The Guardian 18 May, 2005

Budget 2005–06:
Big breaks for the rich
but big cuts for the poor


Anna Pha

There was no need to fossick through the fine print to grasp the content and direction of the Howard Government’s federal budget. The message from Treasurer Peter Costello was loud and clear: the government governs for the rich and the business sector — the capitalist class.


As it pump primed corporate welfare and boosts military spending, the Government has slashed social welfare and stuck the boot hard into the poor, the unemployed, sole parents, people with disabilities, the chronically ill, Indigenous Australians — the more vulnerable the group, the harder the boots go in.

The class lines are clearly drawn. The Sydney Morning Herald summed it up quite well: “They’ll be feasting at the top [big business] end of town.” Costello makes no pretence of looking after the “battlers”, although he has the hide to finish off his budget statement with the fiction, “This budget is about sharing the benefits of this strong economic management, not just with more Australians, but with all Australians.”

This statement has fooled no one. Nor will his claims that the tax cuts announced “will assist low-income earners, boost disposable incomes, reward participation and hard work.”

Nobody took that seriously, not even the government’s most loyal commentators in the Murdoch media.

Tax cuts

The tax cuts are aimed at businesses, foreign investors and those on high incomes. Those with an income of $125,000 or more will receive a weekly tax cut of $86.68 per week. A part-time or casual worker who scrapes in $10,000 a year will receive a pitiful $80 per annum — $1.54 a week.

Just in case that was not enough, the superannuation surcharge, paid by those on high incomes, will be abolished.

Apart from denying those on low and middle incomes genuine and urgently needed tax cuts, the government’s changes to disability pensions, sole parent payments, unemployment benefits and the Pharmaceutical Benefits Scheme (PBS) are highly regressive and punitive.

Corporate welfare

Businesses will be able to feast on $1.8 billion in cuts to tariffs and taxes and lick their lips in anticipation of a new, cheaper pool of desperate forced labour. This labour will be heavily subsidised by government handouts.

Social welfare slashed

Sole parents will lose the Parenting Payment when the youngest child reaches school age and are to be forced onto Newstart Allowance (at a loss of $40 per week) and into the workforce, regardless of circumstances. There will be no grace period to train for re-entry.

Anyone deemed capable of working 15 hours a week will lose their disability pension and be handed over to the private Job Network agencies and expected to look for a part-time job — regardless of how realistic that is.

The budget does not stop with vicious cuts to the lifelines of the most needy. It foreshadows the anti-union legislation that is aimed at driving even more workers into job insecurity, poverty and desperation. It is designed to deregulate the labour market so that small businesses are beyond labour regulation when it comes to wages, hours of work, being sacked, and occupational health and safety.

They will have the freedom to exploit and take advantage of the thousands of sole parents, people with disabilities and the unemployed as they are thrown off their benefits and are forced to beg in a deregulated workforce. Small business will also be “feasting” if the legislation is passed when the government gains control of the Senate in July.

Two thirds of the $9.5 billion allocated to schools will be for private schools. The money will be conditional on the school’s “performance” and the incorporation of “values education” into the curriculum, including flying the Australian flag. “Values” means those of the Christian Right.

As state TAFE colleges are overlooked, there is a gift of $65.4 million to the private sector to set up 24 technical colleges to compete with TAFE.

Indigenous Australians face more mainstreaming, with few funds to meet their needs and enable them to manage their own affairs. There will be more “shared responsibility agreements” with remote communities where spending is dependent on behavioural and other conditions — a racist and demeaning process reminiscent of the colonial days.

PBS undermined

The government’s measures in the health sector perpetrate the obscene and totally indefensible subsidies of billions of dollars a year for the private health insurance sector, continuing to prop up a system that is unsustainable.

The PBS comes in for a special hammering, with the removal of more medications from the list, and limiting the number of free scripts the chronically ill can have.

There is nothing rational about the cuts. For example, removing calcium tablets from the PBS will save around $9 million a year, yet the government spends $131 million per annum on the treatment of fracture cases with the bone disease osteoporosis.

The PBS is being systematically destroyed in line with the demands of the major pharmaceutical corporations and the Free Trade Agreement with the US.

Slush fund for financial sector

The biggest feast of all will be had by the financial sector which is being offered an estimated $91 billion within as few as six years of the public’s money to gamble with at no risk to its own assets. This is in the form of the Future Fund. The initial contribution of around $20 billion will come from previous surpluses and the next budget surplus, along with billions more from the sale of Telstra. The fund is ostensibly being set up to fund future federal government superannuation liabilities and will be managed by a so called “independent” board appointed by Howard and Co.

Commentator Alan Kholer of the Sydney Morning Herald notes that the fund will be “under the control of a board of Liberal Party donors whose turn for a job has arrived, and then invested in the stockmarket, property, venture capital and, yes, hedge funds.” Hedge funds are the biggest investment gamble of them all.

No shortage of money

The huge handouts to the corporate sector, a forecast budget surplus of $9.2 billion and the $21.7 billion in tax cuts, mostly for the rich, and the more than $65 million a day on military, are nothing short of criminal.

So why are the aged treated as a problem? Why are public hospitals and public education in crisis? Why are the chronically ill being denied access to free medication? Why is public housing being starved of funds? Why are Telstra and other public assets and government services being privatised? There is clearly no shortage of money.

The answer is a class one. This government has total contempt for the working people. Its interests lie with the business sector, with the big financial corporations, with imperialism, US imperialism in particular.

It does not serve the working people of Australia

This situation cannot be changed by hoping for change within parliament. The struggle must begin on the ground — in trade unions, workplaces, community organisations, and whereever there are people who are being exploited or are victims of the government’s pro-business policies.

With the government gaining control of the Senate, it is even more urgent than ever for all the democratic, peace loving, left and progressive forces to work together, to build a united front to defeat the Government and replace it by a government of a new type which puts people not profits first.

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