SEARCH News May 2023

Welcome to the May 2023 edition of SEARCH News.

You can download a copy here (4.5MB).

Our editorial, which you can read over the fold, is our response to the Federal Budget which was handed down by Treasurer Jim Chalmers on 9 May. 

Also in this edition we feature articles by Peter Murphy, Patricia Hovey and Howard Guille examining the AUKUS agreement and its long-term implications on Australia's foreign policy and independence, as well as from Casey Thompson who provides us with a briefing of the recent launch of the Evatt Foundation's annual journal '90 Seconds to Midnight' which includes essays from leading Australians including Peter Garret and Sharan Burrow on the urgency of nuclear disarmament and peace.

Dr Patricia Ranald from AFTINET takes a look at a recent campaign victory in the updated Trans Pacific Partnership agreement, and you can read about our latest event with Prof. Jim Stanford from the Centre for Future Work (you can watch a video of the event here).

Download the May 2023 edition of SEARCH News.

Editorial: Labor Dodges Tax Debate in First Full Budget

The Federal Labor Government’s first full Budget has been delivered, and to paraphrase the government themselves, there’s a long way to go.

Contained within the Budget papers are many initiatives that are to be welcomed. The government has scrapped the draconian Parents Next program and restored the single parent payment for families with children up to 14 years of age, funded significant wage increases in aged care and early childhood education, targeted funding for bulk billing under Medicare, committed new funding for the Pacific and the implementation of a National Net Zero Authority to name but a few.

However welcome these measures are, they are overshadowed by the government’s unwillingness to take on tougher political challenges and thornier problems, especially when it comes to the challenge of raising revenue and rebuilding a fairer tax system.

The government has not reversed the previous Coalition government’s Stage Three income tax cuts which benefit high income earners, and it hasn’t implemented any substantial reform of the housing system, the greatest source of growing wealth inequality.

While it includes a small increase in income support for the unemployed ($2.80 per day), and some modest but welcome temporary cost of living measures on energy prices, it does little to reduce the numbers of people living below the poverty line – 3 million people at last estimation.

Cassandra Goldie from ACOSS said in their post-Budget appraisal:

“The government is providing an increase of $2.85 a day for people with the least. The Stage 3 tax cuts will deliver $25 a day to people on the highest incomes. We have our priorities wrong.”

The failure to address inequality has enormous costs, both social and economic.

The ACOSS 2022 Poverty in Australia Snapshot found that there are 3.3 million people (13.4%) living below the poverty line of 50% of median income, including 761,000 children (16.6%). We know form the pandemic response, when payments were raised, that this level of inequality is a political and economic choice – and it is a poor one. And when the RBA admits that the system requires 1 in 20 workers to be out of a job to control inflation, then it is fundamentally wrong to keep those people in poverty.

We know, empirically, that there is a cost to inequality. Widening inequality reduces living standards for all and `leads to social fracturing and environmental destruction. The Treasurer’s own rhetoric acknowledges this. Yet the government remains straightjacketed by myths about fiscal surpluses and wage-push and demand-led inflation. They have therefore budgeted for a small surplus and defended the $20 a week rise to Jobseeker as being all they can afford.

As noted at our recent SEARCH forum with Dr Jim Stanford (see inside), the inflation that fiscal restraint is meant to tame is being caused by the preponderance of price-setting power of a few mega-firms, not by workers. Therefore, a Budget that restricts the spending power of working people does nothing to quell inflation. Tax increases and greater regulation on these hugely profitable firms would be a fairer step. The only revenue measure of this kind has been to the Petroleum Resource Rent Tax (PRRT).

But again, the changes here don’t go nearly far enough. The increase to the tobacco excise raises more money than the change to the PRRT. As the Centre for Future Work said in their Budget briefing, the changes to JobSeeker and the PRRT ‘seem like half-measures, mostly serving to highlight the need for more action’. The gas companies are still making off with finite resources, creating more carbon pollution, and contributing very little to the welfare of the Australian people for the privilege.

To bring down a true ‘Labor Budget’, far more ambitious and far-reaching tax and spending changes are needed. Research presented by Ben Spies Butcher and Troy Henderson at a SEARCH event showed that raising Australia’s tax to GDP ratio to that of Nordic nations would allow for genuinely decent income support for people looking or work, studying or retired. That should be what Labor is aiming for, not the limited and limiting increases to revenue they have outlined in the forward estimates.

However, large increases in revenue will all be for nought if the money is not spent on real priorities such as supporting human need and tackling climate change. Unfortunately, the long-term Budget plan seems to point to different priorities. This Budget marks the beginning of a decades-long spending spree on defence with budget papers showing spending for 2023-24 will reach $52.558 billion, up from $49.131 billion in 2022-23.

So why has the government taken this conservative approach and how can we overcome it?

Partially, the answers lie in understanding the government in the context of Labor’s loss in the 2019 election and the experiences of the Rudd-Gillard governments. Backlashes to modest reforms to capital gains tax and negative gearing in 2019, as well as the campaign against the Resources Super Profits Tax in 2009, will have lowered the horizons of many in the government.

Understanding this within the context of the effects of neoliberalism including declining trade unionism and the transformation of social citizens into atomised individuals provide us with important insights which are necessary for formulating a plan to win.

SEARCH will be discussing the path forward to Voice, Equality and Peace at our forum on 28 May in Sydney, click here for details.