Budget 2019 boosts inequality

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The vacuousness of this year's budget is matched only by the viciousness of the inequality it entrenches. The much trumpeted projected budget surplus, such as it is, is built on the backs of people who are left out and often made to feel that they are left over, surplus to the economy: people on low pay or no pay, young people, sole parents, people experiencing homelessness, people living with a disability.

Treasurer Josh Frydenberg Delivers his budget address (photo by Tracey Nearmy/Getty Images)These are the people who bear the brunt of inequality and once again they are told that there is not enough money in the tin to meet their needs, while the largesse is reserved for the already wealthy. One is reminded of Martin Luther King's observation of the USA: 'This country has socialism for the rich and rugged individualism for the poor.'

The urgent need to lift Newstart, currently at $40 a day, so that people locked out of a job no longer need to wage a daily battle for survival from below the poverty line, has become a point of rare consensus for everyone from the ACTU to the Business Council of Australia; from ACOSS to Deloitte. The failure to increase this payment remains a deep wound in the nation's soul. Instead of healing this wound the government has rubbed salt in it, even going so far as to exclude unemployed workers from its pathetic one-off energy payment, only to belatedly include them the day after, a payment in any case so low, at $1.45 a week, that it won't even buy a hot apple pie from McDonalds, let alone keep the heating on at home.

US jurist Oliver Wendell Holmes famously said: 'Taxes are the price we pay for a civilised society.' It is clear that taxation is viewed by the current government as something that needs to be minimised rather than properly administered and harnessed for the public good. It is the 'tax cuts' trope that is persistently paraded as the greatest public good. One cannot help but think that instead of Holmes' formulation the government is of the view that: 'Modest tax cuts for working class people are the price we pay for generous tax cuts to corporations and the wealthy.'

One of the hallmarks of neoliberalism is the trick of the eye whereby we are convinced that government deliberately steps out of the way to let the market work its magic. In fact, neoliberal governments consistently and systematically intervene on the side of big business. They style themselves as being diametrically opposed to the notion of planning, portraying this as a residuum of the Soviet era, which might be true as long as you include Roosevelt's New Deal as well as Curtin's White Paper on Full Employment in this category. What neoliberal governments have done is very different but has required no less planning. They have instigated Big Business Plans, plans that follow the template of atomising labour while dismantling the architecture of what used to be known as the welfare state, consisting of the public provision of such necessities as education, health, social security and housing.

The atomisation of labour has happened in plain site. It has consisted of three prongs. The first is the suppression of the rights of workers, especially through union bashing, and limitations on the rights to withdraw labour, bargain, organise and enforce conditions in the interest of worker safety. The second is changing the rules in the labour market, usually referred to as deregulating but more accurately described as re-regulating in favour of employers, particularly in the areas of employment status, casualisation, labour hire, contracting, gig work and flexibility (or as, workers prefer to call it, precarity).

The third prong is embedding a sense of social insecurity for workers who are unemployed, keeping unemployment benefits at extremely low levels and reinforcing a narrative around the idea that the worst paid work is better than no work, driving a wedge between those on low pay and those on no pay while actually erasing the boundary between the two due to the normalisation of precarity and the rise in the numbers of people in paid work experiencing poverty (USA style).

 

"It would have taken a colossal act of optimism to expect an investment in people from this year's budget."

 

Amid the fanfare surrounding the banquet of tax cuts that working people are supposedly set to feast on, the facts are that they increase disposable incomes for working people by less than one per cent (and by zero for the lowest-paid). If, as opposed to this cheap trick, wage stagnation had been addressed, the increase to disposable incomes would have been substantial.

It would have taken a colossal act of optimism to expect an investment in people from this year's budget. At a time when, under the banner of neoliberalism, we have grown accustomed to the boot being put into the people who bear the brunt of inequality, many of us have almost come to believe the lie that people on low pay or no pay are the least productive. The flipside of this bad penny is the fantasy that the highest paid and wealthiest are the most productive, the ones the rest of us should be grateful to.

The problem is that the concentration of wealth in the hands of a very few has occurred at the same time as protracted wage stagnation and growing inequality. Aided and abetted by neoliberal governments, big business has reaped the benefits of atomising the workforce while dismantling what we once proudly called the welfare state.

We cannot turn the clock back but we can rationally plan ahead to craft a social guarantee that encompasses a genuine jobs plan to address the structural causes of unemployment and underemployment. We can reconfigure our social security system to better reflect the changes in the labour market as well as being informed by a feminist analysis of the politics of caring. We can begin again to invest in people, instead of punishing them and further excluding them. The government's tax cuts, far from being the embodiment of a rational plan for the future, constitute a dangerous act of profoundly irrational faith, given its systematic undermining of our revenue base in the face of uncertain economic forecasts.

Overall, the government's planned tax cuts, with their excessive benefits to the wealthy, are, let us not forget, a plank in the radical flattening of Australia's personal taxation system announced in the budget of 2018, fuelled by short term windfall gains rather than being guided by the long-term national interest. This flattening has, in budget 2019, been exacerbated. Removing the 37 per cent tax bracket in 2024, as planned, means reducing the tax on all income between $45,000 and $200,000 to 32 per cent. The tax on this bracket is now going to be lowered, if the government's tax plan is passed, to 30 per cent!

This tax flattening goes hand in glove with cuts to social expenditure. It means cuts to social housing, social security, public health and public education; a flattening that rips the guts out of what remains of a fair go. Because when you flatten a progressive tax system you deepen inequality.

Good governments fight inequality. This year's budget — with its budget 2014 lineage; with its kick in the guts to unemployed workers and its refusal to address wage stagnation for low paid workers; with its racist rollout of the paternalistic cashless welfare card to First Nations communities — reaffirms that this government wants not to battle inequality but to boost it.

 

 

John FalzonDr John Falzon is Senior Fellow, Inequality and Social Justice, at public policy think tank, Per Capita. He was national CEO of the St Vincent de Paul Society from 2012 to 2018.

Main image: Treasurer Josh Frydenberg Delivers his budget address (photo by Tracey Nearmy/Getty Images)

Topic tags: John Falzon, Budget 2019, Newstart, disadvantage

 

 

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The greatest challenges we face in Australia are inequality and climate change. The Coalition's Budget fails dismally on both counts. The Coalition is true to form!
Grant Allen | 03 April 2019


Surprising that you didn't ask the ES readers to join you, Mr Falzon, in donating our tax cuts (as the privileged and the wealthy) to charity.
homespun economist | 03 April 2019


And coalition ministers will still claim their tax fee accommodation allowance to live in their negatively geared appartments when parliament is sitting in Canberra...
Ginger Meggs | 03 April 2019


Thank you - so helpful to have the (devil in the) detail identified and illuminated. Observations such as "... a point of rare consensus for everyone from the ACTU to the Business Council of Australia; from ACOSS to Deloitte" bring the message right home.
Richard Jupp | 04 April 2019


A further affirmation of this government's inhumanity and economic stupidity, if you add asylum seekers and refugees to Dr. Falzon's list. Out damned spot!
Henri | 04 April 2019


And Ginger, so too will the Labor mob when they gain government. If the past record is any indication, however, the Labor mob is likely to add a modicum of dubiously acquired benefit on top of that.
john frawley | 04 April 2019


Amen, amen and amen to all you have said, John. Very rarely do we hear precisely and succinctly what neo-liberal capitalist governments do to exploit those who are struggling to make ends meet, to exploit our environment and to start wars to further their power, steal resources from poorer nations and to further enrich the large corporations - especially the military hardware manufacturers. And then we have politicians like Christopher Pyne who had plans to sell military hardware to undemocratic, women hating and repressive regimes like Saudi Arabia. And I have to take John Frawley's point about the ALP. The right wing and pseudo left factions of that party also adopt similar policies to the LNP Coalition. However, at the 2018 ALP National Conference, motions were passed to recognise the state of Palestine and to increase overseas aid. This has been an extremely long time coming for a political party that claims to support social justice and human rights. Grant Allen is on the ball when he points out about the LNP Coalition budget's failure to deal with climate change. This is yet another indication of how out of touch it is with latest scientific thinking and how much it is only interested in carrying out the wishes of the super wealthy and the large corporations. it should be added that as we demand urgent action on climate change, we must also demand urgent action about the pollution that is poisoning our environment and the living things - including human beings - in it. We need extensive laws to stop pollution and to have effective storage for dangerous chemicals that have already made millions around the world very sick. Voters who are sincere about fairness, social justice, equality, human rights will vote for those candidates who put these issues high on their agenda.
Andrew (Andy) Alcock | 04 April 2019


We have got to the stage with neo-liberalism, that a worker/employee is nothing but a slave and an input cost to business while the sick, unemployed and retirees are nothing but a burden on society. Its time to re-engineer society with people taking control, networking and concentrating their purchasing and political power so Governments have to assign resources to them. Encourage micro business. Start local, buy local, grow community!
Cameron RUSSELL | 04 April 2019


Wasn't it Marx who wrote that 'the theory of the net product as the last and highest purpose of production is no more than the brutal but accurate expression of the fact that the valorization of capital, and hence the creation of surplus-value without heed to the worker, is the driving force behind capitalist production' ? The 'trickle-down' theory is just a con - scraps for the plebs.
Ginger Meggs | 05 April 2019


20% of Australians are paying net tax. This means 80% are prepared to pay no tax and still complain. Yes, life outcomes will be uneven. We all have friends and family that have done well and some not so well. Some people will elevate their lives and some people will waste their opportunities. Be sure to legislate for equal opportunity versus equal outcome. Equal opportunity will continue to allow citizens to elevate their lives.
Patrick | 06 April 2019


Again John you are coming from the left, unbalanced and not objective. Perhaps when Shorten negotiated on behalf of Gillard the demise of the single parent pension you could have forcefully spoken out, but no - you had the platform as CEO of Vinnies. A few points, wage stagnation was around with Rudd; Uncertain Economic benefits have always been with us; Wealth has always been in the hands of few, even in socialism; Fairness in Government distributes wealth in the national interest, is Labor any better than the Coaltion - no. Is a Labor Government going to remove the 1.1m children from relative poverty, no. Is the Coaltion, no. Your article is unbalanced, unhelpful and your maths does not reflect that all low income earners receive more in government assistance that they pay in taxes. Further Rudd's effort on his grandstanding on homelessness did zilch, nought, not a thing when the millions he wasted could have been spent wisely. Leave your academic circle and venture into the real world. Ciao.
Brian Goodall | 06 April 2019


Well said Grant, the budget does further entrench inequality and does little about our evolving climate and the reply speech, although recognising the move towards enrtrenched inequality said nothing about alleviating the poverty of the those families forced to subsist on the unemployment benefit under the unsleeping eye of the robo-debt system while the multinationals enjoy the benefit od yet another enquiry. Since when did compassion become a dirty word in the lucky country and who decided 5% unemployment was 'full employment'?
Philip Theobald | 07 April 2019


Brian Goodall I think you'll find John Falzon did criticise the Gillard government for moving single parents to newstart on many occasions including in Eureka Street: https://www.eurekastreet.com.au/article/gender-and-class-equality-should-go-hand-in-hand Get your facts right before posting.
Jacqui Sutton | 15 April 2019


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