Three budget cuts we should support

October 25, 2022
Graph showing who benefits from stage 3 tax cuts
Graph: Green Left. Source: Greg Jericho/The Australia Institute and Centre for Future Work

“Stop the cuts” is the usual left response at budget time. But on the eve of the first budget to be delivered by the Anthony Albanese Labor government, there are three cuts we should support.

1. $11.6 billion a year (and rising) wasted on fossil fuel subsidies

The Climate Council has estimated the amount Australia spends on fossil fuel subsidies: $11.6 billion a year and rising. The federal government accounts for the lion’s share ($10.5 billion) of this subsidy; if it took a lead the states could be encouraged to follow the good example and eliminate the rest. The Climate Council says the money could be better spent on giving rooftop solar to 1.5 million low-income households, addressing climate change while substantially cutting their energy bills.

2. $254 billion over 10 years for stage 3 tax cuts for the rich

Treasurer Jim Chalmers revealed on October 20 that the cost of the former Coalition government’s stage 3 tax cuts (which Labor in opposition voted for after previously arguing they were grossly unfair) had blown out by $11 billion to $254 billion over 10 years. The Australia Institute has pointed out $117.6 billion of this will go to those earning more than $180,000 a year, will benefit men more than women, and “give $9,075 to the highest income earners while giving $0 to those on the minimum wage”.

The Albanese government should take note of what happened to Britain’s short-lived Liz Truss Conservative government after its attempts to introduce more tax cuts for the rich at a time when ordinary people are hurting badly as a result of rising living costs.

3. $170 billion or more on AUKUS nuclear-powered submarines deal

It was a year ago when it was estimated that the disgraceful deal made by the previous government to purchase nuclear powered submarines from the US would cost $170 billion. But every single major military arms purchase has blown out massively so the final cost could be even higher.

Defence minister Richard Marles admitted on October 10 that at least 28 major defence projects are a cumulative 97 years behind schedule, and 18 projects are over budget. Just one program, for Hunter class frigates, is four years behind schedule and costing $15 billion more than the $30 billion it was originally meant to cost. This is great news for the arms manufacturers, but this money should be spent on addressing the climate emergency and urgent social needs.

In the weeks leading up to budget night, the treasurer has been using the government debt levels (raised significantly during the COVID-19 pandemic) to fend off calls for the government to address these urgent social needs.

If you add up 10 years of fossil fuel subsidies at the current rate, the $254 billion cost of stage 3 tax cuts and $170 billion for nuclear submarines, it comes to $540 billion — more than the government's net debt, which is estimated at $515 billion.

Makes you think about the Albanese Labor government’s priorities, doesn’t it?

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