The big lie at the heart of every federal budget

May 12, 2023
income shares of GDP Australia 1975-2022
Figures are in 2021 dollars. Total factor income equals gross domestic product less (a) taxes minus subsidies on production and imports and (b) the statistical discrepancy; averaged 90.3% of GDP. Source: ABS 5204.0 Australian System of National Accounts

There is a big lie at the heart of every budget delivered by Coalition and Labor governments alike: that it is a plan to manage the economy for the collective good of the nation.

In reality, these governments – and other institutions like the Reserve Bank of Australia – are fundamentally managing the economy on behalf of the minority capitalist class.

Even when a Labor government delivers a budget that includes a headline-grabbing “$14.6 billion cost-of-living plan,” that Treasurer Jim Chalmers claims is building a “fairer society”, it remains a budget that fundamentally serves the interests of the corporate rich.

The latest budget will not make a significant difference to rising poverty levels, according to Associate Professor Ben Philips of the Centre for Economic Policy Research at the Australian National University.

The small changes to welfare payments, Philips estimated, will add “around $2 billion a year into low and middle income families”.

However, this will be less than half the increase in taxes paid by workers as a result of the removal of the Low and Medium Income Tax Offset from July 1, which will be $1500 a year in extra taxes for many workers.

The working class will also bear the burden of the $3 billion a year rise in tobacco tax.

By contrast, the gas companies, which reaped an estimated windfall profit of between $26 billion and $40 billion last year, will pay just $3.1 billion more in the ridiculously low Petroleum Resource Rent Tax.

Labor’s budget also does not retreat from the Coalition’s notorious Stage 3 tax cuts for the rich (to cost $254 billion over 10 years from 2024).

Labor and Coalition governments have been doing such a good job managing the economy for the corporate rich that the corporate profit share of national income has been steadily increasing since the mid-1970s, while the wages share has been declining.

Green Left calculated, on the basis of Australian Bureau of Statistics data, that the total rise in profit share since June 1975 is was $6.788 trillion, while the decrease in wages share was $6.594 trillion.

This is a massive income transfer from one class to another.

How did these governments do this? By systematically reducing the right of workers to collectively bargain for better wages and conditions and by reducing welfare payments to well below the poverty line.

It was the Hawke-Keating Labor government that struck the critical blow against the power of collective bargaining, through its imposition of enterprise bargaining in 1991.

Union membership collapsed as a result, from 52% to 12.5% of the workforce and, these days, trade unions have to negotiate a legal minefield to take even the most minimal industrial action.

Workers’ collective power has been weakened to the point that, even with the low unemployment rate today, real wages are still falling.

The bipartisan commitment to economic management for the capitalist class has consequences that extend beyond social injustice, poverty and inequality.

It also means that Coalition and Labor governments systematically ignore the common interest to protect the power of the ruling class.

We can see this in the latest budget, which continues the Coalition government’s insane drive to support the United States in a war against China with the planned acquisition of nuclear-powered submarines and long-range missiles.

The common interest is also systematically betrayed by Coalition and Labor governments. While a few billion dollars is committed to helping big business take advantage of the renewable energy transition, the budget “doesn’t meet the scale of the climate emergency Australia faces” according to the Climate Council (CC).

“Climate change is already reshaping our world, the government needs to fundamentally re-shape budgets to tackle it,” said the CC’s Amanda McKenzie.

Government for the corporate rich is simply incompatible with a just, peaceful and climate safe future.

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