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John Passant

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May 2016



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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole

Sick kids and paying upfront


Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. (0)

I am not surprised
I think we are being unfair to this Abbott ‘no surprises’ Government. I am not surprised. (0)

Send Barnaby to Indonesia
It is a pity that Barnaby Joyce, a man of tact, diplomacy, nuance and subtlety, isn’t going to Indonesia to fix things up. I know I am disappointed that Barnaby is missing out on this great opportunity, and I am sure the Indonesians feel the same way. [Sarcasm alert.] (0)



Budget 2016: Robbing the poor to pay the rich – talking notes for a Solidarity talk Thursday 12 May at ANU

Budget 2016: Robbing the poor to pay the rich

I acknowledge and celebrate the First Australians on whose traditional lands we meet, and pay my respect to the elders of the Ngunnawal people past and present.

I thought I would start off by going through some of the many cuts to the social wage and to social welfare. Then I will go on to deal with the tax cuts and argue that the attacks on poor people, on women, on students, on workers, are in fact being made to fund the tax cuts for small, medium and big businesses. I’ll try to explain why this shift in wealth from labour to capital is happening. As Cassandra Goldie from ACOSS put it:

“The budget locks in $13 billion in cuts from family payments, income support for young people and paid parental leave, and adds a further $3 billion in cuts to payments and essential services. This includes cuts to Medicare and dental health and income support for people with disability.”

For example the government will continue with its freeze on Medicare bulk billing payments. This means the bulk billing rate will remain at what it was 2 years ago for another 2 years. This is effectively a co-payment by stealth.

There is nothing in the Budget for addressing climate change, perhaps the existential threat to humanity and capitalism over the next generations. There have of course been hundreds of jobs cut from the climate change research section of CSIRO.

There is nothing in the Budget for addressing domestic violence. Other than cuts for women’s refuges, and community legal services.

The public service will continue to shed jobs with its Owellian named efficiency dividend. 810 staff are to go from Centrelink. Waiting times on hold will treble or quadruple.

The attacks on public servants’ wages continue.

There is nothing in the Budget addressing Aboriginal disadvantage.

I thought this Facebook meme, always a good educator, gives an idea of the nature of just some of the cuts for women. Working women and poor women fare badly in this Budget.

The Turnbull government is cutting aged care by $1.2 billion.

It is underfunding public health and education by all up about $73 billion. It has abandoned Gonski reforms from 2018 by about $23 billion. And it is cutting about $50 billion from future health care spending. That is not just me saying that. It is how Brian Owler, the head of the Australian Medical Association describes the cuts.

So two of the most vital services for the future of capitalism in Australia – having an educated and fit workforce – and for workers are being massively cut back from 2018. I will come on to University funding and privatisation soon.

The government is creating a two tier welfare payments system. Everyone after the Budget going on to social payments will get less than those already on them. This means a lower pension, lower youth allowance, lower Austudy, lower Newstart … The list goes on and on.

When Labor introduced the carbon tax, as well as cutting income tax rates, it increased these welfare payments to compensate for increased electricity and other costs. When the Abbott government repealed the carbon tax it kept the tax cuts and the welfare payments compensation. Now the Turnbull government has abolished those payments for recipients of social welfare after Budget night.

Many of you would have heard about the infamous work for the dole changes. Its name is PATH (Prepare-Trial-Hire). Here is how the Education website describes it.

Under the scheme, the government will pay businesses $1,000 to take on young, unemployed people as interns for up to 12 weeks. Under the scheme the interns will receive $200 on top of their fortnightly welfare payments.

‘Businesses that employ people full-time at the end of their internships will be eligible for a youth bonus wage subsidy of between $6,500 and $10,000.’

It is a work for the dole scheme, at slave wages. It is part of a wider strategy to lower wages. That wider strategy includes the Trade Union Royal Commission and the vilification of the CFMEU as criminal to smash the one union in Australia that defends jobs, wages and the lives of its members and uses industrial action sometimes to do so.

Back to PaTH.

Notice how much a young unemployed person will get paid on top of the dole? $100 extra for up to 25 hours work. That is $4 an hour. The minimum wage is $17.29 an hour or $656.90 a week. Even if you (incorrectly in my view) add in the amount received for the dole, it is still below the minimum wage.

‘By the ACTU’s calculation, PaTH interns working 25 hours a week would receive $364 a week. That is $68 below the minimum wage [of $11.81 for an 18 year old] and represents just a $4-an-hour improvement on the dole. Businesses would save a wages bill of $432.25 for 25 hours’ work a week for each employee.’

By the way the 30,000 internships artificially cuts the unemployment rate by about 0.2%, the exact fall in unemployment the government predicts for the next few years.

However it will do nothing to address unemployment overall. There are 700,000 people looking for a job in Australia, with about 100,000 jobs available. If you were serious about addressing unemployment you as a government might for example have funded a program building solar farms across Australia for Australia to become a totally renewable energy society in a decade. And you’d be retooling the soon to close car plants to produce trains and buses.

What this PaTH scheme will do is attract employers to employ new cheap workers in unskilled jobs at the expense of those already doing those jobs at the minimum wage, all for the $432 a week saving. And they will churn young people through if they can, i.e. dump the first person after 12 weeks and hire someone new on the cheap wage for the next 12 weeks. It is not clear how the government will address churn.

There are other savings for employers. No work safety cover, no mandatory superannuation, no sick leave. It is a free market anti-unionists’ dream.

What about Universities? The government has continued to factor in the $2 billion cut from University funding. It has put off until after the election other nasties. The Education Minister released a discussion paper on Budget night.

‘The Government said it hoped to finalise an overhaul of the multi-billion dollar sector later this year, with changes now set to start a year later on January 1, 2018.

‘It has outlined a range of potential changes, including lifting the student contribution to course costs to 50 per cent — up from about 40 per cent currently.

‘Options it has floated include:

‘Reducing the income level where repayments start from about $54,000 to as low as $40,000.

[It is disproportionately women who will be hit by this, given they are more likely to be in part time and low paid jobs And I gather the government is flagging using household income as the basis for this. So if your partner has a good job, then under this option you will potentially be required to pay your debt back despite the fact you might be earning well below the threshold. It is disproportionately women who will be hit by this, given they are more likely to be in part time and low paid jobs.]

‘Introducing an across-the-board student loan fee to help recover costs for the HELP loan system.

‘Increasing repayments from high-income earners.

‘Introducing partial fee deregulation for certain flagship courses (e.g. high demand ones such as Law and Medicine).’

On top of that the government is cutting the funding by 20% (about $120 million) for the low socio-economic transition program it has into Universities.

So what are all these finding cuts aimed at? As well as reflecting a government obsessed with the market and market solutions to the very problems the market creates, the cuts are about giving enough money to government to fund business tax cuts, and individual tax cuts for those on $180,000 and those on more than $80,000. I will explain the individual tax cuts first.

The Abbott government introduced a temporary Budget emergency levy on those earning more than $180,000, where the top marginal tax rate of 45% kicks in. These 2% or 3% of income earners pay a temporary levy of 2% on top of their 45% rate. The government will allow the levy to end in 2017. This gives, as Labor points out, a tax cut of almost $17,000 to someone whose income is one million. A couple of things. This shows you the priorities of this government. And has the Budget deficit ended? No, in fact it has more than doubled under the Abbott/Turnbull governments.

The government will also increase where the second top marginal tax rate of 37.5 cents in the dollar kicks in cut from $80,000 to $87,000. 75% of those earning taxable income earn less than $80,000 a year. As Greg Jericho in the Guardian points out, the figure does not include people on pensions and others who do not earn taxable income or earn below the tax free threshold. Only 14% of the population earn more than $80,000.

Jericho also gives us the figures for average wages including break ups for women and men, and including all workers, not just full time worker averages. He says:

‘The current average full-time earnings for men, at $87,600, is 25% higher than the $69,846 average for women full-time workers. The average for all male workers, at $71,453, is 50% higher than the average earnings of $47,595 for women.’

He goes on to say:

‘But even among men, the median income is well below the $80,000 mark. In 2013-14, the median male earnings of $61,032 had such workers a long way from worrying about bracket creep taking them above $80,000.

‘At the current wages growth rate of 2.2%, they can expect to be earning more than $80,000 by 2028.’

This graph from Jericho captures the points well.

Those below $80,000, the vast majority as Jericho makes clear, get no tax cuts or equivalent benefits in the Budget. Indeed the Budget projections are that revenue as a percentage of GDP will increase slightly over the next four years. This is because those 86% people on wages or other earnings below $80,000, will get pay increases that increase their average tax take. In other words workers below $80,000 are the cash cows for this government. The government won’t address bracket creep for most workers. It is all about robbing the poor and working class to pay the rich.

The ten year ‘plan’ to cut company tax rates starts off with small business and then expands to include Medium sized businesses and then big businesses by the end of ten years. By then the company tax rate will be 25%, down from the current 30%.

Three days after the Budget the government was forced to admit that the cost of these cuts over ten years would be $48 billion. It will be more than that because as Treasury admitted, under questioning from Penny Wong in Senate Estimates, that this was the cost of 2 of the 11 tax cuts.

The government claims these company tax cuts will increase growth, jobs and wages. This is supply side or trickle-down economics. The idea is that the more profit business has in its pocket the more it will invest in new development and hence increase growth and with it employment and wages. One version of the argument goes that all the increased activity leads to more revenue not less.

The Australia Institute and others have looked at the history of this approach and shown there is no correlation historically between company tax cuts and growth, employment and higher wages. The main correlative with higher wages is strike action.

The other problem with supply side or trickle down economics is that shareholders will demand bigger dividends and competition will drive businesses to invest in labour saving devices.

Now the government claims that it will pay for part of these tax cuts for business by a crackdown on tax avoidance by big business. The much vaunted to be introduced Google tax will bring in, wait for it, $100 m in the first years. And hen $200 million after that. Seriously? The rest of the supposed $3.9 bn looks like it will come form a task force in the ATO set up and employing 1000 people. So those staff cuts of 4400 in the ATO look like they might have been the main reason for the increase in tax avoidance by big business.

Even then $3.9 bn is small bikkies. Up to $1 trillion of Australian assets might be held for example in tax havens.[The Tax Justice Network estimates up to $32 trillion is hidden in tax havens, and with about 2% of the world economy Australia’s share might be $700 billion or more.]

Half of global trade is routed through tax havens. One hundred and fourteen (57%) of the top ASX 200 big businesses in Australia have subsidiaries in tax havens. The biggest tax havens are the City of London and US states like Delaware.

Thirty six per cent of big business, according to the ATO’s company tax transparency report, pay no income tax. That untaxed amount is $454 billion, and that is before we even look at the low taxed companies. A small tax on that gross income, say 3%, would yield $13 billion.

The government has adopted Labor’s tobacco excise increase. This will raise an extra $27 bn over ten years. It is, to echo Tony Abbott, a workers’ tax. It is the reality that poorer people and lower paid workers smoke much more than the middle classes and the ruling class.

The government has made a few changes to the superannuation tax concessions. The top ten percent of income earners get 38% of the benefits, almost $12 bn of the $30 billion the concession cost annually. The government’s measures will recoup about $1.5 bn of that $12 billion.

The Government won’t touch negative gearing which reduces government revenue by over $5 bn a year. Fifty per cent of those negative gearing losses flow to the top ten percent of income earners. They also won’t touch the capital gains discount where 54% of the benefits worth $6.15 bn (about $3.2 bn) go to the top ten percent of income earners.

I said before that the Budget is all about robbing the poor and working class to pay the rich. Hopefully my talk today has given some backing for that.

So what can we do? The focus of much of the electorate is on the election. And that is understandable. However the ongoing attacks on the poor, on students, and on workers, are not going to end because of the election. There is something more systemic going on. Profit rates around the globe began to fall after the end of the post war boom in the late 60 and early 70s. Neoliberal policies stabilised that and turned it around a little, until the mid 1990s according to a number of leftist economists, but at the expense of the rest of us with increasing inequality. Most of the benefits of the increases in growth have gone to capital and the rich.

In Australia the economy wide average profit rate during the mining boom was tied to the mining boom which in turn depended on a strong Chinese economy. The end of the mining boom and the weakening of the Chinese economy have seen average profit rates in Australia begin to fall from about 2013.

The current Budget fits into the same pattern as previous Labor Budgets when it was in power. It was Labor for example who cut the single parent payment and forced more single parents, 90% of whom were women, into deeper poverty. It was Labor who attempted to cut $2.3 bn from higher education funding when it was last in government, a cut the Abbott and now Turnbull governments were happy to continue.

The Budget figures show that spending as a percentage of GDP will increase slightly over time. In part this is because of increased defence spending, including the $74 billion over time on the 50 submarines and 24 jet fighters. In part it is because more people will be accessing the pension; in part because health spending increases at rates well above inflation; and in part because social welfare payments will go up even if the numbers don’t.

A contributing factor too is infrastructure spending, in particular on transport for business to get their goods and minerals to ports and airports to be exported. There is also some discussion of funding public transport in major cities, but the $23 billion available for that is dependent on the States privatising assets. However we need to keep this in perspective.

The amount the government will spend on infrastructure is small and the private partnership model won’t produce much government investment unless there are big monopoly rents for the ‘lucky’ businesses involved to make.

Turnbull is now talking about funding major transport developments through value capture. When you build a train line or tram line to a suburb, or through a rural town on the dream of a Melbourne to Brisbane inland railway, it improves the value of nearby land. This is a pretty weak rationale and funding base for building such infrastructure.

And of course the government is slashing adequate spending on health and education infrastructure back to very small and inadequate increases.

On Wednesday 11 May there will be a rally at ANU against the attacks on higher education. Our task as socialists has to be to make the case that the attacks on the poor, on students and workers are about shifting wealth from labour to capital. We have to argue that protests and strikes are the way to resist these attacks, whether they come from the LNP or Labor. Now I know not that many students are listening. Our task as socialists is to talk to that small minority who are, to keep alive the flame of resistance and to make the arguments for a new society where funding for basic services like health and education exists to satisfy human need and where we decide democratically what is needed and what is produced.

The drive to attack the poor, students and workers is systemic. It requires a systemic response.

If you are interested in these ideas I’d urge you to buy a copy of Solidarity magazine. As a bonus and extra inducement it has an article by me on the Panama Papers and one by Hannah on the rise of Trump. If you are interested in these ideas and want to fight the system that produces attacks on students, the poor and workers, I’d also urge you to consider joining Solidarity.

Thank you.

I will be speaking on this at 1 pm on Thursday 12 May in room G 17 of the Crisp Building at the Australian National University. Here is one of the Facebook event links.



Comment from Lorikeet
Time May 9, 2016 at 2:03 pm

A very interesting read. Thanks John.

Comment from Lorikeet
Time May 10, 2016 at 2:55 pm

I don’t know anybody who thinks employers should receive half the value of a pension to employ a young person. It’s a sad day when the welfare dollar gets redistributed to bosses so they can rely on government to pay their wages bills.

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