Our Common Cause: Their budget priorities and ours

May 17, 2008

"Here is a government that has given us a guarantee that working Australians all get a look in, not just the big end of town", said Australian Council of Trade Unions president Sharan Burrow of federal Treasurer Wayne Swan's first budget.

Oh, really?

Just how much have "working Australians" gained from this budget, and just how much has the big end of town paid? Swan dressed up the core of the budget as the $55 billion "Working Families Support Package", made up of $47 billion in tax cuts over four years and $8 billion in help with child care, education, housing affordability and extra payments to carers.

But we can discount $31 billion of these "tax cuts" ($7.1 billion in 2008-09) because this simply returns extra tax lifted by tax-rate thresholds not being indexed ("bracket creep").

The real gains that people will feel from the budget then come down to: removal of the Medicare Levy Surcharge for singles earning between $50,000 and $100,000 and couples earning between $100,000 and $150,000; increasing the Child Care Tax Rebate from 30% to 50%; a means-tested 50% refund on eligible education expenses for primary and secondary school; the "teen dental plan" plus some assistance to first home owners and "eligible senior Australians".

From these payments, a couple on $85,000 with two preschool children would gain around $1500 a year. The biggest gain would be for a couple earning a combined income of $105,000 with two preschool children — leaving aside the smoke-and-mirrors "tax cuts" of $1650, they would gain an extra $2928 a year.

The "demographic" that gets the best result from the budget is the 100,000 voters in the marginal seats who deserted the Coalition over Work Choices last year: swinging "Howard battlers" have become Swan's "working families".

But how much did others "get a look in" with Swan's budget? The country's million pensioners, who have become poorer over the past two years because of rises in the price of essentials like milk, bread, fruit, vegetables and fuel, get no pension increase but only an improvement to the indexation mechanism from here on. Was PM Kevin Rudd really surprised to see Melbourne pensioners demonstrating half-naked in the streets?

And Aboriginal Australia? Here the level of funding — an additional $718 million over five years — falls far short of meeting even the government's own goal of "closing the gap" in Indigenous disadvantage and life expectancy. Aboriginal Legal Services, which sought a 30% increase in funding before the budget, find themselves with a 6% cut in real terms.

And let's not forget the increase in the number of unemployed people (up to 469,000) that Wayne Swan's "counter-inflationary" budget will help put on the streets.

What pain and suffering did Swan visit on corporate Australia? Apart from the decision to scrap the $2.5 billion tax exemption on light crude oil for Woodside Petroleum and five other resources giants, nothing. In fact, global finance is laughing — the tax rate for overseas investors in certain managed investment funds will fall to 7.5% from the present-day company tax rate of 30%. The same bonanza will apply to Australian funds investing overseas.

The vast bulk of the savings achieved ($40 billion over four years) will go to the Building Australia Fund, Education Investment Fund and Health and Hospitals Fund. How much these savings will actually benefit future generations of working people remains to be determined. Will they go to building really needed infrastructure or more roadworks and federal versions of Sydney's Cross-City Tunnel and airport rail link? Will they turn into trust funds for the big infrastructure corporations like Leighton Holdings and other potential carpetbaggers?

A large part of this surplus should have taken the form of a Climate Change Sustainability Fund, vastly expanding the paltry $500 million to be devoted to developing renewable energy sources.

A budget really directed at helping "working Australian families who are doing it tough" would have been completely different to Swan's budget. It would have slashed military spending, targeted the obscene increase in corporate wealth and eliminated the $9 billion in subsidies fossil fuel industries receive.

The $60-$80 billion which that approach would make available could be used where it is most needed — for Indigenous Australia, the 2 million people still beneath the poverty line, quality public housing, health, education, transport, child and aged care and education, and to funding the most rapid shift possible out of this country's carbon-intensive economy.

[Dick Nichols is the national coordinator of the Socialist Alliance.]

You need Green Left, and we need you!

Green Left is funded by contributions from readers and supporters. Help us reach our funding target.

Make a One-off Donation or choose from one of our Monthly Donation options.

Become a supporter to get the digital edition for $5 per month or the print edition for $10 per month. One-time payment options are available.

You can also call 1800 634 206 to make a donation or to become a supporter. Thank you.