Budget: Mean and tricky
by Anna Pha The Federal Budget presented by Treasurer Costello takes pre-election pork barrelling to new heights. It is mean and tricky, to use Liberal Party President Shane Stone's apt description of the Government and Treasurer Peter Costello. Promoted as a big social spending budget that splashes around billions of dollars for the aged, the unemployed, the environment, public education, health and rural Australia, it in reality takes with one hand while giving with the other. It is a budget for big business, and does not bother to hide the Coalition Government's contempt for working people and the unemployed. The Budget is noteworthy for what it fails to do to meet the pressing needs of the people. The much-heralded $300 payment to aged pensioners is a one-off payment. While any extra money is welcome, the $300 is totally inadequate to compensate for the impact of the GST on pensioners. It falls far short of the $1000 the Government promised a year ago. It still leaves pensioners short in future years as the GST continues to eat into their meagre pensions. The payment is a cynical attempt to buy votes, designed to put money into pockets of a section of the electorate where the Coalition has lost considerable support. So too is the raising of the tax-free threshold for aged pensioners and self-funded retirees of pensionable age with a retrospective tax rebate. (Pensionable age is presently 61.5 years for women and 65 for men.) The raising of the income threshold for retirees of pensionable age to qualify for a seniors health card will also benefit those who qualify. The evidence is there that the GST is causing considerable hardship for those on low incomes — but there is no assistance for workers, students, or others on low incomes. Instead the Government is creating new anomalies. For example, a worker slaving away for $30,000 a year will now pay $5,380 a year more tax than a retired couple on $30,000. Yet a worker's needs are just as great, or even greater with a young family to support. The unemployed come in for special treatment making it even harder for them to qualify for benefits. The Treasurer admits that unemployment will rise over the next 12 months, but fails to tackle the question of job creation, which is left to "market forces". Not one cent of the $1.7 billion package for welfare goes into the pockets of welfare recipients. It is to be used to wield the "big stick", subsidise employers and drive unemployed off the books. The Government expects to recoup more than half of it through such measures. The GST is driving small businesses to the wall, costing thousands of jobs. The Government knows this but does little to help them. The many problems associated with the GST will only be solved by repealing the regressive tax and introducing a progressive tax system based on ability to pay. While pensioners and other retirees are trying to work out whether they qualify for the tax rebate, big business has no doubts about the profits bonanza that lies ahead. Handouts for big business First there is the cut in corporate taxes, from 34 cents to 30 cents in the dollar, adding $2 billion a year to profits. Then there is the potential to make huge savings on the purchases of company cars as the introduction of full GST tax credits is brought forward for businesses — worth an estimated $700 million. The big mining corporations are being granted a cut in tariffs on imports of capital equipment for large resource projects — another $46 million handout. Big business will also benefit from the ongoing privatisation program as the government continues to sell off public assets. The sale of Essendon and Sydney Airports is expected to bring in $3 billion. The CSIRO is to sell more than $100 million of property, defence assets of more than $1 billion are also up for grabs for developers and other sharks in the private sector. Speculators stand to gain with the abolition of stamp duty on share transactions. The Government has backed down under pressure from its wealthy business mates on an earlier decision to tax all business entities on the same basis regardless of the way they are structured. This would have meant that trusts would have been taxed the same way as companies. The loss of revenue is estimated to be more than $1 billion which could have gone a long way to increasing welfare benefits. Environment hoax One of the biggest hoaxes is the promised $65 million of "new" money for the National Action Plan for Salinity and Water Quality. This is exactly matched by $65 million in cuts to other water-related environment programs. As Australian Greens Senator Bob Brown points out, "It's short-sheeting the environment." The apparent increase of $96 million in total environment spending is mostly accounted in handouts to corporations. Mining corporations, in particular, stand to gain millions for restructuring and other expenditures. "Most core programs have taken a cut, for example Bushcare (-$21.4 million), National Reserve System Program (-$16.7 million)", said Bob Brown. "The nuclear industry is soaking up environment funding — an increase of $2.3 million (33%) to a total of $9.3 million for uranium mining and supervision and research plus the environment impact assessment for the proposed nuclear waste dump. "The Howard Government's policies have allowed the axe to be taken to Australia's environment. Instead of ceasing the axe, this budget buys more bandaids." The public sector is sadly neglected with token funds thrown at health and education — all of which fail to address the fundamental questions of adequate funding and support for the public sector. No change in direction The major failings of the budget have not been headlined by the media: The fact that the budget continues ruthlessly down the same economic rationalist path as previous years. The cuts to public health, public education, and the public service continue, with the hefty fees that deny poorer students access to programs. Competition policy remains in force, the corporatisation and fee-for- service (full cost recovery) continues. The obsession with budget surpluses, regardless of the cost to the community. The transfer of the tax burden onto the backs of workers, pensioners and unemployed continues through corporate tax cuts and the GST. Many social security recipients will remain below the poverty line. * Funding cuts to childcare have not been restored. There are no measures to guarantee the security of workers" entitlements or prevent employers restructuring to avoid their obligations. * The working poor will continue to be poor. * ABC funding has not been restored. And so the list goes on and on. And after the election, if the Coalition are returned to office, the belt will be tightened even further as the rubbery, and far too optimistic economic forecasts that the budget surplus is based on do not materialise. There is so much that could have been done for the people and economy of Australia. Next week The Guardian will look at what a government which puts the interests of people first would do.