Budget attacks on ordinary people use scalpel instead of sledgehammer

May 13, 2017

Complaints by conservative commentators that Treasurer Scott Morrison and Prime Minister Malcolm Turnbull have delivered a “Labor budget” show how low expectations are that any federal government in Australia will deliver a budget aiming to advance genuine social justice in this country.

Media outlets typically produce guides about the “winners and losers” in a government's budget. However, by focusing on the marginal changes for different sectoral interests, they obscure the fact that we all lose when Liberal and Labor governments rule on behalf of big corporate interests.

For example, the ABC guide describes “older people” as “winners” as they will get a “one-off $75 power rebate”, which was a sweetener to get corporate tax cuts through parliament and because people who had their pensioner concession card taken from them earlier this year as a result of asset test changes will now have this measure reversed. Basically it was small biscuits.

However, the big banks are described as “losers” because of the $1.5 billion levy — out of $30 billion in annual profits — that will be imposed. However, this designation ignores that the overall thrust of the budget is 100% in line with the interests of corporate Australia, which clearly includes the big four banks.

Of course, this agenda is carried out in a way designed also to advance the political interests of the Turnbull government, which has taken a battering in recent polls.

The bankers have been squealing about the levy on banks, claiming it will result in “potential disaster” for Australia's largest financial institutions and that costs will be passed on to bank customers anyway. They have also ratcheted up the ideological campaign to get ordinary people to identify with banks by claiming that any effect on bank shareholders will be felt by all of us via superannuation funds.

This is all smoke and mirrors to disguise the fact that, as some of the most profitable corporations in the country that have been ripping off consumers for decades, the big banks ought to be brought into line.

The best way to do this would be to bring the banking sector into public ownership under democratic community control so that banking could be run as a public service rather than as a profit-gouging organised crime syndicate. That would also ensure that any profits made by the banks would be returned to the public purse to fund social services, not prop up Caymann Island slush funds — with some spare change “trickling down” via superannuation funds.

Failing that, bigger taxes on banks and other big corporations is more than reasonable — just the opposite policy of both Liberal and Labor parties.

The fuss about the bank levy also disguises the fact that a bigger slug is coming out of workers' pockets via the increase in the Medicare levy. As a flat rate tax, except for the lowest income earners, the Medicare levy is inherently unfair. The burden is felt more heavily by poor people than the rich.

Socialists have long argued that the Medicare levy should be abolished and health care should be funded out of general government revenue — as happens in Britain and many countries in Europe — which would be raised by higher taxes on corporations and very high income earners.

There are several health measures in the budget, but the Doctors Reform Society released a statement saying that “almost all of the health measures in the budget are simply partial restorations of funding which has previously been slashed”.

“While extra funding for mental health and for research in primary health care is welcome, the paltry 3% increase in hospital funding is less than inflation, the Medicare rebate freeze will still remain in part for three years, there is no new funding for preventive health, for expansion of Primary Health Care networks to coordinate the chaotic health system patients have to negotiate, for dental care, or for the myriad supportive community based programs axed by the 2014 budget’s cut to flexible funding.”

Education cuts and attacks on unemployed and welfare recipients are other ways this budget attacks ordinary people.

The budget restores some Gonski schools funding — though less than originally promised — but increases university fees and forces graduates to begin repaying student debt at a much lower income level. This slug will be felt acutely by low-income earners, since once the repayment threshold is reached, the amount repaid is calculated on total income.

Instead of increasing the miserable Newstart allowance for unemployed people — who greatly outnumber the number of job vacancies and therefore cannot be blamed for unemployment — the government is increasing the “mutual obligation” demands with the intention of penny-pinching from some of Australia's poorest. This works by either pressuring people off the dole or imposing harsh financial penalties for missing appointments.

It has also introduced a trial drug testing regime which is “poorly considered” according to Melbourne University's John Fitzgerald. This program is “unlikely to help welfare recipients who have substance use problems,” he said, with international experience indicating “these are costly programs with a low rate of positive test results”.

Ordinary workers also pay more because of “bracket creep” (the fact that income tax thresholds do not increase with inflation). John Freebairn of Melbourne University gives as an example “someone with a taxable income of $50,000 a year would pay $7797 per year in income tax”. However, “a 4% increase of income to $52,000 results in a tax payment of $8447, an increase of 8.3 per cent, and a reduction of real take-home pay.”

Finally (but not the least in importance), this budget does absolutely nothing to tackle the most important issue facing ordinary people: urgent action to address climate change, even as subsidies to the coalmining industry exceed $1 billion for the first time.

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