Budget surplus fixation hides a deeper crisis

Vanguard November 2012 p. 3

Whether Federal Treasurer Wayne Swan’s mini-budget will achieve a real surplus in this financial year is not really significant for the Australian people today. The extreme focus by the politicians on achieving a budget surplus is a diversion from the real important issues.

The bottom line is that Australia continues to face the impact of economic crisis, driven not primarily by this or previous government policies, but by the operation of a global capitalist economy that has led to overproduction, a relative shrinking of the market and a capitalist financial system that is integral to the cause of the crisis.

Australia’s economy is also being strangled because the decisive parts are in the hands of overseas corporations and financial institutions that do not operate in the interests of the Australian people. This has led to the decimation of the nation’s manufacturing base and is making life harder for the majority.

These problems and a legacy of privatisation of key public utilities and assets have caused a long term decline in government revenues. Forward tax estimates are $22 billion. A $16.4 billion gap is intended to be met with $2 billion from the new mining tax. Another $8.3 billion is to come from a change to company tax payment arrangements, where a company turning over more than $1 billion in a year is to pay its tax monthly instead of quarterly.

There is no issue with these measures as such. In fact, if the government was genuinely serious about building a new manufacturing base and expanding essential services to the people – affordable health services, education, housing, child care – it would increase corporations’ tax more extensively, instead of implementing the neo-liberal economic policies designed to help the big end of town.

As it is, mining companies now facing a fall in profit are likely to end up paying less than previously estimated. Company tax will also be minimal due to the practice of creative accounting, where loopholes are used to seriously understate profits and therefore avoid full payment of taxes. In addition, income tax for those on over say, $150,000 a year, is far too low. They can afford to shoulder a greater burden in difficult times. This would take the burden off lower wage workers.

People cop it once again

For the people, the worst part of the mini budget news is that $1.1 billion will be cut from the baby bonus (declining $5,000 to $3,000 after the first child); a $1 billion cut to higher education, a cut to the private health rebate, and the shutting down of the Medicare teen dental program.

All of these are driven by something else than the claimed need to balance the budget as quickly as possible. It has more to do with re-directing public funds to the corporate end of town to maximise their profits. These cuts hurt average wage earners and those on fixed incomes. There should be relief for the people, both because it is just and because it makes more economic sense to provide more people with spending power.

A government that truly represented the people would take on as its priority action to build a new economic and social foundation for Australia’s future. It would not confine itself to tinkering around the edges, but ensure real significant and lasting change. Only when the ownership and management of the Australian economy is firmly in the hands of the Australian people, can this be achieved.