NSW Treasurer Michael Costa's third budget, on June 3, included massive handouts to big business and a nasty backhander to workers.
The state Labor government has lowered the rate of payroll tax, saving big business $2.2 billion over four years, and capped wage rises for government workers, with any extra rise linked to "productivity trade-offs".
Costa claimed that the business tax cut will lead to more investment and more jobs. At the same time, wage rises of 330,000 public sector employees have been capped at 2.5% a year, despite a national inflation rate of more than 4%. Unions NSW secretary John Robertson said the government is holding the state's employees "in contempt", according to the June 4 Sydney Morning Herald.
The NSW Teachers Federation (NSWTF) has promised a state-wide campaign of strike action for its 15% wage claim over three years, according to the June 4 Australian.
Government funding of the TAFE sector remains woefully inadequate, as a result of chronic under-funding from 1997. Budget allocations to TAFE will increase by 3.7% for 2008/09, but the "actual increase for TAFE may be less than 3.2%, when the related services funds are extracted from the total and the TAFE allocation is compared to last year's actual expenditure, rather than to last year's budget figure", Phil Bradley, the NSWTF assistant general secretary, said in a statement on June 6. "Only $86 million has been allocated in 2007-08 for capital expenditure for TAFE, a cut of $1m from last year and only $1m more than in 1998/99", he said.
The Rail, Tram and Bus Union is organising a ballot of its members to take protected industrial action to win its pay claim and stop an attempt to cut 400 jobs. The Public Service Association has referred its claim for a 6.5% pay increase each year for three years to the NSW industrial commission and the NSW Nurses Association has refused to rule out industrial action in pursuit of its claim for 5% a year. Other unions representing NSW public sector workers, including the Fire Brigades Employees Union, are also running wages campaigns.
The biggest increase in spending was for capital works. While this sounds good, most of the $14 billion allocated will be spent on unnecessary projects, such as the desalination plant at Port Botany ($886 million). Meanwhile, projected spending on improvements to public transport, let alone a much needed expansion, is inadequate.
The NSW government intends to spend $3.5 billion on electricity transmission and distribution infrastructure over the next financial year. This will be a free gift to whichever corporation buys NSW's publicly owned generators, if the government succeeds in selling them off. Costa is a renowned climate change skeptic, which helps explain his enthusiasm for privatising NSW electricity generation at a time when public ownership is needed to steer the industry in a renewable direction.
Despite scientists' warnings about the urgent need to cut greenhouse gas emissions, the budget boosted spending on roads. More than $2.2 billion has been committed to fund these projects, including the controversial duplication of the Iron Cove Bridge, which planners say will have a negligible impact in reducing peak hour travel times on Victoria Road in Sydney.
Just $1.8 billion has been committed to improving the inadequate public transport infrastructure. The pre-budget hype was that the government would spend an extra $112 million on more buses to ease overcrowding. However, only $100,000 has been committed for the next financial year according to the June 4 SMH — not enough to purchase even one bus! To add insult to injury, the Labor government has committed to spend $100 million over the next four years on buses for private operators.
Funds not spent on infrastructure the previous financial year will be rolled into the 2008-09 budget figures, inflating them. For instance, hundreds of millions of dollars earmarked for reducing rail congestion in 2007-08 that was not spent have now been included in the 2008-09 budget.
An additional $11 million has been promised to fund public school maintenance. The NSWTF said this increase barely covers inflation, let alone enough to deal with the huge backlog of necessary maintenance work.
John Kaye, NSW Greens MP, criticised the budget for slashing funding, "by a massive 9% after inflation", for climate change policy and programs. "The Climate Change fund itself is losing about 4% in real terms" and "the government continues to spend more on roads than rail in an era of peak oil and climate change", he said.
Kaye said Costa fooled no-one when he lumped natural resources and environment into one figure to claim a 53% increase since 2005. "Much of the natural resources spending will be in water buy-back programs. While more water for the rivers and lakes is desperately needed, the budget ignores climate change and other essential environmental spending priorities", Kaye said.