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Issue # 1413      03 June 2009

Alternative Budget: Recovery for the people

Last month’s federal budget contained a number of stimulatory measures aimed at halting downward recessionary spiral in the economy. The government’s primary focus in the budget was on recovery for the corporate sector. The media reported it as though there were no alternatives to economic rationalist policies and profit-led recovery. But there is an alternative – one that puts the interests of ordinary people first and protects the planet – a People’s Budget.

Sackings, plant closures and bankruptcies will continue as long as people do not have the income to purchase what is produced. (See “The cyclical crisis of capitalism”, The Guardian, 27-05-09, for a description of the capitalist production cycle.)

There are a number of ways in which the capacity of people to spend, and hence raise demand for goods and services can be increased. One is increasing the income of people by raising social welfare benefits and wages. Another is by job creation.

The unemployment benefit for a single person, at $227 a week, is less than half the minimum wage and only two thirds of the age pension. In no way is it adequate to meet rent, food, energy and other bills, let alone medications, doctors’ bills and purchase of clothing. It is an absolute disgrace that in a country like Australia with all of its wealth and development that the unemployed, the victims of capitalist crisis, are denied the right to live in dignity. This obscenity is compounded by the $6 billion plus increase in military spending next year.

The aged pension, with the budget increase of $32.49 per week for singles, is a below-subsistence $336.68. The $10 for couples is just as insulting. These benefits, along with sole parent, disability, sickness, carers and other benefits, should all be raised to a minimum of 30 percent of average weekly earnings.

Such an increase would serve two important objectives: address pressing humanitarian needs and act as an economic stimulus, as their recipients spent most if not all of their additional income.

The poverty-level benefits and stringent guidelines that deny many people access to benefits are the result of conscious policy decisions. These policies have nothing to do with a lack of funds. There is plenty of money – after all the government had no trouble finding billions of dollars for tax cuts to the rich. It comes down to ideological and political priorities.

What comes first? Private profits and the US military alliance or people? The government will have spent an estimated $22 billion plus on defence in 2008-09. It has budgeted for $26 billion direct military and several billion more on indirect measures next financial year.

A reduction of 10 percent, as the Communist Party of Australia has been calling for, instead of an increase of around 20 percent, directed to social welfare instead of war preparations would make for a far more secure environment and improve the well-being of those most in need. It would put around $7 billion back into the economy, meet needs, create demand for goods and services and create many thousands more jobs than the building of a few submarines would. They would be permanent jobs.

Creating jobs

There are many other pressing social needs that could be addressed in a People’s Budget that would also result in additional, ongoing (not temporary) employment.

The public hospital system is in crisis. Two decades of economic rationalist policies have seen billions of dollars diverted from public to private hospitals The long waiting lists and nurse and doctor shortages are a direct result of under-funding. The lack of preventative health care, aged care, community and mental health services are also the result of policy. They are not “there isn’t enough money” decisions. Dental health should be fully incorporated within Medicare. The decline of bulk-billing has resulted in people putting off or going without treatment or advice, with disastrous consequences, including death.

One of the priorities of a People’s Budget would be the allocation of an immediate $4 billion to public health to address these and other pressing needs in health. This money would be found by abolishing the 30-40 percent rebate people receive on private health insurance premiums.

There is enough money to put the public health system on a sound footing with universal access to bulk billing. It is a question of political and ideological will. It comes down to whose class interests the budget serves – working class or capitalist class – people first or profits first.

The public education system has also been run down and funding diverted to the private system. This process should be halted and public funding of private education phased out. University and TAFE fees should be abolished, student allowances increased and the encroaching corporate takeover of university curricula and research wound back by increasing the funding of these institutions.

The Communist Party of Australia proposes the establishment of a National Superannuation Scheme that workers could join on a voluntary basis and roll over existing funds. This scheme would be government guaranteed, members would receive a defined benefit – a regular specified fortnightly payment, would be guaranteed for the rest of their life. Retirement income would not be affected by crashing share markets and other speculative activities of managed funds as is the case presently.

These funds would be invested in public housing and other infrastructure projects and other areas of social benefit. Under the People’s Budget industry and superannuation funds would be obliged to invest a minimum of five percent of their investments in public infrastructure – around $30 billion.

There are many unmet areas of public infrastructure, including transport and housing. Additional funding would have the immediate social benefits of providing affordable, quality housing, for the homeless and those in low incomes in particular, as well as creating thousands more jobs.

The provision of public transport to outlying suburbs that presently have none or at best an infrequent private service would remove many vehicles off the roads. So too would the development of rail freight and rail passenger services. The benefits would be many: employment, greater demand for goods and services, environmental, health and safety, as well as the convenience of having access to public transport.

Public education and infrastructure projects could be funded by such means as cuts in corporate and other tax rorts and by borrowing as the government is doing now.

One of the major differences from the government’s budget is the type of infrastructure projects and emphasis placed on the environment. For example, the budget infrastructure program spends billions of dollars on ports, rail and road transport related to a planned doubling of coal mining. Another $2 billion is allocated to “clean coal” research, at best producing results in the 2020s – too little, too late.

This money and that allocated for the emissions trading scheme in future years, should be invested in sustainable, renewable energy projects, desalination, restoration of dying river systems, and other projects to reduce Australia’s emissions of greenhouse gases and repair the huge damage that has already been done through reckless land and water use.

This should not be left to the private sector and its suckling of the public purse through tax rebates and other investment subsidies. It is a great opportunity for the state to step in and take responsibility for energy production as well as the research. In the longer term this could also generate income for the government.

Expand public sector

The government is missing out on tens of billions of dollars in profits because of its privatisation of the Commonwealth Bank, Telstra, and other services and agencies. The Communist Party of Australia is calling for an expansion of the public sector which has the means to offer permanent employment, a long history of providing apprenticeships and is far less costly and more efficient because of the elimination of layers of profit. The development of infrastructure projects by the public sector means more jobs for the same investment and better quality outcomes.

The establishment of a People’s Bank and a public insurance company with strong social charters (including low or no-fee services) would bring real competition to the industry.

The taxation system is crying out for reform. The corporate tax rate has been slashed and the higher marginal rates on personal income tax steadily reduced over two decades of economic rationalist policies. The big winners are those on highest incomes and the corporate sector. These cuts have been largely funded through freezing and restraining pensions, unemployment benefits and other social spending.

It is time for a radical overhaul of the taxation system – a higher tax-free threshold, a restructure of the marginal rates so that those on higher incomes pay at a much higher rate in the dollar.

A People’s Budget based on the above proposals would provide the basis for economic recovery for the people.

The People’s Budget would speed up economic recovery at the same time as bringing considerable relief to the people, but it cannot bring a halt to the boom- crisis-recession-recovery phases of the production cycle. This cycle is a systemic feature of capitalism, and has only ever been and can only ever be eliminated by socialism.

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