By Pip Hinman
MELBOURNE — On the eve of the Kennett government's second mini-budget, due on April 6, the Victorian Council of Social Service has called on the government to target the rich rather than the public sector and capital works.
Victoria spends less per capita on community services than the state average, according to a recent audit on state finances, yet the Coalition government is planning the biggest public spending cuts in the state's history. In its bid to reduce the state's $1.9 billion budget deficit, it plans cuts to all departments of at least 10% and increases in state levies and charges on public utilities of as much as 66%.
Over the last couple of weeks, the premier and his treasurer, Alan Stockdale, have attempted to soften up the public before the next instalment of the government's Thatcherite program. The press has all but announced the final details of the projected cuts.
In order to reach its target of eliminating 20,000 public sector jobs by August, the government intends to shed a further 7000, with education, health and welfare the prime targets. Stockdale has attempted to rationalise a further $250 million cut to education by pointing out that Victoria has more schools per square kilometre than NSW!
Karen Batt, vice president of the State Public Services Federation, questioned the government's concern about the unemployed when jobs are disappearing at a rate of knots. She told 91×ÔÅÄÂÛ̳ Weekly that cuts of 8-10% across all government departments were expected and that some, such as the Department of Consumer Affairs, may well be facing a 35% cut.
In an interview with the March 31 Age, Stockdale said that the government intends to eliminate the state's deficit by the end of the year. Set to rise are stamp duties, gas and electricity charges by at least 10% and water rates by up to 66% to the average household consumer.
According to VCOSS executive director Rob Hudson, many of the 1 million Victorians dependent on pensions are already living without electricity and other essential services because they cannot afford them. Moving to a user pays system will only exacerbate these people's desperate circumstances, he said.
As several public servant chiefs were given secret pay-outs of more than $100,000 each, the government is preparing to reduce superannuation entitlements of public sector workers. With a superannuation debt of some $19 billion, the government wants to bring its superannuation more into line with private sector schemes, which often are linked to the investment performance of the fund and are not indexed for inflation.
SPSF officials have vowed to fight cuts to superannuation entitlements. SPSF general president Key McVey said that super benefits are a basic part of public servants' remuneration and a necessary compensation for accepting lower wages.
The VCOSS report slams the government's strategy of raising revenue from the lowest income sector. It points out that the increase in government taxes and charges, including the $100 state deficit charge levied on all property owners, will fall most heavily on those who can least afford it.
(Businesses can claim the levy as a tax deduction, but individual home owners cannot. Further, the local government minister has also announced that landlords have the legal right to pass the $100 state deficit levy on to tenants through rental increases.)
A VCOSS analysis of the impact of the raised charges and levies reveals that pensioners with an annual income of $9586 now spend 16.4% of their income on state rates and charges, compared to a state government minister on $114,000 who spends only 2.1%.
"To be fair and equitable, increases should be based on people's capacity to pay, and take into account the very real hardship experienced by pensioners and beneficiaries."
According to VCOSS, there is an unprecedented demand on government and community-based services as a result of the recession: emergency relief accommodation agencies report an average increase of more than 150%; family counsellors report an average 30% increase in demand, with a four week waiting list. Public housing waiting lists have grown from 38,000 to 55,000 over the past two years; there is a five-year waiting list in some areas.
"Agencies are running out of funds completely and coming under strong pressure from clients" said VCOSS. "These agencies reported an increase in violence, including mothers and children driven to desperation by their situation. Agencies such as the NOW Centre, the Springvale CAB, Collingwood Community Health Centre and Preston Careforce, report that they periodically run out of funds and have no emergency relief to provide for weeks at a time."
The VCOSS report argues for continued investment in housing, public transport, sewerage, education and community services and health. It suggests a range of revenue raisers as an alternative to those planned by the state government. They include the removal of exemptions from land tax, the closures of loopholes in the financial institutions duty, a withholding tax on land speculators, forcing polluters to pay, business franchise fees and a tax on city car parks.
VCOSS is also critical of the federal Labor government's cuts to the states and its tax concessions to the rich. Over the past decade, general purpose recurrent and capital grants to the states have declined by $3.4 billion in real terms.
"The critical revenue shortfalls confronting the states are unlikely s a result of a cyclical upturn in the economy", it states. "It is of particular concern to VCOSS that the Commonwealth, whilst reducing grants to the states, has chosen to provide tax cuts to high income earners and to corporations. The effect of these policies has been to reduce the overall reliance on the more progressive revenue measures available to the Commonwealth and to increase the reliance on the more regressive and inefficient revenue measures available to the states."