May 13, 2014
It looks that the 2014 budget promises growth at the same time as cutbacks designed to deal with an immediate crisis that doesn't exist. Behind the rhetoric and spin is the neo-liberal politics of austerity with its push for user pays, smaller government that will reduce economic growth and cause economic stagnation in Canberra.
The public service job cuts will have negative effect on environmental protection and give Big Mining and fossil fuel industries greater scope for its environmental destruction. That is what smaller government and rolling back green tape means. A neo-liberal mode of governance means no green tape restricting an open for business Australia, irrespective of the environmental consequences.
The rhetoric of good economic management in this context means a neo-liberal mode of governance. So Australia sells assets and cuts welfare spending to rein in a debt burden that is already the second-smallest among developed nations whilst refusing to reduce the vast amounts of subsidies and tax credits given to corporations--eg., the diesel fuel subsidy for the mining industry. The cuts in welfare spending for everyday people and disadvantaged people is necessary because these kinds of support create dependency and promotes laziness.
In this context “reform” is a synonym for “cut”, and ideology trumps evidence. Austerity is the dominant political paradigm of our time. What's usually meant by austerity is ‘fiscal consolidation’, a term that basically means reducing the budget deficit in order to create the conditions for stable growth, so that growth over time reduces the net debt of the state. Fiscal consolidation is a perfectly sensible thing to do when you are growing and pay back some debt.
Austerity is when is when you try and do this in conditions where you don’t have economic growth (as in Europe) or entered a period of low economic growth as in Australia. The LNP's 'contribute and build' rhetoric refers to ‘expansionary fiscal consolidation’. This nonsense on stilts says that we are so worried about government debt that just waiting for the government to slash the welfare budget by 50% so that we can be confident that ten years time that there will be a smaller tax bill as a result of this. So we will go out and spend and invest big time and the big growth rates return.
The theory that sits behind this politics of austerity is that of Public Choice, and this attributes the rise in government debt to an inherent tendency of democracies to“live beyond their means." The trajectory of debt management by consolidation is in the direction of a neo-liberal state that is “leaner,” less interventionist, and, in particular, less receptive to popular demands for redistribution than was the case for social democratic states of the postwar period. So we have declining public investment, increasing privatization of government services and increased reliance on private-public partnerships.
Will this will restore economic growth and secure democratic legitimacy for the Abbott LNP Government?