The Guardian May 30, 2001


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.

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