- by Anna Pha
- The Guardian
- Issue #1961
Women, aged care, and jobs were to be the focus of the 2021-22 federal budget – or so we were led to believe, prior to its release. Women, aged care, and jobs are the sales-pitch façade for what is an election budget. Putting aside a few token measures, the main thrust of the budget is pro-business. These measures are sweeteners that will not last. When the sugar coating comes off, it will be back to business in pursuit of a budget surplus based on harsh austerity measures.
“Australia is coming back […]. Our plan is working,” a smug Treasurer Josh Frydenberg claimed, as he played down the massive $151 bil deficit. Not that a deficit is necessarily a bad thing – it depends on what it is spent on. For example, the more than $40 bil per annum spent on war preparations, the millions more in tax cuts for the rich, the $20 bil in tax concessions for the corporate sector, and fossil fuel subsidies do not justify running up a deficit. But these are the real focus of the budget.
Such measures are evidence that the Coalition government is still pursuing its neoliberal agenda and still as subservient as ever to US imperialism. The main thrust of the budget is a private-sector led, fossil-fuel driven recovery. The budget deficit and accumulated debt is recognition that stimulatory measures are still required to lift the economy from crisis.
The unemployed are still condemned to poverty, as they wait for crumbs to trickle down from the rich and big business.
Iron ore is keeping the Australian economy afloat. In the past twelve months, the price has soared from US$87 to US$230 (AU$112 to AU$295) a tonne, primarily due to high demand from China and Brazil’s present difficulties. The underlying economy, iron ore aside, is not the rosy picture presented by the Treasurer.
The Treasurer boasted how well Australia had done economically compared with other industrialised countries. This would not have occurred without pressure from the trade union movement to provide employees of businesses affected by the pandemic with JobKeeper and an increased JobSeeker. This reduced job losses and kept many businesses going.
The number on JobKeeper peaked last September at 3.6 mil. Many of its recipients would otherwise have been deemed officially unemployed. These programs demonstrated the importance of consumer demand, of workers and the unemployed having money to spend.
ASSUMPTIONS FLAWED
The core budget assumptions about unemployment and economic growth are relatively rosy. Unemployment is forecast to be down to 4.75 per cent by 2023-23 and 4.5 per cent the year after – both below pre-pandemic levels.
Real Gross Domestic Product (GDP) growth is expected to rebound to 4.25 per cent in 2021-22 and then settle down to about 2.5 per cent thereafter. Given we are unlikely to have the population growth of the pre-COVID era, that’s a relatively high rate by recent standards, pleasing economic commentators.
The government is relying heavily on consumer spending to stimulate the economy. It is not doing this by increasing wages or pensions. It is relying on its “plan” for job creation which translates into the whims of market forces. This is centred on infrastructure spending, and subsidies and tax concessions to the private sector.
It ignores the link between higher wages and an increase in consumer demand, which in turn drives investment and job creation. It has not learnt the lessons of the pandemic and the positive economic impact of JobKeeper and JobSeeker.
It also fails to recognise the role job security plays in consumer confidence and spending.
The budget also assumes that borders will open by the middle of next year and that everyone would be vaccinated by the end of the year – by no means assured.
WAGES AND JOB SECURITY
The budget forecasts that workers cannot expect real wages growth prior to 2024-25. In real terms wages are forecast to decline over the next three years when compared with forecast rises in the Consumer Price Index (CPI).
Casualisation, labour hire, the gig economy, and job insecurity are not addressed. The government turns its back on low-income workers. Prime Minister Scott Morrison’s “Have a go to get a go” underlies the government’s attitude to workers and social security recipients.
Frydenberg continues to ignore the Reserve Bank of Australia’s pleas to increase wages as a means of stimulating the economy.
WOMEN
Last year’s budget was deservedly criticised as neglecting women. The government bungled the handling of a series of rape, sexual abuse and harassment allegations within its own corridors. The government earned anger and dissatisfaction from women around Australia, even within its own ranks. With an election on the horizon, women needed to appear to be high on the Coalition’s agenda.
The budget allocates $3.4 bil in funding for women over four years with the stated aim of improving women’s safety and economic security – less than five per cent of total new expenditure. Much of this spending is short-term, pre-election.
Frydenberg makes unsupported claims about “ensuring Australian workplaces are free from sexual harassment.” The government can’t even do that in the parliamentary bubble.
There is an allocation of $164.8 mil in financial support for women escaping family and domestic violence, including a trial of $5,000 assistance for women fleeing to safety. This is a start in the right direction but not enough.
Domestic violence services will see an increase of $250 mil per year to $1.1 bil, but this is reduced in later years. Clearly, it is a pre-election ploy, not a serious commitment.
The $1.7 bil allocated to early childhood education and care takes up half the allocation for women, and most of the benefit will be gained by families on higher incomes. (See page 4 for details.)
There is a government-backed scheme for sole parents (the overwhelming majority of whom are women), to be able to enter the housing market with a two per cent deposit. But how many low-income women, struggling to pay for rent, childcare, and day-to-day bills could save two per cent? Forty percent of single mothers struggle below the poverty line, as they rely on social security as their primary source of income. No mention of public housing.
Housing prices continue to rocket with combination of low interest rates and investors pouring into the market. Housing has been commodified, rather than seen as a human right.
The budget abolished the $450-a-month earnings threshold for superannuation payments. An estimated $4.7 mil in additional savings will flow into super accounts for 200,000 low-wage women. While this is a positive move, it is not enough. Women’s median super savings are around half that of men’s, and some women retire with no super at all. The measures fail to address the inequalities within the superannuation system, which run deeper than the gender divide. Nor do they tackle the rorting of the system by the wealthy.
CRUEL AND PUNITIVE
The $671 mil cut in income support for newly arrived migrants stands out as especially objectionable. As of 1st January 2022, new residents will have to wait four years before being eligible to apply for welfare payments.
$200 mil will be slashed from employment services which are already failing. There is no attempt to restructure and return them to the public sector, boost employment, cut back on contracting out the work of public servants. Outsourcing is far more costly as layers of profit are built in and there is no transparency or accountability as contracts are “commercial in confidence.”
The economy was sliding into recession prior to the pandemic. Structurally, there was a heavy reliance on visa workers in construction, tourism, aged care, health, and other areas. International students and tourism were other major contributors to the economy. Labour for these mostly low-paid jobs largely dried up with border closures. If the borders do not open, what then of the economic forecasts?
The government has found $467 mil over the next two years in additional funding for onshore immigration detention and expansion of the Christmas Island detention centre.
HEALTH
There are a few token, inadequate measures such as a small increase in the Medicare rebate for doctors in regional and remote areas. There will be $107 mil in cuts over the next four years in MRI and a number of other Medicare claims.
NDIS
Prior to the budget, Prime Minister Scott Morrison warned that costs of the NDIS had to be reined in. The disastrous and cruel system of independent assessments was introduced to do this. The assessors were doing their job, cutting costs and reducing levels of care. There was such an uproar that the government was forced to suspend the independent assessments. But it has not given up on the idea.
The budget makes a relatively small increase in spending on the NDIS, but there is no doubt that following the elections, a Coalition government would return to “reining in” costs at the expense of people’s needs.
In the eyes of capitalists, people with disabilities are not highly productive for exploitation in the profit-making process – not worth spending a lot of money on.
EDUCATION & TRAINING
Public universities were hit hard during the pandemic when international student numbers declined, and the government refused to pay them JobKeeper. They had become heavily reliant on international students as a means of addressing shortfalls in government funding. An estimated 17,000 staff lost their jobs. Courses were shut down. At the same time private universities received JobKeeper. Yet, the budget finds $53 mil for the private sector.
Since 2013, TAFE has suffered over $3 bil in funding cuts. The budget continues this trend with new funding directed to the private sector.
There is support for 70,000 additional apprenticeship and training places bringing the total to 170,000. However, these apprentices will not be ready to meet skill shortages immediately. The funding includes 5,000 additional gateway services to women and in‑training support services for women commencing in a non‑traditional trade occupation. That is 5,000 places out of 170,000 earmarked for women!
Just how much of that money flows to TAFE or to private VET colleges remains to be seen.
The budget cuts funding for domestic students at public universities, further decreasing quality and making it harder to run the more expensive courses such as the sciences.
TAXATION
The government is extending the low- and middle-income tax offset at an estimated cost of $7.8 bil. It was set to end, which would have seen its estimated 10.2 mil workers facing a tax increase – hardly a wise political move just before the elections. The tax offset is graduated according to income for workers on up to $126,000. Individuals receive up to $1,080 and couples up to $2,160. There is no guarantee that this will continue after the elections if the Coalition is still in office.
In 2018, the government announced three stages of income tax cuts. The third stage, totalling $130 billion in cuts, is slated to commence in 2024-25, although the government previously failed to get the third stage through the Senate.
“[…] almost a third of the [third stage] benefit goes to the top ten per cent of taxpayers and the top twenty per cent will get more than half of the benefit. At the other end of the distribution the bottom ten per cent gets none of the benefit while the bottom twenty per cent gets less than one per cent of the benefit,” Matt Grudnoff of The Australia Institute said in May 2019.
Business is also the beneficiary $20 bil in tax cuts through such means as rapid depreciation of capital spending and various subsidies including for fossil fuels, and “digital innovation.” The apprenticeship program also provides additional subsidies.
JOBS
The government’s jobs “plan” is based on the additional funding for training and $15.2 bil in new commitments to infrastructure projects across Australia. Almost all these projects are roads and highways to carry extra fossil-fuel driven vehicles. There are a few rail projects.
Job seekers will face a self-service digital portal in the place of Jobactive, saving the government $1.1 bil, costing an unspecified number of jobs, and creating even more frustrations and anxiety for many unemployed.
There is no job creation plan as such. It is left to the “markets” – the anarchy of the profit-driven private sector.
CLIMATE CHANGE & ENVIRONMENT
There are a few token allocations for the environment and climate change measures are basically limited to hydrogen hubs and carbon storage. Serious investment in proven renewables miss out. Instead, there is a commitment of an additional $58.6 mil to subsidise a gas-fired recovery.
Just prior to the budget, Minister for Resources, Water and Northern Australia Keith Pitt vetoed a $280 mil loan to a Queensland wind farm because he claimed that this would not help deliver lower prices to the national electricity market!
AGED CARE
The government’s aged care package fails to implement the Royal Commission’s recommendations. There will still be no requirement for all workers in the sector to be qualified. Staffing ratios are not specified. The additional $17.7 bil over five years – $3.54 bil per annum – falls disgracefully short of the estimated $10 bil per annum required.
No conditions are placed on the additional funding that residential centres receive. There is nothing to stop them pocketing the money as profits. This is not the “once in a generation” overhaul of the sector promised by the Health Minister Greg Hunt. (See page 4)
Next Week: A People’s Budget – what the government should have done, what the Communist Party of Australia would do.