The real class war

ON LINE opinion – Australia’s e-journal of social and political debate

Posted Monday, 9 May 2016

The Prime Minister, Malcolm Turnbull, has accused the Leader of the Opposition, Bill Shorten, of engaging in class warfare. The basis of his accusation relates to comments Shorten made about tax breaks given to those earning above $80,000 a year and tax breaks to medium sized businesses and Labor’s policy of restricting negative-gearing to those with existing negatively geared homes and continuing negative-gearing only to new homes in 2017.

The Prime Minister thinks that Bill Shorten is attacking aspiration, taking a wrecking ball to Liberal fiscal rectitude and is about to end civilisation, as we know it by not applauding Treasurer, Scott Morrison’s “jobs and growth” budget.

A closer inspection of the 2016 budget might just reveal some infelicities of style. Perhaps even some significant shortcomings. There may even be some legitimate grounds to believe that the ghosts of ex-Treasurer, Joe Hockey’s 2014 budget still reside in the Government’s budget.

Just for starters

The Government has retained most of the $80 billion cuts to health and education foreshadowed in Hockey’s budget. It has come up with $1.3 billion to partially fund the proposed Gonski school reforms.

It has extended by a further two years the freeze to the GP rebate for bulk-billed consultations. This will, as Professor Brian Owler, President of the Australian Medical Association says, cause many General Medical Practices to cease bulk-billing and thereby harm the health of those who are poor and/or chronically ill.

The 2014 Hockey Budget had large tax cuts for the wealthy and small tax cuts for those who are struggling. The 2016 Budget has tax cuts for those earning over $80,000 annually and nothing for those earning less than that.

There are cuts for some families earning less than $80,000 but they are not tax cuts – they are cuts to family payments. The Labor website notes that:

  • Individuals who earn the most will get a double tax cut – someone on $1,000,000 will get a $16,715 tax cut tonight while three quarters of Australian taxpayers receive absolutely nothing.
  • A couple with a single income of $65,000 with three children in primary school are $3,034 worse off a year – and receive no tax cuts.
  • A single mother with an income of $87,000 with two children in high school is $4,463 worse off per year as a result of tonight’s Budget.

By any measure such disparities in the treatment of low income earners and the well-off cannot be described as equitable, just, fair, even-handed, egalitarian or deserved. Nor would such unequal treatment be considered conscionable, fitting or without prejudice. Clearly Morrison is rewarding those most likely to donate to the coffers of the Liberal Party.

There are words that could adequately describe Morrison’s budget treatment of the big end of town and the battlers. The words that first come to mind are invidious, self-serving, improper, egregious, distasteful and, dare I say it, unjust.

The budget throws billions at the contractors charged with running the concentration camps that the government incorrectly calls the “Pacific Solution”. The refugees and asylum seekers incarcerated in these hellholes are slowly but surely being driven mad. Two people detained on Nauru have self-immolated in recent days. One died and as I write the other is struggling for her life. While Dutton without a shred of evidence claims it is not the situation that the refugees find themselves in that is causing them to self-harm but the urging of asylum seeker advocates. These camps are not peaceful and they are not a solution. The Australian Broadcasting Commission’s program “The Minefield” explored this tragedy in an insightful way on the 5th of May 2016.

It would be cheaper to place them on Christmas Island. Cheaper still to place them in camps on the mainland and much cheaper to place them in the community and give them the right to work while their refugee claims are being assessed.

To add insult to injury, a further $224 million has again been taken from Australia’s foreign aid. As Robin Davies points out:

In the 2015 budget, for financial year 2015-16, Australia’s aid was cut by A$1 billion – a massive 20%. …

The big drop in Australia’s generosity is not merely a relative one. It has much more to do with Australia’s cuts than with other countries’ increases. Between 2012 and 2016, Australia’s foreign aid as a share of national income has fallen steeply from 0.36% to 0.23%.

Despite our excessive bastardry overseas the budget does not totally ignore the poor here for as ANU Professor Peter Whiteford says:

Also built into the forward estimates is a range of savings measures that have not yet been passed by the Senate. These include cuts to family payments for low-income families, reductions in Pharmaceutical Benefit Scheme concessions, the higher age pension eligibility age, the one-month waiting period for young people to access income support, and lower payments for many young unemployed people.

These policies of infinite wisdom mainly stem from the 2014 budget.

What is the wash-up?

From Malcolm Fraser to Malcolm Turnbull every Liberal Prime Minister has repeatedly told us that Australia has to live within our means. They frequently suggest that there is a direct comparison between a household budget and the federal budget.

Morrison in his 2016 budget laid out a blueprint for dropping company tax to 25% by 2026. But the budget papers did not reveal what such magnanimity towards the big end of town would cost. David Speers, political editor of Sky News, asked the Prime Minister what such largesse would cost over the ten years. Turnbull refused to provide an estimate but insisted it was affordable because the budget predicted a return to surplus by 2021.

The secretary of the Treasury, John Fraser, told the Senate estimates hearing on the 6th May that Treasury thought the cost of the company tax cuts would cost $48.2 billion.

Several other economists have suggested amounts well in excess of $50 billion. More alarmingly there have been reports that:

The world’s second biggest rating agency has once again cast doubt on the government’s promised return to budget surplus, projecting a debt and deficit blowout as the cost of federal spending programs overwhelms tax revenue.

It is important to realise that since the global recession rocked our 2010 budget treasurers have been claiming to be about to return the budget to surplus but have not succeeded in doing so.

Morrison and Turnbull have both claimed we have a spending problem and that we don’t need to raise the level of net tax. But when it comes to 12 new submarines or strike fighters rounding up the readies is not a problem. Likewise overly generous tax cuts for business presents no problem. Allowing the well-off to continue to rort negative-gearing – that’s the way we protect the perks of the well-off.

But when it comes to hospitals, dental health, nursing homes, social security, community services, schools, universities and homes for the homeless that is where we have to watch our pennies.