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Issue # 1399      18 February 2009

End privatisation, build the public sector

The Rudd government’s $42 billion stimulus package passed through the Senate last Friday, with the support of the five Greens senators, South Australian independent Nick Xenophon and Family First Steve Fielding. The Coalition were politically left out in the cold.

When Senator Xenophon indicated that he was voting against the package on Thursday night, the government was forced back to the negotiating table. Without opposition support, the government needed the support of the other seven Senators.

The government agreed to accelerate the buy-back of water licences in the Murray-Darling basin and other water policy measures. This involves bringing forward $500 million of spending already scheduled for 2012 and 2013.

The deal also includes funding for stormwater harvesting and commits $200 million to community water planning. “This is a first for Australia. We hope this will support community planning projects in some of the hardest hit areas of the Murray Darling Basin – bringing expertise in planning, water management and sustainable agriculture together to support local communities to weigh up their options and develop a shared vision for the future,” said Greens Senator Rachel Siewert. Ten million dollars of new money will be provided for a bioremediation program to rescue South Australia’s Lower Lakes and create more than 100 local jobs there.

“The Greens have secured a commitment that the $14 billion schools infrastructure spending and the $6 billion for social housing will result in buildings designed for energy efficiency, helping the most needy Australians save money as well as reduce their impact on the climate,” said Greens deputy leader Senator Christine Milne.

The government agreed to an additional $435 million Local Green Jobs package to create over 10,000 new jobs for local unemployed people. Councils will be able to apply for one-off grants for the construction of local infrastructure to improve community amenity. Some $550 million has been won for the reopening of the Local Community Infrastructure Program due to the efforts of the Greens and Senator Fielding.

An initial $40 million has been agreed to for cycleways in Australia’s major cities, with the aim of reducing traffic congestion and cutting pollution. This is to be followed by further investment through Infrastructure Australia.

Apart from the Murray-Darling basin projects, the additional commitments will be funded by reducing the tax payments for individuals and one income families by $50. As a result, tax payers with an annual income of up to $80,000 will receive $900 each, for incomes between $80,000 and $90,000 it will be $600 and then up to $100,000 the sum of $250.

Cash payments to farmers, the back-to-school child bonus and training payments will be $950.

The stimulus package is similar to those being introduced in Europe and the USA and is in line with calls by the International Monetary Fund for temporary, timely and targeted measures. Temporary is the major weakness in the package.

This package will not save Australia from recession or make serious inroads into unemployment. The government itself is predicting the creation of 90,000 short-term jobs. Although of great value to local communities and the environment, the additional green and job-creating measures negotiated by the Greens and other senators, will not make any indent into overall unemployment.

In addition to an immediate stimulus, medium and long-term measures are required to assist in sustaining the purchasing power of the community and for job creation on a large scale.

The question of purchasing power can be addressed by giving age pensioners, carers, unemployed and other welfare recipients an immediate, ongoing increase in their benefits. Their needs are great, struggling for survival on a day-to-day basis below the poverty line, and they will spend every cent they receive and continue to do so in coming years.

As for job creation, the public sector is the most efficient and socially beneficial area for allocating funds. The for-profit private sector has proven time and time again to be more costly, less efficient, less reliable and offering poorer quality of services.

Government departments should not be treated as businesses. They exist to provide services to people and business, and to assist government in its affairs. The old public works departments that built roads, schools, hospitals, public housing, etc, have been quietly wound back and dismantled, and their work handed over to the private sector at great cost and wastage to the taxpayer and community. The public sector was once a major employer of apprentices. The private sector employs fewer people for the same dollar amount.

A 10 percent cut in Australia’s military spending, which is over $60 million a day, redirected to hospitals and schools and pension increases would provide greater security and many more jobs than it does now. The bulk of these cuts could be achieved by cutting spending on fighter planes, weapons and other military purchases from the US and withdrawing all Australian military forces from Afghanistan and Iraq.

Job creation should be centred around rebuilding the public sector, and restoring the public sector as a provider of public facilities, infrastructure and services. That is where the public funds in the Future Fund should be directed, and where superannuation funds should be mandated to direct some of the savings they hold.

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