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the austerity script is in place « Previous | |Next »
February 27, 2014

The politics of austerity script is in place. Despite the Abbott Government's rhetoric of growth in the short term to reduce the increasing unemployment before the next election there have been, and increasingly will be, cuts in education, health, pensions, and the ABC in order to ensure long term fiscal self-restraint. But there are to be no cuts in defence to ensure greater fiscal consolidation. It seems as if Defence will get more money.

So we are entering an period of rising insecurity and anxiety about the future and the Abbott Government's strategy is one of austerity as a way to regain economic momentum. That strategy is associated with claims that the social democrats are profligate and that their economic incompetency puts at risk conservative-leaning voters private incomes, which are more important to them than anything they receive from the state.

The ALP'S response to the scenario of inevitable decline and despair is that the greatest threat facing Australia's welfare state is the Abbott Government’s swingeing spending cuts. The ALP opposition has decided to defend and preserve the status quo of a strong welfare states in spite of thirty years of neoliberal ideology and the competitive forces of globalisation and the associated small-state proposals of the right.

RoweDAusterity.jpg David Rowe

The script is that fiscal consolidation in Australia is required because an ageing population and rising health costs will blow out the budget in spite of economic growth. Hence the "structural deficit" and being “fiscally responsible" framing hat can only be actioned by real men. Ways to increase government revenue have been ruled out in the pre-budget softening-up period-- the tough political choice by the tough guys is that deficit reduction is to be through spending cuts not tax rises. It looks as if the general thrust of the welfare state roll back will protect the benefits for older people at the expense of families and children who are the working poor.

The concerns of younger generations and marginalised groups of people are already being sacrificed at the expense of elders and well off middle-class citizens. So “new ‘clusters’ of long-term social disadvantage and inequality are emerging as the effects of the global economy attenuates polarisation in labour markets and real wages” and mass unemployment.

The welfare state, which was premised on benefit in return for contributions, has been remarkably resilient to attacks from the Right. However, if bringing new money into the system through taxation is deemed to be politically unattractive, how is the welfare state to defended given shrinking budgets?

Simply preserving the status quo is being seen as economically unviable: it is not possible to achieve sustainable public finances; safeguard universalism; and increase ‘social investment’ spending. So something has to change. What was put in motion under the Gillard Govt was transforming the Australian welfare state--- the provision of childcare, welfare-to-work reforms to support more people into work, and the expansion of university places.

Will the Coalition's roll back of the welfare state involve a shift from the traditional (ie., social democratic) welfare state to a service intensive’ welfare state, and where ‘social investment’ such as public childcare, maternity leave and help for people to find work?

The role of the traditional welfare state was to protect citizens from market forces through unemployment benefits, public health and education and pensions. The activities of the welfare state act as insurance to protect us when times are tough and smooth risks and costs over the lifecycle. Universal entitlements both sustain public consent for welfare states and efficiently distribute both ‘hortizontally’ across the lifecycle and ‘vertically’ to low-income groups

In the liberal welfare state the aim is to equip them to contend in the global economy. The emphasis is on investment-style spending that builds prosperity for the long-term.

| Posted by Gary Sauer-Thompson at 1:45 PM | | Comments (6)


The bad news on jobs across the economy in recent months is depressing.

Will the Abbott Govt support Qantas as it did Cadbury's in Tasmania and the farmers; or will it say no as it did with Holden and SPC?

The Coalition goes on and on about the carbon tax costing business money. Isn't Tony Abbott's $5.5 billion paid parental leave scheme to be paid for by business?

It is to be financed by 1.5 per cent levy on company incomes to be paid by companies with an after tax turnover above $5 million per annum, offset by some changes to company tax rates.

"the Abbott Government's rhetoric of growth in the short term"

The Coalition rhetoric re the climate debate consists of wild assertions that blame every lost job on the carbon tax.

These assertions are not based on any objective consideration of the evidence.

Labor clings to the 18% unionised workers like a floating man clings to a buoy. It is a coalition, a symbiotic relationship that has expired but lingers like a dead dogs last fart.

That is a MIGHTY cartoon.

Wait till they get their FTA- the current damage will be as nothing.