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Issue #1498      20 April 2011

All pain, no gain budget

Prime Minister Julia Gillard’s speech to the Sydney Institute on April 13 has caused concern amongst Labor MPs over how far she has lurched to the Right. Called “The Dignity of Work”, her speech forewarning of massive cuts to social welfare spending, is loaded with dog whistles, innuendo, political spin, warnings of a “formidable participation policy challenge” and “hard decisions”. She avoids saying directly what she means. Its content sinks to new lows, to the depths of Tony Abbott and Pauline Hanson.


(By Leonard John Matthews)

The choice of the Sydney Institute as her audience is quite fitting. It is an extreme Right think tank, led by Gerard Henderson and Anne Henderson – the latter is a strong preacher of budget surpluses and the evils of government debt. Gillard in her speech describes herself as being “among so many of my friends”, in “a community of reason”.

The underlying aim of these “hard decisions” is to boost private profits, slash government spending and privatisation. Profits will be increased by “cutting company tax … and increasing tax breaks for small businesses….” Labor shortages will be overcome by importing more workers (cheap labour) on 457 visas with promises of training for Australian workers.

Gillard speaks confidently as though the mining boom will last for decades and the rest of Australia can feed off it. “Good decisions now can nurture the boom so that it lasts, while making the most of the boom for our future.” Gillard is in total denial of the cyclical nature of mining booms, and ignores the serious global economic crisis which is still unfolding. The demand for mineral resources from China and India could be hit by cuts in imports to the recession-bound US and Europe. Demand from Japan will be high during the post-earthquake reconstruction period, but that will hardly last decades.

Neo-liberal myths

Gillard is obsessed with returning the federal budget to surplus by 2012-13 (ie within two years) regardless of the consequences. She uses two arguments to try and justify massive cuts:

1. adherence to Keynesian economics

2. the neo-liberal line of “crowding out the private sector”.

On the Keynesian claim she says: “The government invested in jobs in the downturn and it was absolutely the right call… If we are going to be Keynesians in the downturn, we have to be Keynesians on the way up again,” as we enter “a period of record fiscal responsibility”.

“So we will be making hard decisions in this Budget: to prevent greater pain in the long term.

“When the private sector was in retreat, the government stepped forward to fill the gap and over coming years as the private sector recovers strongly, it is the right time for the government to step back.

“If government doesn’t step back when the private sector employs more people, spends more money and builds more projects, we will be chasing the same scarce resources, driving up prices and adding to the inflationary pressures arising from the investment boom.” This is the so-called “crowding out the private sector”. In reality it comes down to a choice between public provision or privatisation. The Gillard Labor government is opting for privatisation.

“The time for government to step back is in this Budget.” The painful cuts during boom times are to social welfare, health, and other public services. The pain is suffered by ordinary working people. It is all gain for big business with tax cuts producing larger profits.

When the boom times are over and recession sets in, the government will “step forward” – not to restore the cuts and ease the pain – but to bail out the corporate sector, ensure its ongoing profitability.

Under neo-liberalism with its agenda of winding back the “welfare state”, it is never the right time to boost social welfare benefits or to expand the public sector. The neo-liberal gospel of budget surpluses forces governments, strapped for cash, to retreat from their responsibilities, to step back and let the private sector in. It is a recipe for privatisation of welfare provision, of public housing, education, health services and public infrastructure. Privatisation brings sackings, job insecurity, lower wages, loss of working conditions, deunionisation, and more expensive and poorer quality services.

Enormity of cuts

Gillard says: “We have put in place cost offsets worth around $85 billion across three years to meet the cost of key reforms. “Cost offsets” is spin for cuts - massive cuts - in people’s services and welfare benefits of $85 billion in three years. That figure is based on optimistic budget forecasts. The economy as a whole – mining industry excluded – is still largely recessed and tax returns are not flowing in at the rate expected. The cuts could even be larger!

Some of the most painful cuts will be to welfare payments, the main theme of her speech to the Sydney Institute.

The unemployed, sole parents and those with disabilities are singled out for special treatment. “Income management, improving school enrolment and attendance, tighter eligibility and smarter employment services for adults with some disability…” Described as “extensive welfare reform”, these are spin for the methods that will be used to throw thousands of Australians off benefits and force them to accept low paid jobs under the most appalling conditions – regardless of geographic location, availability of child care, transport, health or other limitations.

Gillard dishonestly draws on what she calls “our Labor values”. She is not talking about organising workers in trade unions, fighting for better working conditions and higher wages or improving job security. Quite the contrary. The reference is a cynical and dishonest attempt to equate her attack on progressive reforms of past Labor eras with basic working class values. Gillard’s values are not working class values.

Gillard, preparing the way for throwing tens of thousands of the most vulnerable people into the arms of philanthropists and unscrupulous exploitative employers, cynically claims that “everyone who can work should work….

“Friends, believing in the benefits and dignity of work is a deep Labor conviction.

“The party I lead is – politically, spiritually, even literally – the party of work…” – attempting to translate the word “Labor” into “labour”, meaning work.

“The social and economic reality of our country is that there are people who can work who do not.”

This is an insulting dog whistle to the extreme Right, a play on the “dole bludger” line. “It’s not fair for taxpayers to pay for someone who can support themselves,” she says in a divisive appeal to the lowest and most reactionary elements in society.

“The party of work not welfare, the party of opportunity not exclusion, the party of responsibility not idleness”, she continues, putting up straw men to knock down.

Behind the title of her speech, “The Dignity of Work”, lies the message that the unemployed, carers, the sick and those with a disability who do not work lack dignity. The inference is that they can work but do not wish to work. Gillard ignores the fact that the overwhelming majority of these welfare recipients want desperately to have a job.

Instead of providing genuine assistance, providing the most vulnerable and disadvantaged with dignity, Gillard is going to cut the already inadequate services that so many people on disability pensions, with mental illness or who are full-time carers, require. Genuine policy proposals to address the plight of the unemployed, the homeless, etc, are missing.

Gillard is a blind adherent to neo-liberalism; she is wedded to pleasing the likes of the financial markets, the International Monetary Fund, the big mining and other transnational corporations. Next month’s budget will be all pain and no gain for the people of Australia.  

Next article – Aboriginal Deaths in Custody

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