The Gillard Labor government is obsessed with reducing the public debt and delivering a surplus – at whatever social and environmental cost – to prove they are “good economic managers” for the corporate rich. But you don’t have to be a Keynesian to question the wisdom of delivering a surplus in this budget, argues Peter Boyle.
For weeks Labor PM Julia Gillard and treasurer Wayne Swan have been focussed on one thing: using the coming 2012 federal budget to prove that they are “good economic managers”.
But good managers for who?
The ALP government is determined to deliver a surplus and reduce the public debt even at the cost of more public sector jobs, services and cuts even to the meagre welfare support for single parents. This, explained Gillard in her April 19 speech to the Western Australian Chamber of Commerce and the Western Australian Chamber of Minerals and Energy, was so that the government can build up the reserves so that they can bail out big business again just like Labor did when the GFC hit if needed, deliver more tax cuts for the rich and continue the billions of dollars in corporate subsidies even for the biggest polluters.
This is what it means when ALP politicians proudly boast that they are “fiscal conservatives”.
But Gillard had to acknowledge that there is a growing disconnect between all this talk of the current economic “good times” and the reality faced by pensioners and workers in the non-mining sectors. The bigger part of our famously “two-speed economy” is, according to the latest Reserve Bank statement, is “subdued, and investment intentions in the non-mining sector remain weak”.
The expected budget cuts will increase the pain for the majority yet the politicians call this “good economic management”.
If we had a government prepared to deliver good economic management in the common interests — instead of the interests of the super-rich tiny minority — we would probably see a budget that significantly increased public borrowings to make billions of dollars of investment in a transition to 100% renewable energy. About $30 billion a year is needed for investment into large-scale solar power and wind generation for the next ten years, Beyond Zero Emissions has estimated.
Some of that can be obtained from slashing corporate subsidies and tax breaks for the rich. It is estimated that $12 billion a year in subsidies is paid by state and federal governments to the fossil fuel industry. Generous superanuation tax breaks for the richest 12% cost $7 billion a year.
Billions more a year can be saved if Australia did not buy the expensive submarines, warplanes and other military resources that maintain its offensive capacity to attack and occupy other countries.
But “good economic management” for the majority would also require serious investment in repairing the public health, eduation, housing and welfare systems that are in tatters after decades of conservative neo-liberal vandalism by ALP and Liberal-National governments alike. Closing the shaeful gap between Aboriginal and non-Aboriginal peole also requres serious public investment.
A community and environment-first budget for 2012 would probably increase the public debt. A recent OECD report revealed that Australia has the lowest government debt of any of the 28 rich countries studied. Gross government debt is a bit over 20% GDP in Australia, compared with 49% in Sweden, 53% in Norway, 81% in Germany, almost 100% in the US and more than 200% in Japan.
Public social spending in Australia (16% of GDP) is also lower than the OECD average of 19.3%.