By Iggy Kim
HOBART — Slow economic growth, combined with substantial cuts in federal grants, means the Liberal minority government will be wielding a very sharp razor in the August 15 state budget.
The cuts are likely to badly affect public services and the Royal Hobart Hospital, the closure or privatisation of Rosebery Hospital, a 5% reduction in welfare spending, and the privatisation or extensive "out-sourcing" of the four major ports (all currently returning operating surpluses).
This comes after the government recently reneged on an election promise to abolish a 5% electricity surcharge, halved a $24 million assistance scheme for low-income home buyers and raised bus fares.
The state Hydro-Electric Commission (HEC) will also consider a recommendation from the State Government Prices Oversight Commission (SGPOC) to raise electricity charges for domestic users and reduce prices for the commercial and small business sectors. Despite finding that households had overpaid the controversial network charge — the highest fixed electricity charge in the country — by about $50 million in the last two years, the SGPOC inquiry focused on ways to reduce charges for small to medium-sized businesses by targeting domestic consumption. The terms of reference of the inquiry deliberately excluded big industrial consumers who use two-thirds of the power.
Following in Labor's footsteps
These cuts are an intensification of the austerity measures of Liberal and Labor state governments over the past decade.
The Field Labor government in 1989, with the reluctant support of its Accord partner, the Greens, implemented a program to ruthlessly reduce state debt and stimulate growth for industry through cutbacks, corporate hand-outs and public service wage restraint.
Since then, 20% of public service jobs have been lost. Tasmanian state school teachers are the second lowest paid in Australia, with overall spending on education, employment and training as a percentage of the state budget falling by 3% over the decade to 1994-95. Tasmanian Council of Social Services president, Phillippe Allen, told Green Left that he estimates community and welfare spending has declined by over 10%.
Field also gave away vast chunks of Tasmanian forest and mineral reserves to big business through resource security legislation.
State tax revenue as a percentage of gross state product (GSP) has diminished since 1989 from 19% to 14%, mostly in the component collected from big business. As well, the HEC has made massive donations of electricity to big business and the mining industry has paid consistently less of the electricity consumption levy each year.
New phase of austerity
The Field Labor years heralded a short period of upturn with growth in the GSP peaking at 4.4% in the 1992-93 financial year. However, the growth was short-lived, with a 1.7% reduction in GSP the following year. Recovery for the year to December 1995 was a mere 0.6%, while business investment fell by 8.7%.
The new phase of austerity is aimed at recovering profits for big business. Hence, the $3 million subsidy offer to keep the Tioxide plant open earlier this year, the rescue package for Blue Ribbon in July, and the recent $350,000 handout to TT-Line to trial a new ferry fare. As well, land tax is due to be completely phased out and payroll tax reduced over three years — all while the government is preparing to slash spending for working people.
Tasmania's proportion of national income, population and investment has been in long-term decline. The state economy relies on primary resource exports from mining, forestry and select manufacturers. These sectors are highly capital-intensive, employing less than 5% of the state's work force, with the result that Tasmania has the highest unemployment rate and the lowest paid workers in Australia.
Plenty of wealth
Although government and big business cry poor, the wealth is there. For example, Tasmania has some of the world's biggest and most productive mines as a result of restructuring over the last decade which halved the number of jobs and put miners on individual contracts to work 10 to 12 hour shifts underground.
The wood and wood products industry is the second largest exporter, making up 18.2% of the state's export income in 1994-5, while employing only 2% of the population. Increased "efficiency" is being achieved by the forestry multinationals by shrugging off some operating costs to contractors — workers' compensation premiums, for example.
In 1994-5, the forestry industry had an injury rate approaching 20%. Nevertheless, in late June, the Forestry Industry Trauma Support Group was forced to close due to lack of funding. Now the contractors in the industry want to restrict employees' ability to sue bosses for injuries sustained at work.
Speaking to Green Left Weekly, Tasmanian Green Party leader Christine Milne was emphatic that ordinary people cannot afford to sacrifice more state services. Instead, the Greens are advocating a return to the bulk power levy (which would hit big business), a further increase in mining and forestry royalties and, if these are insufficient, a progressive household levy based on affordability.
The Greens see the current minority government as an ideal framework for achieving this shift in economic priorities. The Liberals' invitation to the Greens to submit their proposals for the August 15 budget is seen by Milne as evidence of a spirit of greater cooperation in the new balance-of-power parliament which, she said, is "working extremely well".
The Greens believe that such cooperation will allow a shift in economic direction away from the resources sector to small business. They see small business, particularly in information technology, eco-tourism and gourmet foods, as the potential spearhead of an environmentally and economically sustainable recovery in Tasmania.
Ben Courtice, a delegate in the Community and Public Sector Union and member of the Democratic Socialists, argues that while Milne is correct that wealth should be taxed to fund social services, this can only be enforced by bringing both the public and private sectors under the democratic control.
Courtice says that it is naive to expect big business to allow any government to implement significant anti-profit measures. "It is therefore essential", he said "to organise working people to campaign for a government which consistently favours people's needs before corporate profit. And this has to be a nationally coordinated campaign; the problems of the Tasmanian economy are the problems of Australia as a whole."