A surprise tax cut in this year's federal budget, released on May 13, saw the corporate media happily seize on one of the least significant elements of the Howard government's eighth budget. The question the media should have been asking is: what is treasurer Peter Costello trying to hide in this budget? What doesn't the Coalition government want us to see?
The minuscule tax cuts are just a smokescreen for some dramatic and regressive changes proposed for health and education. The changes continue the trend towards user-pays and privatisation of social services, forcing more of the costs of health care and education onto working people. At the same time, the budget flags a substantial increase in "defence" spending and tax breaks for business.
While the government maintains that it is boosting funding for health and education (after years of slashing funding), it is putting in place changes that will dramatically reduce the need for government spending in the future.
In presenting the budget, Costello argued that there was a "looming crisis in our living standards caused by our ageing population". The push for superannuation, for example, is driven by the argument that we have to "increase savings" and that governments can no longer afford to provide an age pension except, perhaps, as a "safety net" for a small minority.
It's the same with other measures of social welfare: the government argues that we "can't afford" free tertiary education or as many hospital beds as we need or improved public transport or free child care.
Since we used to have some of the things that we now "can't afford", you could be excused for thinking that Australia has become poorer over the last few decades. But since the days of free, universal education and health care, Australia's GDP has grown well more than 20% in real terms, to its current level of $739 billion or $39,946 per capita.
It is not a question of what our society can afford, but what the government, and the corporations that back it, want to spend money on. The government had $178 billion to spend in this budget, including at least $5.8 billion extra in unpredicted tax revenue. (The $30.5 billion raised from the GST, which is given directly to state governments, isn't counted as part of federal revenue.)
But the government spends our money supporting corporate Australia. PM John Howard and Costello's mates in multinational corporations got a nice bonus of $270 million in tax breaks on overseas profits. Fuel and energy rebates, another handout to business, will increase by 8.4%. Private schools will get an extra $1 billion, boosting overall funding to $4.37 billion — $60 million more than the funds allocated to Australia's 38 public universities.
The government views universities as profit-making institutions. Education is already Australia's third-largest services export, and the Coalition government wants to further streamline the sector to cater for the needs of the economy and enable a reduction of government funding in the future.
Not since 1973 have student fees played such a significant role in funding higher education as they will under the government's projections. The shift will take higher education much closer to its "vision" of a fully privatised higher education system.
The proposed changes to Medicare would see co-payments for most patients visiting a doctor increase rapidly, to the benefit of private health insurance companies. The changes continue the Coalition's policy of accelerating the demise of public health, by forcing people into private health.
Sensitive to the huge support for free public health care, the government is presenting the changes as a "funding injection". It will have a difficult time selling these changes, however, given that a May 2 Australian Newspoll found that only one in 10 people think they'll be better off under the proposed changes.
One issue that barely rated a mention in the budget was unemployment. Australian Bureau of Statistics figures for April show that almost 623,000 people were unemployed. This figure does not include those who want more work — even those working just a couple of hours a week — and those who have given up actively looking for work. Taking these factors into account, real unemployment would be closer to 15% than its already scandalous "official" level of 6.1%.
Consider how the $2.4 billion ploughed into tax cuts could have been used, instead, to create 50,000 full-time jobs at the average wage of $48,000 a year, funding an increase in teachers, doctors, nurses and social workers in the areas that most need them.
But instead of creating jobs to get people out of unemployment queues, the government has again opted to harrass the jobless out of the welfare system, leaving them on the scrapheap. While the Senate blocked the government's 2002 plans to tighten eligibility for the Disability Support Pension, Costello announced that in this year's budget, they will get around this administratively: through a new round of reviews, the government hopes to make savings of $108 million.
Military spending has been increased to $15.8 billion, up 4.7% — much more than the 3% projected increase. This includes $745 million to reimburse the military for the cost of Australia's participation in the war on Iraq.
Using what they call the "new challenges" posed by the threat of "global terrorism" as a pretext, the budget also increases funds for security, intelligence and border protection to the tune of $1.8 billion.
Thrown in with this funding is something that has nothing to do with "defence" or "security" — the further harassment of asylum seekers. The government has allocated $18 million to deter unauthorised boat arrivals and "secure" Australia's borders.
Not only is this an outrageous way to treat some of the world's most vulnerable people, this is a huge pot of money set aside for something that might not happen. In 18 months, only two boats of asylum seekers have even attempted to make the journey to Australia.
That $18 million could go a long way to funding resettlement support services for some 9000 refugees in Australia on temporary visas, and the hundreds still in detention.
Labor has little criticism to offer — it has a rotten record on "defence" expenditure. From 1983 to 1996, Labor governments presided over the biggest peacetime rearmament of the Australian defence forces: $25 billion was allocated over a 15-year period to purchase equipment and participate in regional conflicts.
What else could have been done with the $2.4 billion handed out as a tax cut, or for that matter, with the entire $4.6 billion surplus?
As ACOSS president Andrew McCallum pointed out in a May 13 media release, a tax cut was entirely unnecessary "just three years after income tax was cut by $12 billion."
He added, "These tax cuts will do nothing for jobless people — homeless people, people with disabilities, unemployed people, sole parents, students or age pensioners — who will be pushed further behind."
"Instead of cutting income tax the government should cut the billions of dollars in 'welfare' for the well-off", McCallum argues, "big discounts on health insurance, discounts on up-front university fees, and concessions for high-income retirees."
Labor has made some timid suggestions in its budget reply, including the boosting of Medicare funding, but while opposition leader Simon Crean argues that all the initiatives have been costed, he is too scared to explain where the money would be reallocated from.
This opens up a few questions. Is Labor prepared to make the rich pay for a change? Is Labor prepared to increase the company tax rate, which could raise an extra $20 billion if it was increased from 30% to 49%, the level it stood at in 1988? Is Labor prepared to scrap the 30% private health insurance rebate, which costs taxpayers a ridiculous $2.5 billion every year and hasn't eased the pressure on public hospitals? Is Labor prepared to reduce "defence" spending?
The wealthy Australian economy has the resources to fully fund essential social services such as health, education and welfare, as well as a massive program of job creation. It is unlikely, however, that either of the major parties will cut into big business profit to do so.