Dick Nichols
Suddenly, with a federal election looming, there's money to burn. There always was, of course, but this time last year Coalition treasurer Peter Costello was lecturing us about the need to pay off government debt and to build the biggest possible surplus "at this stage in the business cycle".
Business cycle, my foot. The cycle that drives their budgets — the Coalition's but also Labor's — is overwhelmingly political. In the two years after winning an election the talk is all "fiscal responsibility" and "austerity": through cuts to services and attacks on the most defenceless, you build up your war chest for seducing the swinging voters in the marginal seats come election year.
With his latest effort, Costello has taken election year bribery to new heights, committing $36.6 billion to tax cuts and "more help for families". When you add in the extra spending committed since Mark Latham took over as ALP leader ($51 billion in total), that's more than twice the "pork" handed out to help defeat former Labor leader Kim Beazley in 2001.
In this atmosphere of pre-election largesse and ALP-Coalition cockfighting, it's easy to get swept away by two false impressions. The first is that the sums involved are absolutely enormous. The second is that, when it comes to budgets, there is a huge difference between the major parties.
Of course, looked at from the viewpoint of 80% of the world's population, the sums involved are huge: $51 billion is more than the annual production of Vietnam, a country with four times Australia's population. That's what it means to be a rich industrial "lucky" country.
But look at this figure from another point of view — the share of wages and profits in Australia's annual production. That $51 billion is around 8.5% of a year's Australian output. It still sounds a lot, until we recall that the benefits will be paid out over five years, and that it represents less than one year of the income shifted from wages to profit by Labor and Liberal's economic rationalist policies.
Put in a nutshell, Costello's $51 billion is simply money that has been robbed from Australia's workers and is now being returned in an operation calculated to win the Coalition maximum votes per dollar.
But $51 billion isn't so huge from another point of view — that of the spending needed for a serious attack on this country's social and environmental problems. From the desalinisation of the Murray River (estimated cost: $7.5 billion) to confronting our heightening aged care crisis, there can be no definitive solutions — without spending tens of billions of dollars more a year and without a big expansion of the public sector. (The sort of policies needed are outlined in the Socialist Alliance's recently released Manifesto 2004.)
Adopt this perspective and it also becomes clear that the differences between the major parties aren't anywhere near as huge as Costello's baiting of Latham might suggest. Quite the reverse. The treasurer has designed his budget against Labor on the correct assumption that its leader shares his belief in the four main commandments any responsible treasurer must obey:
- Thou shalt not increase tax rates on the rich and the corporations;
- Thou shalt not go into deficit except in crisis periods (war, depression, impending electoral disaster);
- Thou shalt do everything possible to restrict government spending as a proportion of GDP; and
- Thou shalt rave and rage about "reducing bureaucracy".
How, then, can Latham respond to Costello's package of tax cuts, one-off maternity bonuses and other targeted welfare payments, many lifted straight from the ALP? For Labor, opposing Costello's tax cuts is as impossible as increasing corporate tax and tax on all forms of capital gains. Lifting all tax thresholds (and not just the highest two) would take the budget into deficit. Cutting back on real waste (like the "defence" budget) is unthinkable.
The naked truth is that the only way to create a genuinely alternative budget to Costello's is to break the very rules to which Labor and Latham defer, beginning with the one that says that government spending must be restrained. And it's the only way that his gooey rhetoric about "giving this country a government every bit as big and warm-hearted as the Australian people themselves" won't sound like a very sick joke if Labor gets home at the next election.
[Dick Nichols is the managing editor of Seeing Red.]
From 91×ÔÅÄÂÛ̳ Weekly, May 19, 2004.
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