Spending

Australian Labor government to cut social spending to pay for tax subsidies and war plans

It is now clear that in its first budget, due October 25, the Australian Labor government will maintain planned massive income tax cuts for the wealthy, while starting to further cut health and disability services. and to increase military spending in preparation for a US-led war. against China.

Yesterday, in line with a deluge of warnings and demands from headlines and corporate media editorials, Prime Minister Anthony Albanese ruled out any reversal of Labor’s pledge to implement tax cuts of the “third stage” for high-income households in 2024. This means an unprecedented windfall. for the rich, in addition to the two previous tax reduction packages.

Meanwhile, Labour’s already scrapped May election slogan of ‘a brighter future’ has been replaced with chilling warnings from Albanese, Treasurer Jim Chalmers and Defense Secretary Richard Marles about ‘global economic storms’. and “the most difficult circumstances” since World War II.

In preparing the budget, Albanese and Chalmers sought to condition the public to expect deeper cuts in social spending. They named three crucial areas of alleged unexpected budget blowouts: hospitals, aged care and the National Disability Insurance Scheme (NDIS).

Simultaneously, the pair declared the need to increase military spending and pay higher interest rates on more than $1 trillion in government debt, which was incurred by handing over billions of dollars to big business throughout the world. throughout the COVID-19 pandemic.

Increasingly, government plans are dominated by the impending global recession induced by central banks, which are raising interest rates to stifle workers’ wage demands to cope with soaring inflation triggered by the pandemic and the escalation of the US-NATO war against Russia in Ukraine.

Just two weeks before the budget, Chalmers will fly to Washington tomorrow for what he called “perfectly timed” talks on mounting “budget pressures.” He will meet for a “candid assessment” with US Federal Reserve Chairman Jerome Powell, World Bank President David Malpass and other G20 finance ministers.

“It’s going to be tough decisions in tough times,” Chalmers said. He warned that Australia “will not be spared a global downturn”, further repudiating Labor’s false election promises of better times.

The “third stage” tax cuts will cost $243 billion over a decade. Inevitably, this means further cutting public health, education and other social programs, and imposing even greater social inequalities, which have already accelerated during the COVID-19 pandemic.

According to Treasury estimates in August 2021, when Labor confirmed its commitment to support the cuts imposed by the previous Liberal-National coalition government, they will benefit a $400,000-a-year two-earner household by $23,280 per year. But a single person with $30,000 will only get $255, or $5 a week.

It’s a near flat tax system, with a flat tax rate of 30% on all income up to $200,000 a year, or about three times the median wage. Those trying to survive on poverty-level social security payments, such as elderly retirees, caregivers, and the unemployed, will get nothing.

Today, Chalmers and Marles have added the dimension of war to budget plans. They renewed the government’s commitment to increase annual military spending from 2% to 2.2% of gross domestic product, reaching $80 billion a year by 2032. That’s not counting the $300 billion earmarked for improved military armament over a decade.

It was also, they pointed out, in addition to the still undeclared tens of billions of dollars needed to acquire and base nuclear-powered submarines and other weapons under the AUKUS anti-China military pact with the United States and the United Kingdom, and to expand the size of the armed forces from 20,000 to over 100,000.

Chalmers and Marles revealed a $6.5 billion blowout on 18 major existing military hardware projects, so there’s no doubt that all of these defense spending estimates will proliferate in the coming years.

Marles directly spoke the language of war sacrifices. “We are facing the most difficult circumstances since World War II, compounded by the fact that the economy is facing severe pressures and reaching record defense spending as a percentage of GDP,” he said. declared.

Albanese delivered a similar message of sacrifice yesterday, saying Chalmers was putting together a budget under ‘very difficult economic circumstances’. Albanese said monetary and fiscal policy must work together to avoid fueling inflation.

It’s code for cutting social spending and suppressing workers’ wage demands, in sync with central banks aggressively raising interest rates.

The Prime Minister reassured the financial markets: “Labour will always present responsible budgets. That’s what we’re going to do in two weeks.

Labor’s targeting of NDIS, hospitals and aged care comes on top of its support for the pre-election budget tabled by the Morrison coalition government in March, which included a massive cut in health spending – from 10 to $105 billion this year, or more than 10% in real terms.

This means less money for COVID-19 vaccines, treatments and support for doctors, elderly care providers and overwhelmed public hospitals. This Labour-backed budget also imposed cuts to education, arts and climate change programmes.

Albanese’s commitment to “third stage” tax aids is only part of the Labor Party’s broader commitment to enriching the corporate elite at the expense of the working class. After its defeat in the 2019 election, the party dropped its bogus “fair go” slogan, which many workers in no way believed in due to Labour’s long pro-business record.

Labor also dropped promises to adjust the ‘negative cut’ scheme, which rewards property investors and drive up house prices, cut capital gains tax cuts and scrap refunds “escape credits” for investors who have received dividends from their stock portfolios but do not pay income tax. .

None of this is an aberration. This is entirely consistent with the party’s historical record of serving the ruling capitalist class, including in fiscal matters. The Hawke and Keating Labor governments from 1983 to 1996 reduced the top tax rate from 60% to 49% and the corporate tax rate from 49 to 33%.

It was a central part of the Labor Party’s economic program. The unions have imposed it as part of their price and income agreements with Labor governments and employers. The unions have strangled the opposition of workers, helping to lay the foundations for a vast and continued transfer of wealth to the rich from the working class.

Today, this Labor government relies even more on the trade unions, which are increasingly discredited shells due to their decades of betrayal. Together they seek to impose far deeper attacks on working class conditions, as well as the biggest real wage cuts since the Great Depression of the 1930s, the government’s deadly pandemic policies of “living with the virus” and preparations for a potentially catastrophic world at the instigation of the United States. Third war against Russia and China.