By Joe Montero
The big selling point in this year’s federal budget is the tax cuts. No doubt, much of Australia will appreciate having to hand over a little less of their income. This has the marking of a government, scared that it is in a terminal decline.
It is clear. The cuts are a bribe to hoodwink the public into believing that the government has changed its ways. But before we celebrate the few extra dollars in our pocket, it would be wise to look at the full context.
The second selling point, is the $24.5 billion boost to infrastructure spending. There is a big gap to be closed. More spending on transport is needed. There is no argument about this. Only that it is still not enough.
Just as important is spending on infrastructure that is linked to the growth of a sustainable economy. Shrinking our carbon footprint depends on this. So does building a modern and healthy economy. It is a pity that the government has turned a blind eye to this.
Then there is the $19.9 billion committed to home care for the aged, and the $83 million for mental health. This is all well and good. But what about funding for those not able to be cared for at home and the rising cost of health care?
Let’s look a little more on the income tax cut. It is not all good. Far from it. In the first place, it takes the dismantling of the progressive nature of the income tax system another step. It is those earning at the higher end towards the $200,000 a year mark that get the greatest relief.
Bracket creep over the years, has brought in a measure of unfairness that needs correction. But a correction does not have to cut at the concept that those who can afford to pay a bit more, should do so. The income tax system is an important means, by which a more equal sharing of the nation’s wealth can be implemented.
Here is where the smoke and mirrors really comes in. Government policies have assisted in ensuring that wage growth is stagnant, penalty rates have been cut, work continues to be casualised, all those on pensions and unemployment benefits continue to be penalised and forced to live in poverty, homelessness is growing, and government services have been pulled down across the board.
In this broader context, a hell of a lot more has been taken away from most Australians than is being handed down in this budget, and the taking is not stopping.
Another fiction is that that the income tax cut has been given, because the Australian economy is doing so well. The government claims it has created jobs. The truth is much of the job growth on paper, is the replacement of permanent jobs with casualised ones. The government claims that the economy is in growth. Much of t his is accounted for by the property bubble, the transfer of assets and the creation of debt. It is not real growth.
Government revenues have increased by $7 billion. This has more to do with rising stamp duty on properties relieving pressure on funding the States and Territories and population growth. This will pay for some of the carrot. The rest will be covered by government borrowing. The government has built its edifice on a shaky foundation.
The positive about the income tax cut on paper, from the view of the economy, is that is will release more spending. But if more disposable income is taken away by other means, this is rendered irrelevant. And this is exactly what the government is doing.
While we are on about population increase. Even on the inflated figures used, per capita GDP growth has been flat. This is important, because it shows a truer picture of how the economy is going.
The fundamental problem of the economy is, that it is stuck in the problem of a falling rate of profit. This is distinct from the amount of profit. It is important, because it distorts investment patterns in ways that cannot be corrected by the market. The budget has done absolutely nothing to address this, and the distortions will continue.
There is quite a bit of evidence about, to show a falling rate of profit has been behind the downward pressure on wages and conditions at work, has led to a growth in the monopolisation of the economy and increased the power of the biggest corporations over government and society.
The property bubble will go on being fed, until it goes too far. Australia’s manufacturing base will continue to disappear. Money will continue being made mostly by trading it, dealing in shares and other assets. Creating personal debt will continue to be a major source of profit in the Australian economy. The share going to the banks and other financial institutions will continue to rise. And all of this will be counted in as economic growth.
The budget fails to address any of these issues. On the contrary. It is designed to continue more of the same, and the shift of Australia’s wealth into the hands of the few.
If it was otherwise, income tax relief would have been funded by increasing it at the top end, and mainly by putting an end to the massive scale of corporate tax dodging. Funds at the government’s disposal would have been used to provide tangible benefits in the form of improved services.
Let’s not forget, if the government is genuine about giving the largest part of Australia a helping hand, it would have done something substantial to address the problem of housing affordability. This would really do something to raise the capacity of Australians to spend more on other things.