Labor’s big business budget and tax review
SP Newsletter No.312
Big business leaders and all the major newspapers praised Wayne Swan’s third federal budget when it was released in mid May. For ordinary people however there is very little in the budget to be happy about.
For the capitalist class this budget - coupled with the recently released Henry tax review – not only protects their profits but it also ensures that it will be not be them who have to pay for the economic crisis.
In an attempt to starve off the worst effects of the downturn, Rudd pumped billions of dollars into the economy through stimulus packages. These measures led to a $57 billion budget deficit and this debt now has to be paid back.
Despite the fact that most of the money from these packages ended up in the bank accounts of the big retail, automotive and construction companies, the bosses of these same companies now want working people to pay the debt through cuts and reduced government spending.
Swan has gladly granted the bosses their wishes by pledging to cap spending at 2% per year. This, he argues, will return the budget to surplus three years earlier than originally predicted. He has also included in the budget a whole series of cuts by stealth.
Some of the first people forced to pay will be those on welfare. Far from giving assistance to the most vulnerable, it will now be harder to get the Disability Support Pension (DSP). Many welfare recipients will be forced into low paid jobs or training or else their benefits will be cut.
The annual child care rebate will be reduced and capped while reductions will also be made to Family Tax Benefit A. These changes are expected to affect tens of thousands of people. The only money invested in welfare will be in the area of ‘surveillance’. In other words, policing the system to ensure less people are receiving benefits.
On the surface it seemed as if health was a winner in this budget with $7 billion allocated over the next four years. Unfortunately this funding is part of new health reforms that restrict hospital access and encourage the expansion of the private sector. In the long term these reforms will lead to less investment in public health.
This budget needs to be looked at in conjunction with the Henry Tax review as it includes several changes to the taxation system. The first is a reduction in the corporate tax rate from 30% to 28%. This will be a boost to employer profits and will be phased in by 2015. The other major change is the introduction of the so-called ‘Resource Super Profits Tax’.
The mine owners have cried foul that their profits are being attacked through this tax. They have threatened a strike of capital with the announcement of investment projects being put on hold, dumped completely or moved off shore. This is the real threat to jobs.
It clearly demonstrates that big business has no interest in jobs and investment in Australia, only in their own profits. The threats of a capital strike show why the mining industry should be nationalised to ensure that the massive profits of this sector are used for the benefit of society as a whole.
While the government has used populist language to claim that Australia’s resources should be ‘shared’, not one cent of this new tax will go towards improving services for ordinary people. The billions of dollars in revenue collected will be directed back to the mining companies in the form of investment in infrastructure to support their operations.
The other significant measure announced in the Henry Tax review is the increase in the superannuation guarantee from 9% to 12%. This will be phased in over the next ten years.
Again while this may seem like an improvement on the surface it is really a move designed to undermine the pension system. Instead of the state guaranteeing elderly people a decent income, workers will be expected to fund their own retirement. Employers will also expect the increase to be offset by a reduction in real wages.
The budget and new taxation measures really represent a plan to transfer wealth from the pockets of working people to employer and government coffers. The plan for reduced spending, reduced corporate tax and a reduced welfare system should not be supported as it is designed to make ordinary people pay for the increased government debt.
Swan has shown that the economic policies of the Labor Party are identical to those of the Liberals. Workers desperately need to build a political party that puts their own economic interests before those of big business.
Upcoming SP meetings
The Melbourne Branch of the Socialist Party meets every Wednesday 7pm at Trades Hall on the corner of Lygon & Victoria Streets Carlton South. Upcoming meetings include:
2/6 – Greece: Mass strikes against austerity measures
9/6 – The 1917 General Strike in Australia
16/6 – The Middle East: A socialist analysis
23/6 – The politics of the Black Panthers
For more information or for details of meetings in other parts of Australia contact our National Office on 03 9639 9111.
News links:
Britain: The ConDem coalition
http://www.socialistworld.net/doc/4297
Romania: Mass protests against EU / IMF deal
http://www.socialistworld.net/doc/4292
India: Police assault in Orissa condemned
http://www.socialistworld.net/doc/4295
Join the Socialist Party
If you agree with what you have read in our newsletter or on our website you should consider joining SP. The Socialist Party has branches in Melbourne, Sydney, Newcastle and Perth as well as members and supporters in all other states.
We are involved in trade union work and student work. We also run community, anti-war and environmental campaigns. But most of all we want to build a party that will fight to get rid of the capitalist system, the system that is at the root of all of these problems. We fight for socialism - a system that will bring an end to wars, poverty and environmental destruction. To join SP contact our National Office on 03 9639 9111 and we will send you a membership application form.
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Socialist Party contact details
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Sydney: Phone Gary on 0297287727.
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Rest of the world: Phone our International Office on ++ 44 20 8988 8760.
The Socialist Party is the Australian section of the Committee for a Workers’ International (CWI). The CWI is organised in over 40 countries across the world.
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