The 2019 Budget entrenches neoliberal inequality

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Snake Oil

I’ve listened hard for the sound of wealth trickling down but all I hear is the sound of the excluded still waiting

Amid the fanfare heralding a surplus that is better described as being more diaphanous than definite, Budget 2019 masks the story of the entrenchment of inequality.

It is a story that has its roots in the history of neoliberalism in Australia, a history that arguably begins with the Hawke-Keating years, peaks in the Howard years, descends a little and plateaus in the Rudd-Gillard years, and then explodes in the Abbott-Turnbull-Morrison years.

It is a history that seems to obsess with creating budget surpluses, of exercising fiscal restraint, imposing austerity where needed, all the while looking for ways of paternalistically guiding and disciplining the people, and then suddenly, especially before elections, exercising unfathomable largesse in the form of tax benefits and cuts.

It is a story that celebrates the search for the surplus with messianic fervour but the reality is really about the creation of surplus people. These are the people who are left out and often made to feel that they are left over, surplus to the economy: people on low pay or no pay, young people, sole parents, people experiencing homelessness, people living with a disability.

These are the people who bear the brunt of inequality. These are the people who copped an absolute walloping in Budget 2014, which made an artform out of cruelty, especially to the young unemployed.

But the more insidious viciousness has been masked in this year’s budget, which does not contain the same kinds of frontal assaults on people but rather entrenches, as a fait accompli, a trajectory of deepening inequality.

In contrast with even the wage increases that the government has been projecting but which have never eventuated, the tax cuts only increase disposable incomes for working people by less than 1% (and by zero for the lowest-paid).

You cannot help but frame the modest tax cuts for working people as the price the government is willing to pay to achieve its ideological vision of a flatter tax system with excessive benefits going to the wealthy.

Removing the 37% tax bracket in 2024, as planned, meant reducing the tax on all income between $45,000 and $200,000 to 32%. The tax on this bracket is now going to be lowered, if the government’s tax plan is passed, to 30%!

This tax flattening goes hand in glove with cuts to social expenditure. It means cuts to social housing, social security, public health and public education; a flattening that rips the guts out of what remains of a fair go. Because when you flatten a progressive tax system you deepen inequality.

The thin lines between the precariously employed, the underemployed and the unemployed are, in the meantime, increasingly blurred, if not almost erased.

Budget 2019 is the capping off of the neoliberal transfer of risk to the individual member of the working class.

An approach that focussed on the long-term national interest would have harnessed this revenue with an eye on the uncertain economic future and would have begun investing in people instead of lining the pockets of those who need the least assistance.

But no, that is not what you do if you are ideologically wedded to inequality as if it were a measure of our nation’s freedom. You abandon the surplus people, even adding to their ranks as we see more people experiencing poverty who are in paid work.

There is, on top of this, of course, the festering sore of income inadequacy for people on Newstart and similar benefits. The urgent need to lift Newstart, currently at $40 a day, so that people locked out of a job no longer need to wage a daily battle for survival from below the poverty line, has become a point of rare consensus, with even the likes of the IPA and Senator Arthur Sinodinos coming out in support of an increase.

The failure to increase this payment can only be understood as a means of humiliating people whilst flagging the perils of social insecurity for workers who are dissatisfied with their pay and conditions in the labour market. The government has already admitted, after all, that low wage growth was integral to its overall plan.

Following 24 hours of serious lobbying the Treasurer Josh Frydenberg suddenly announced that the excluded would now be included in the handout. In reality the about face had nothing to do with need or lobbyists, it was purely political, as they/he discovered the opposition was to announce that it would include those initially excluded.

As for the bizarre exclusion, and then belated inclusion, of unemployed workers from the government’s pathetic one-off energy payment, at $1.45 a week, it won’t even buy a hot apple pie from McDonald’s, let alone keep the heating on at home.

The paternalistic intrusions and interventions in people’s lives, once they have been consigned to the surplus people zone, are many and varied, ranging from the systematic harassment and hounding that has come to be known as robodebt to the hyper-exploitation of young people in PaTH, and then, of course there is that pinnacle of neopaternalism, the cashless welfare card, for which Budget 2019 has set aside $129m to supercharge its racist rollout in the NT and Cape York.

Budget 2019, unsurprisingly, does not include an actual jobs plan, just more of the same blind faith in the hidden hand of the market, alongside the heavy hand of “welfare-bashing” and punishment of people forced into poverty.

Only more of the same behavioural solutions to structural problems. No visionary plan for housing either. Again, according to the neoliberal doxa, housing is best left to the market. Never mind the reality that what should be treated as a human right has become a speculative sport. Nothing to address the gender pay gap, which sits, in the government’s estimation, at around at least 15%. Nothing to support better training or wages in the NDIS.

Millions given to for-profit company Medibank Private to run 1800 RESPECT, the National sexual assault, domestic and family violence counselling and information referral service, after previously privatising it. Over 60% cut in funding for services to asylum seekers.

The purveyors of neoliberalism persist with the fantasy that wealth trickles down. Hence the logic of flattening the tax system and maintaining the pool of surplus people while profits steadily increase. They say that they are merely encouraging the enterprising to exercise their talents for the benefit of us all. But everyone knows that wealth never trickles down. I’ve listened hard for the sound of the wealth trickling down but all I hear is the sound of the excluded still waiting.

  • Dr John Falzon is Senior Fellow, Inequality and Social Justice, at Per Capita. He was national CEO of the St Vincent de Paul Society from 2012 to 2018.

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