The Australian Budget – What’s The End Game?

Hockey and Abbott’s mantra: “Change the culture of entitlement”. Wow – a bold statement from a people dripping with entitlements. Their benefits: A generous super package, resettlement allowance, a parliamentary (retirement) allowance of 50% (of $195K) after only 8 years of service, and don’t mention the 50 free flights per year, free office and more for the average back bencher. This is the generous trough of entitlements that parliamentarians have bestowed on themselves.

Culture starts from the top, and a pay freeze which will probably be made up by a bonus later on is deception. Remember those making these decisions are being made by the 1%. And most of Canberra is making more than 98% of other tax payers.

Interestingly it seems that this government aspires to the capitalist ‘American dream’. Well firstly the US is no longer a democracy (read here and here) and is essentially run by crony corporatism. A brief glance at what is happening in the US (before we discuss our budget): The decline in the quality of American jobs is one reason for the implosion of the middle class in America. Now, 9 of the top 10 occupations in the USA pay a wage less than $35,000 a year. Overall, an astounding 59 percent of all American workers bring home less than $35,000 a year, and from data exploring over 114 million US households, the median household income in the US is $50,502. Cashiers, for example, all 3.34 million of them in the US, earn $20,420 each year. Food prep and serving staff, 3.02 million, earn $18,880 annually. And Hockey wants wages to come down. Be warned. It is hard earning a decent living wage in America if you are not a doctor, lawyer, politician or feeding from the corporate and bankers troughs of free cash and no interest rates that are flushed into Wall Street by the Federal Reserve.

Back in Australia it seems were doing okay with the average full-time male job at $70K, female $45K and an average across full-time careers being about $57,000. If one includes part time workers, the average for the working adults is $46,900. But Australia’s asset (housing) prices are very high, so we have to factor in the cost of living.

But what is the end game of the budget? It might take some time to sort all this out. But privatisation is a big (not spoken about) factor. The pressure on the States is also to encourage either privatisation or the rise of the GST. The populace will probably find selling off “their” assets much more palatable in the short term. The government has signaled it intends to privatise Australian Hearing, Defence Housing Australia, the registry of the Australian Security and Investments Commission, and the Royal Australian Mint. But the carrot will be there for the States with a new “asset recycling” program funded (at $5bn) to encourage state governments to privatise their assets and invest the projects in infrastructure. That sounds great. But as I have mentioned in previous blogs, we will eventually be renting Australia from the global corporates.

And the question is: Will these infrastructure projects be government-private partnerships where the tax payers are funding a sophisticated corporate welfare system – where in the end – tax payers are paying the bulk of the build (with tax and sold assets) and the corporates reap the profits into the next century?

I am also suspicious of the seemingly well-intentioned “medical research future fund”. The average Joe will add a co-payment of $7 to a GP or out-of-hospital visit, and these health savings will go into a this “fund” to generate a permanent interest stream to fund important research. I really hope that we are not going be taxed and that this money is directed back to Big Pharma to do more research on mainstream drugs – which we will have to pay more for – as the Pharmaceutical Benefits Scheme co-payments to buy medicine will also increase by $5 to $42.70 for general patients or by 80c to $6.90 to concessional patients. Maybe I am being too cynical, but it would be interesting to note who lobbied government in this direction. But I do hope that the research is given to genuine Australian researchers not working in the interests of Big Pharma.

All I hear on the budget talk is about the debt (and about a the pain) – and about slamming Labour. Nothing about vision… about society. To me it feels like a bunch of ‘corporates’ secretly payed for the ink in their pens.

More on the other aspects of the budget later.