Labor’s budget fills pockets of the rich, crumbs for workers

Prime Minister Anthony Albanese says that the new budget is “a Labor party budget through and through because it is a budget for every Australian, not just some”.

That is the biggest lie. The Albanese government’s third budget provides the lion’s share of benefits to the well-off, the military and favoured sectors of the capitalist class and fails to address the major social problems facing the Australian working class—falling real wages and housing stress.

Let’s start with the changes to income tax. According to the Parliamentary Budget Office, those in the top 20 percent of taxable incomes will benefit from the revised Stage 3 tax cuts by $148 billion over the next decade, just under half of the total benefit of $318 billion.

Then there are the handouts to big business. The Financial Review declared the biggest winners from the budget as “businesses involved in the green transition”. The government’s new industry assistance program, “A Future Made in Australia”, will provide $23 billion in tax concessions, direct subsidies and grants over the next decade for the renewable energy and critical minerals sectors. The government argues that this will make Australia a “renewable energy superpower”.

The whole concept that Australia will lead the world in renewables is pretty rich, coming just days after the government announced it was all-in on a gas-fuelled future. Besides, the lucky businesses receiving this money will not be interested in fixing the escalating climate catastrophe, only lining their pockets. If they can turn a buck, they will. If not, it’s too bad for the climate. And this spending, like the Biden administration’s Inflation Reduction Act on which it is based, is aimed as much at building the infrastructure that can withstand a war with China as it is in responding to the escalating climate catastrophe.

On the topic of war, the government boasts of its “generational investment” in the military, boosting defence spending by $6 billion to $53 billion this year. The budget projects this figure to rise to $100 billion by 2033-34. This splurge will take the military’s share of GDP to its highest for 40 years. These figures do not even factor in the hundreds of billions earmarked for the nuclear submarines that are part of the AUKUS pact, making the military a huge claim on public funds.

This budget ensures that big business and the well-off will keep their fortunes while the generals and arms manufacturers will wallow in money.

What about workers, students and the poor?

Since 2019, real wages have fallen by 5 percent as inflation cuts into disposable incomes. For middle- and low-income wage earners, the drop has been even greater because they spend a bigger share of their incomes on essential goods and services, which have risen in price more than non-essential items. Those on JobSeeker are falling further behind.

Even though inflation has dropped over the past twelve months, wages are still not keeping up. Since the March quarter of last year, the cost of living for employees has gone up by 6.5 percent, while wages are up by only 4.2 percent. Rents are up by 8 percent, insurance is up by 16 percent, monthly mortgage payments have risen by hundreds of dollars, healthcare costs are up, and GP bulk billing is becoming rare.

This squeeze on working-class living standards comes on top of years of wage stagnation. Real wages are now no higher than they were in 2010.

What does the budget do to reverse this trend? Treasurer Jim Chalmers says that it will relieve cost-of-living pressures. The government’s press office, otherwise known as the Australian Council of Trade Unions, describes it as “a good budget for working people”.

This is nonsense. For those on the lowest incomes, the budget offers no increase to JobSeeker, the age pension or sole parent allowances. The income tax cuts do nothing for those dependent on these payments since their taxable income is below the threshold.

In refusing to lift these allowances, the government is ignoring the recommendations of its own advisory body which in April urged it to increase payments.

Successive governments have treated the unemployed scandalously. The Albanese government has continued this shameful tradition, refusing to revert to the higher JobSeeker rate introduced early in the pandemic but cancelled after eighteen months.

There are also no measures in this budget to raise wages, nothing to stop companies from price gouging or landlords from raising rents, nothing to deal with lengthy waiting lists for elective surgery, and precious little for those with serious mental health needs.

Even the supposed goodies in the budget offer less on close examination.

• The revised Stage 3 tax cuts will lift incomes for most workers. But for workers on annual incomes of less than $75,000, these only compensate them for the 2022 scrapping of the Low- and Middle-Income Tax Offset. For workers on higher salaries, the benefit is just a few hundred dollars a year, nothing like what is needed to restore real wages to where they were in 2019.
• A 10 percent increase in rent assistance sounds good, but it only amounts to $19 a fortnight, far below the increase in rents. It only applies to those on social benefits, leaving millions to fend for themselves. It is also hemmed in by a range of restrictive eligibility criteria and does nothing to stop landlords from simply lifting rents again since the budget contained no measures to curb their greed.
• Measures to encourage the construction of 1.2 million new homes by 2029 are meant to relieve the housing shortage. But this is all to be left to the private sector to deliver, and they won’t build homes unless they can make money from it. According to the budget figures, growth in dwelling investment will be zero next year after falling by 3.5 percent this year despite the government’s already-flagged funding commitments. The government’s own advisers predict that construction will fall short of the target by 300,000 homes.
• A one-off $300 rebate on electricity bills for all households still leaves households paying more than before the hikes of recent years. The rebate is only for one year and does little more than artificially lower the inflation rate so the government can go into the next election boasting of its success in containing price increases. Gina Rinehart and her fellow billionaires are the recipients: a total waste of public money.
• Funding for wage increases for aged care and childcare workers will help many low-paid workers, but because the government is staggering the payment of these funds and paying them to the operators rather than directly to the workers, there is no guarantee the workers will see the full amount.
• A reduction in HECS/HELP indexation will reduce the outstanding debt, but it won’t affect annual debt repayments or prevent vice-chancellors and education ministers from raising fees and inflating student debt by thousands of dollars.

The Treasurer says that inflation is coming down and will fall further over the next year, relieving pressure on household budgets. The government hopes that falling inflation will encourage the Reserve Bank to relent on its high interest rate regime and give relief to mortgagees.

But there is no certainty about this.

Internationally, inflation is proving much stickier, and central banks are no longer set to cut interest rates at anything like the rate confidently predicted just six months ago. Those with mortgages can expect the interest squeeze to continue. And while inflation has fallen over the past year, the rate of wage increases is now tumbling, pulling down real wages. Even the bosses and the media have stopped screaming about the dangers of a (non-existent) “wage-price spiral”.

The Albanese government’s third budget fails to alleviate the squeeze on working-class living standards. It is, as the Australian Council of Social Services argues, a budget with “a gaping hole in its heart”.

The problem is not just the dollar figures.

For years, successive governments have white-anted public sector programs and handed them over to private companies. The Albanese government is now belatedly cutting back private sector consultants. Still, it leaves whole swathes of service provision, including aged care, childcare and disability services, in the hands of private operators.

Government funding provides these private companies with a continuous flow of taxpayer money. None has any interest in meeting public need and for many, the real estate on which their property sits interests them more than those in their care. Government regulation of the sector is minimal, and private provision of services only leaves the public hostage to their price gouging. The lift in childcare subsidies to 90 percent of capped fees, for example, has done nothing to prevent operators from charging above the cap, taking parents back to square one.

The humiliation the unemployed face is not just the result of their low incomes but the poor treatment they receive at the hands of privatised employment services and the degrading and time-wasting mutual obligation requirements imposed on them.

Education, too, suffers from the private sector sucking resources from the public purse. The federal government pays more to private and religious schools than it does to public schools, only entrenching one of the most socially segregated education systems in the world.

So, too, with the housing policy, which is beholden to the private construction industry motivated by only one thing—their profit margins. This is obvious at the highest level. The Albanese government has set up the National Housing Supply and Affordability Council to provide it with “independent, evidence-based expert advice on matters affecting Australia’s housing supply and affordability”. Its chair? Susan Lloyd-Hurwitz, CEO of $5 billion property developer Mirvac from 2012 to 2023 and currently a non-executive director of Macquarie Bank, Macquarie Group and Rio Tinto. Under such leadership, we can expect this body to have as much sympathy for the plight of tenants as the parliamentarians with their multi-property investment portfolios.

Everything about service provision to the most vulnerable is left to the tender mercies of corporations motivated by returns on investment, shareholder dividends and executive salary packages.

What would a budget that seriously addressed these issues look like?

What follows are some of the most obvious things the government could do to address the cost-of-living crisis and general dysfunction in public services.

Overhaul the tax system to reduce the burden on the working class.

Lift social welfare payments to the minimum wage and index them to average weekly earnings or the Consumer Price Index, whichever is the greater.

Kick private providers out of childcare, aged care and disability care and bring these industries under public control, adequately funded and democratically accountable to staff, users and their families.

Fund public schools properly and ban the levying of additional charges.

Restore free university education and provide non-means-tested income support for tertiary students.

Fund Medicare sufficiently to fulfil its initial promise of delivering medical care to users free at the point of delivery.

Set and fund annual public sector wage targets to provide above-inflation pay rises.

Establish and adequately resource a public employment service agency to help job seekers find work.

Launch a program of public-sector home-building to ensure everyone has the right to a roof over their heads and introduce a rent freeze in the private rental sector.

Take energy generation and retailing back into public hands so that everyone may power their homes without swelling the coffers of giant energy companies.

Establish public enterprises to oversee the transition to renewable energy and new environmentally friendly products.

That is a long list and will cost a lot of money. But we could pay for it by no longer handing money to those who don’t need it. We could do the following to free up the funds to make a real difference in the lives of millions of workers.

Scrap the Stage 3 tax cuts for those in the top 20 percent of income earners, freeing up more than $148 billion over the next decade.

Eliminate subsidies to fossil fuel companies, which amount to $14.5 billion a year, and implement a super profits tax on the resources sector.

Abolish the various tax lurks for investors, such as the discount on capital gains tax and negative gearing concessions. Cancelling capital gains tax concessions for the top 10 percent would free up nearly three times as much as it would cost to lift JobSeeker to the age pension.

Tax those with superannuation balances of more than $2 million who use their super for tax-advantaged wealth management rather than provision for old age.

Return the corporate tax rate to the 46 percent that was in place until the 1980s.

Introduce a wealth tax. According to the Australia Institute, 93 percent of the wealth accumulation in Australia between 2009 and 2019 went to the top 10 percent. Let’s take back our share of these gains.

Impose an inheritance tax on all estates of more than $2 million. Australia is one of the few Western nations that doesn’t have such a tax.

End federal support for private schools.

Eliminate subsidies to private health insurance.

Slash military spending.

Such measures, however, are the furthest thing from the Albanese government’s mind. It is wholeheartedly committed to the interests of big business, the wealthy and the military. In this respect, Albanese is right. It is a “Labor party budget through and through” because, like all Labor governments before his, serving the capitalists is its priority. The government has few but crumbs for the rest of us.