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Budget cuts spell disaster for the vulnerable

By Tristan Ewins - posted Friday, 16 May 2014


Other Welfare:   This is where the Abbott/Hockey/Cormann austerity really begins to bite against some of the most vulnerable of all.   Despite offensively deceitful  rhetoric of ‘spreading the burden’ the vulnerable will be driven into the most spiritually crushing poverty; and ACOSS has argued this will lead to a possible sharp rise in homelessness given the withdrawal of ‘the social safety net’.

The measures include:  

·         A six month waiting period for under 30s applying for Newstart; and then ‘Work for the Dole’ 

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·         Very tough eligibility criteria for the Disability Support Pension;  particularly for those under 35

·         Unemployed under 26 forced on to the abysmally inadequate ‘Youth Allowance’

·         Sole Parents will be affected by the withdrawal of Family Tax Benefit B, and deserve more robust compensatory support than Hockey’s offer of $750 per child  between the age of 6 and 12

The *formula* for determining pensions will also be altered by the Coalition Government.  Pensions will be indexed to inflation rather than Average Male Weekly Earnings – with a gradual fall in payments ‘by attrition’.    John Collett at ‘The Age’ believes this could cost pensioners $100 a fortnight “in several years’ time”.

The consequence will be utterly desperate circumstances for the jobless; especially the young jobless.  And those without family to fall back upon will probably end up homeless.  (those forced to move away from the support of family to find work will be hit doubly hard) This is the ‘American model’ that the Conservatives seem to be aspiring to.   The creation of a desperate class of working poor – motivated by the very real fear of falling even further down the social ladder – into homelessness; and the destruction of all hope.  But for neo-liberals this desperate ‘reserve army of labour’ is ‘functional’ in weakening the bargaining power of workers.

It is also becoming apparent that the Federal Coalition’s $300 million cut to pensioners’ concessions will apply to everything from water to energy.  (so much for fighting ‘cost of living’ pressures) Some of the Victorian Conservativesare outwardly angry with Abbott, as $73-$75 million in cutbacks to pensioner concessions will flow on to Victorians specifically.  This could be the beginning of an internal rift within the Conservative parties: whose ‘endgame’ could include driving (or for some others providing a pretext)  for desperate state governments to lobby for an increase in the GST rate, or a broadening of the GST base. 

Theoretically the GST can increase in the context of a more progressive tax and welfare mix to compensate the poor and vulnerable, and average workers.  But the odds are more in favour of a regressive mix – with GST ‘reforms’ hurting low income earners and pensioners again who had already been hit hard.  Arguably a more regressive mix for Hockey involves a swipe at ‘the undeserving poor’ – in favour of those ‘millionaire wealth creators’, and some ‘self-funded retirees’ whose very comfortable conditions of retirement are effectively subsidised by taxpayers to the tune of tens of billions in tax concessions every year.

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Also importantly: with cuts in the Carbon Tax, Mining Tax and Company Tax overall revenue is still likely to fall.  The question that follows is thus:  Will the GST be promoted to overcome ‘the infrastructure deficit’ – or will infrastructure privatisation reach previously unheard of extremes; with the public being fleeced in the context  of ‘user pays’, and the relatively unfavourable cost structures of private enterprise?  Few in the Liberal Party (or even Labor) look set to accept the proposition that a mixed economy is better for capitalism, and better for workers and the disadvantaged at the same time.  So this Budget is likely only ‘round one’ of a protracted assault upon Australia’s social wage and social insurance.

Conclusions

Those enjoying incomes of around half a million a year will have to pay $6400 extra in tax. But again in a morally abhorrent fashion the government is contending that this has seen a ‘spreading of the burden’.   While millionaires will barely notice the ‘mosquito bite’ that is the temporary, so –called ‘budget repair levy’ – the effect on the poor and vulnerable will be utterly crushing and permanent.

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About the Author

Tristan Ewins has a PhD and is a freelance writer, qualified teacher and social commentator based in Melbourne, Australia. He is also a long-time member of the Socialist Left of the Australian Labor Party (ALP). He blogs at Left Focus, ALP Socialist Left Forum and the Movement for a Democratic Mixed Economy.
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