10-30-07, 9:34 am

The Howard Government was re-elected in 2004 largely on the basis of Liberal Party promises of record low interest rates as against high interest rates and bad economic management from a Labor Government. Three years on and the Howard Government still claims that Labor does not have the skills or experience to run the economy, but it is ducking for cover regarding interest rates.

The Reserve Bank of Australia’s five increases in the official interest rate since the last election, and the expectation of another rise this week put lie to the promise of record low interest rates. As for the Howard Government’s claims about being good economic managers, they are just as false as the interest rate promises.


The government has not fooled the public by pumping billions of dollars into income tax cuts instead of using the money for essential services and the welfare of the people of Australia. Opinion polls consistently confirm that the overwhelming majority of Australians would prefer the money be spent on public health and public education and other pressing needs than in tax cuts.

Treasurer Peter Costello claims that the tax cuts will build a stronger economy: “…we will be able to grow the economy and that will provide us with the base to fund health and education”, Costello argued in an interview with Kerry O’Brien on the ABC TV’s 7.30 Report (23-10-07).

“This is a very ambitious plan for Australia’s future economy… only the Coalition has the experience and the expertise to actually implement this plan”, Costello boasted, referring to his five-year plan for tax cuts. The plan might be “ambitious”, but as far as policy goes it lacks any credibility and amounts to criminal neglect of the needs of the Australian people.

If Costello were the slightest bit interested in properly funding health and education, he would have used some of the billions of dollars of tax cuts on those and other pressing social needs and public infrastructure (public works). As Treasurer he would not have been cutting funding to public hospitals and state schools, which his government has consistently done over the past decade.

Reports in the media this week confirm the impact of these cuts. Over the past decade government funding per student place in universities has been reduced by 20 per cent.

The Australian Medical Association (AMA) reports that the capacity of Australia’s public hospitals has been slashed by 60 per cent over the past 20 years. Too many hospital beds have gone and that has led to dangerously full wards where patient care could be compromised. More than third of emergency department patients are not seen within the recommended times and patients who need elective surgery are also waiting too long, the AMA says.

Federal Health Minister Tony Abbott blames state governments, accusing them of poor economic management. The reality is that the Federal Government has deliberately wound back its contribution, with the aim of driving more people into the private system. It wastes over $4 billion a year on Private Health Insurance Rebates and other subsidies. Despite all the undermining of the public hospital system, it still is far more efficient, far cheaper (no built in layers of profit) and has greater capacity to serve the community than the private profit-driven system.

Australian Education Union federal president Pat Byrne reports that the Federal Government’s failure to adequately fund public schools is making things harder for students. Parents and school communities are doing the hard fundraising work to pay for basic school services. Schools across Australia are now getting $1 billion less per year than they would have been if the funding share for public education had been maintained at 1996 levels”, Ms Byrne said (See page 4).

In the ABC interview Costello confirms that the cuts have nothing to do with lack of funds. He says: “… returning it to taxpayers is actually the right thing to do. Otherwise the Government would have far more money than it needed. So for five years now we have been aggressively returning money back to the taxpayers.”

If re-elected the government has a five-year plan for further cuts.

To sum up Costello’s position: tax cuts are needed to “grow the economy” to provide funding for health and education. The tax cuts are being funded to a large extent by cuts in funding to health and education. Call that good economic management!

One of the government’s aims is to increase public spending – the wealthy get the largest handouts – to grow the economy. According to the government this extra spending will not put inflationary pressure on the economy.

Wage rises cause inflation: myth exploded

This is the same government that opposes wage rises and claims that wages will not be kept so low under Labor. WorkChoices, in particular AWAs, have been very successful in lowering or keeping the lid on wages. “Wage rises are inflationary” the government and employers are always telling workers.

Wage rises are not in themselves inflationary. Employers oppose wage rises because they reduce the share of wealth created by the labour of workers that corporations cream off in profits. When wages are increased they try to recoup the loss by increasing prices.

It is interesting that the Reserve Bank reports serious inflationary pressures on the economy, yet wages have been kept down. None of the economists tracking developments in the nation’s economy are pointing to wages as the cause of inflation!

Tax cuts may ease the pressure on employers for wage rises because they put a few more dollars in the pockets of workers.

The government’s “fiscally responsible,” neo-liberal policies of cutting the funding of the public sector, reducing income taxes, increasing the burden on the poor through the GST, and privatisation have failed dismally. The more than $60 billion per annum wasted on the military as deputy sheriff to the USA is simply another example of why this government has to go.

Unfortunately the ALP leadership is pursuing very similar policies which will also have a disastrous impact on the community. Neither of the major parties have policies committed to expanding and strengthening the public service, nor the political will to meet the pressing needs for public education, hospitals, aged care, child care, public transport, community services, public housing, water management, climate change, public infrastructure. Many of these failed policies were commenced under the former Hawke/Keating Labor governments. They laid the groundwork for Howard and team of privateers to implement their policies that have failed the people.

The economy is not in a good state. There are tough times ahead. The first task is to get rid of the Coalition Government. Even Howard has admitted defeat by saying in an interview on Melbourne’s 3AW, “… what really matters now is which side of politics is better able to better manage an increasingly hostile financial environment.”

The job in these elections is to make sure the Howard Government suffers an almighty defeat, and that The Greens do as well as possible, to ensure that the Coalition does not gain control of the Senate or that its allies such as Family First have the balance of power. The Greens have many sound policies, not just on the environment, but on industrial relations, health, education and other important social issues.

From The Guardian