Australia’s Labor budget benefits the wealthy at the expense of working people

Several reports analyzing the impact of last week’s first budget by the Labor government have further laid bare the reality that it contains the deepest reduction in living and social conditions for the working class since World War II, while benefiting the wealthiest households.

Resigned or unemployed workers queuing for welfare at Centrelink in Sydney’s central west in early 2020. [Photo: WSWS]

Social inequalities, already accelerated by the COVID-19 pandemic, will soar. The lion’s share of parental leave and childcare measures, along with massive income tax cuts, go to high-income families, while wages and social benefits are decimated by utility bills. energy, food and other essentials skyrocketing.

Prime Minister Anthony Albanese contemptuously hailed the budget as “good for families, good for children, but also good for the economy by boosting women’s participation in the workforce and increasing productivity”.

Albanese’s emphasis on ‘productivity’ underscores the Labor government’s intention to satisfy the dictates of big business and the financial markets for a decades-long intensification of rising output and profits at the expense of jobs , wages and basic social services for workers.

The prime minister said the budget had “provided targeted cost-of-living relief to Australian families”. In effect, the measures are “targeted” at enriching well-to-do households, while pushing more workers, including mothers, into the low-wage labor market in an attempt to make ends meet.

Modeling by the Australian National University’s Center for Social Research and Methods has revealed that “stage three” income tax cuts, which massively benefit high earners, will be the main driver of the rise in skyrocketing inequality from 2024-25, when tax cuts will be due to begin.

The to research shows that Labor government policies will see the wealthiest 20% of households receive an additional $12 billion a year in disposable income in 2024-25. This represents an average of $5,740 per year for each household in the top 20%.

In contrast, the poorest 20% of households will only get an additional $40 million in disposable income in 2024-2025, an average of $17 per year for each household.

The ‘third stage’ cuts, which Labor voted for under the previous Liberal-National government, introduce a near-flat tax system, with a 30 per cent rate from earnings of $45,000 a year up to at $200,000.

This will reduce federal government revenue by $252 billion over a decade. Combined with higher interest payments on the $1 trillion in public debt, mostly caused by corporate donations in the first two years of the pandemic and soaring military spending, this will mean deeper cuts. in health, education and other essential social programs.

This inequality is amplified by a gradual increase in the parental leave allowance from a maximum of 20 weeks to 26 weeks, and an increase next July in the subsidies for childcare from 85 to 90%, the decreasing subsidies not removing only income over $530,000.

Most child care subsidies, set to increase by $1.5 billion in 2024-25, will go to the richest 40% of households when ranked by income, as will the cost of parental leave of approximately $700 million in 2024-2025.

For example, couples with children in the highest income category will receive the largest average gains in total disposable income in 2024-25 ($9,763 per year). This compares to low-income families with children, who will earn only $194 through the three budget measures.

Similarly, residents of the affluent suburbs of Sydney, Melbourne, Perth and Brisbane will earn up to nearly $6,000 a year on average. That’s about six times the average for working-class suburbs. Those who live in the poorest region, the Great Lakes on the central coast of New South Wales (NSW), earn just $236 a year, or about 4% of wealthy Ku-ring-gai in northern New South Wales (NSW). Sidney.

Considering the beneficiaries of the three policies combined, the richest 20% of households earn about 59% of total earnings and the richest 40% about 86%.

Beyond the supposed ‘gains’ of the three policies, millions of working-class households will be far worse off due to the government’s refusal to provide any relief from soaring inflation and interest rates. mortgages.

Model published by the australian weekend estimates that average earners will be worse off by $5,000 a year, and up to $13,000 if they have a mortgage.

Westpac Bank raised its expected peak in the official inflation rate to 8.5% in December, from 7.75% expected by the Treasury. This would lead to a drop in purchasing power of $4,994 in 2022-2023 for a household with an annual median income of $90,800, the equivalent of a 5.5% pay cut.

Some economists predicting the Reserve Bank of Australia’s headline interest rate will drop from 2.6% to 3.1% by the end of the year, the nearly $5,000 drop in real wages median-income households would be exacerbated by 35%, or $7,800. , increase in annual interest bills.

Taken together, this would reduce the purchasing power of the median-income household to $77,998, a drop of about 14%.

These estimates are seriously underestimated because the inflation rate for “non-discretionary” items, including food, electricity, gas and gasoline, is already 8.4% and expected to soar. The budget revealed that electricity prices for households are expected to rise by 56% over the next two years and gas prices by 40%, while wages remain stifled by inflation.

A feature article by the Australian Broadcasting Corporation estimates that a 56% rise in the price of electricity will raise an average quarterly bill in New South Wales by around $419 to $650, or around $53 per week .

As the WSWS has warned, the budget is the start of a new offensive against the wages, jobs and social conditions of working-class households in order to impose the dictates of the financial markets.

The growing nakedness of this assault in the eyes of workers sparks nervous commentary in the corporate media. Doubts are being expressed about the ability of the Labor government to take the necessary steps to impose the full burden of the global capitalist economic crisis fueled by the ongoing COVID-19 pandemic and the escalating war unleashed by the United States against Russia in Ukraine.

Writing the weekend in Murdoch’s media Australian, which backed the Albanian government, editor Paul Kelly warned that blaming the previous Liberal-National government for the crisis “has reached the point of exhaustion”. After the budget, “labour cannot shirk responsibility for the state of the country.”

The mainstream media are demanding that the government go much further in cutting social spending, including health and disability services. Saturdays Australian Financial Review the editorial warns Albanese that “fixing the budget and reviving productivity growth will decide the fate of his government.”

Labor was elected in May with less than a third of the vote and its support has plummeted to near-record lows in working-class electorates. It relies heavily on unions to continue to suppress workers’ demands to raise wages to match inflation and the opposition of health care workers, teachers and other workers to low pay, intolerable workloads and budget cuts.

But after decades of betrayals of workers’ struggles, all of the pro-corporate unions themselves are largely discredited, and their membership has dwindled to around 14% of the workforce and 5% among young workers.

To organize a counter-offensive throughout the working class, the Socialist Equality Party urges workers to establish rank-and-file committees, independent of the unions, and to unify their struggles with workers around the world through the International Workers Alliance of Rank-and-File Committees.

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