After the Budget - debating our future

Returning again to Ken Davidson’s projections which assume “a deficit of $54 billion in 2009-10 and $188 billion in 2012”: the “interest on the debt would be only 0.6 per cent of GDP”. That’s less than $6 billion a year in the context of an economy valued at more than $1 trillion. The amount is significant but well within our means. And when considered alongside the toll that would otherwise be taken by unemployment on tax receipts and broader economic activity the effective cost is lower still.

Again, it raises the question of why Labor is not providing bolder and more assertive leadership.

Labor’s budget does at least not fall into the austerity trap, by which disinvestment in infrastructure and public goods and services feeds a recessionary spiral. While most of the investment mooted in the budget it not new at least Labor opts for a deficit to cushion the economy, and support tens of thousands of jobs.

Labor could go further - and should go further - but there is a clear distinction now between Rudd Labor and the conservatives.

The real losers in Labor’s 2009 Federal budget are the unemployed who languish behind other pension groups. They are deemed “unworthy” in the eyes of reactionary pundits of “popular opinion”. Here Labor’s timidity in the face of injustice is cause for despair and anger from those who have hoped for a stronger social justice agenda from the government.

Single aged and disability pensions are now “pegged to CPI with a new pensioner cost of living index or 27.7 per cent of male average weekly earnings” (MATWE), “whichever is the highest”.

These reforms while a genuine and welcome improvement do not meet the minimum demanded by pension lobby groups or the more modest benchmark of 30 per cent of MATWE proposed by me. Certainly, these measures are not sufficient to eliminate or even meaningfully mitigate poverty among some of the most vulnerable Australians.

Even assuming an activity test, the unemployed are expected to make do on $454 a fortnight. The full single aged pension, in contrast, will rise to $673.36 a fortnight: a gap of more than $100 a fortnight between this and “Newstart” (the unemployment pension).

The plight of sole parents is also of special concern: their support payments should be pegged the same as the aged and disability pensions and should be provided until the youngest child reaches 16 (instead of 8, as introduced by the Howard government).

The onus is now upon the Greens and independent Senators to apply pressure to Labor: pressure for a bolder expansionary deficit directed towards sustaining employment, and future productivity and capacity for our economy. And further, we need for those Senators to apply pressure upon Labor now for Newstart to be raised to the point of parity with other full single pensions.

Finally, we need a movement WITHIN Labor and throughout Australian civil society towards these and other essential demands of social justice: an expanded welfare state; a broad and inclusive social wage; and a democratic mixed economy.

There are many initiatives Labor could undertake. We will mention just a few.