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May 15, 2013
The Gillard Govt's budget strategy is one that locks in its long-term social welfare reforms in education and disability in the context of the shortfall in tax revenues caused by falling commodity prices and a high Aussie dollar. This strategy also involves cuts in spending--eg., the baby bonus, university funding, research incentives, and clean energy funding.
Taking money from tertiary education and giving it to high schools is short sighted. It suggests that the limits of Australia's strategy of decent public services + low taxes has been reached in a a post-GFC world. The days of easy revenue for federal governments is over.
David Rowe
It is also short sighted that Australia’s Renewable Energy Agency – the independent institution charged with giving a kick-start to emerging renewable energy technologies and supporting infrastructure – has had its overall funding cut and deferred. What should have happened is a boosting of its the funds to enable the transition to a cleaner economy--eg., a solar thermal energy power station in Port Augusta.
The budget could have the funds by cutting back on the tax breaks for fossil fuels, subsidies for the big miners and subsidies for irrigation farmers. The programs supporting carbon capture and storage, and coal mining more generally, were slashed. The former were all spin, as they were spruiked by the coal companies in the mid 2000s as they tried to fend off carbon pricing and renewable energy support policies.
If the emphasis is on growth and jobs is at the expense of a more sustainable Australia, then it is not clear how Australia's manufacturing base is going to be strengthened to replace the 2015 mining investment run-down. There is still an incoherent roadmap of the Australian economy’s direction as the resources boom comes to an end requiring Canberra to create a 21st century economy.
Austerity is happening, through a mixture of spending cuts in key areas and tax rises, but not the neo-liberal shift to a smaller state. The neo-liberal goal is to attempt to bypass a democratic government to create an integrated global marketplace for financial and mining interests. It involves using the crisis to further the economic reforms needed to undermine the social welfare model and to create a self-organizing market that would allow for mobile capital flows across Australia's borders.
So an economic crisis in Australia has to be manufactured, which is what most of the commentary in the mainstream press is doing with its attack on the Gillard Government for failing to deliver the budget surplus that it had promised. They promised big on the surplus, they didn’t deliver, they look inept.
The attack centred around an $18bn deficit---the government had a spending problem, not a revenue problem--- is designed to destroy the legitimacy of the Labor government so that it is dumped into the dustbin of history, thereby enabling a more compliant Coalition government to implement the neo-liberal mode of governance more effectively in the form of the politics of austerity.
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Australia is an exception to the claim that the West’s economies – including the US’s – are going to endure years of austerity, little or no growth, high unemployment, stagnant living standards, rising inequality and relative if not absolute decline.