No, Gina, the poor aren't the ones with too much money

March 14, 2014
The “intellectual” side of Rinehart's argument is nothing more than a disguised grab for even more of the pie.

Modestly describing herself as “Australia's richest intellect”, Gina Rinehart has launched a new intervention into Australian politics that is calling for a cut in government spending and other measures to make private corporations “thrive”.

True, she is not calling for an end to government subsidies to the mining industry. She is not calling for an end to corporate welfare and she's not calling for a reduction in wasteful military spending.

She's calling on Prime Minister Tony Abbott to be more like late British prime minister Margaret Thatcher. In other words, she's calling for a big government assault on public spending, civil liberties and workers' living standards.

“Put simply, we are not earning enough revenue for all we are spending,'' Rinehart writes. “We are living beyond our means.''

It is true that Australia has a government deficit. Rinehart's conclusion is simple: we need to slash and burn government expenditure on welfare and social programs.

However, there is another alternative, which right-wing commentators don't talk about. That is to look at the revenue side of the government budget.

Former treasury secretary Ken Henry told the ABC's 7:30 that federal government revenue decreased from 26% to 23% of gross domestic product (GDP) between 2000-2001 and now.

“If we had the same revenue collections today as we had in 2000-2001, guess what: there would be no budget deficit at the Commonwealth level,” he said.

The most important reasons for the reduction of government revenue over that period are the John Howard and Kevin Rudd government tax cuts between 2004 and 2008. Those tax cuts gave the greatest benefit to workers on very high incomes and the super rich who don't work at all.

Low-paid workers may have had some reductions in income tax, but this was more than made up for by the significant increase they are paying in tax via the GST. As a flat rate consumption tax, the GST falls heaviest on the very poor and is a smaller burden on the rich, who spend a smaller proportion of their income on essential items.

So not only has government revenue decreased, there has been a huge increase in the amount that the poorest people contribute to government income.

Rinehart makes much of her support for Thatcher's comment that “the problem with socialism is that you eventually run out of other people’s money”.

The truth is that the boot is on the other foot. Rinehart wants the government to continue giving free handouts to big corporations. She doesn't want to reduce or eliminate the tax burden on workers and poor people.

In essence, what she is calling for is a reduction in the benefits ordinary people get for the tax they pay. She is the one that wants governments to spend “other people's money” on projects that benefit billionaires instead of the public good.

The “intellectual” side of Rinehart's argument is therefore exposed as nothing more than a disguised grab for even more of the pie for her and her class.

There is an important truth revealed when Rinehart — and Thatcher — rail against socialism.

Socialism is the alternative to a rampaging capitalist system that results in: unimaginable, grinding poverty for the very poorest people in the world; relentless destruction of the environment; and periodic economic crises as seen throughout Europe and from which Australia cannot escape in the long run.

It is not true, however, that socialists want to spend “other people's money”. Socialism is about returning the social wealth created by the people — not corporate parasites like Gina Rinehart — back to the people to be used for the social good.

[Alex Bainbridge is a Socialist Alliance candidate in the April 5 WA senate re-election.]

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