a community and environment-first future.

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Comments

I'm glad that Corporate tax cuts and a minor cut to our military happened. The trouble is this new budget is not the desperate radical reform we need. In harsh economic times there should be more spending. No surplus but a balance of the budget. When will we have free university? when we can try to cultivate skills here rather than outsourcing it. A huge amount of money should have been poured into Education, Health and promotion of a good society.

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