Wayne Swan has been accused by the media and Tony Abbott of waging class warfare with the budget. We wish. Labor’s obsession with achieving a budget surplus has delivered more cuts and continued their failure to adequately fund our public services.

Despite the talk, there is only peanuts for spending on schools, dental and disability care in this budget. Instead Swan has opted for a series of cash handouts to calm concern over the carbon tax and the cost of living.

While there have been some cuts to defence spending and some reduction in tax concessions for the rich, this is not a budget for workers and the poor.

Shamefully, single parents have been targeted for cuts. They will now lose the parenting payment, $120 a fortnight, when their youngest child turns eight, and be forced onto Newstart allowance and the job search queues. The Australian Council of Social Service (ACOSS) slammed the decision, saying: “The major blight on this year’s budget is the unnecessary attack on 100,000 single parents… leaving some of the most disadvantaged families and their children in deficit.”

Although the government expects unemployment to increase, there is only a token payment of $210 a year to those on Newstart and Youth Allowance. At the current rate, Newstart does not even pay the cost of average fortnightly rent in Sydney.

Behind the rhetoric of \"class warfare\" on the rich, the budget is full of hidden nasties

Public sector workers have also been attacked. More than 4200 jobs will go over the next year, including over 1000 in the Australian Tax Office.

Worse still, spending figures for future years indicate plans for further cuts, with $164 million to be shaved from the government’s wages bill in 2013-14. This means either wage cuts or axing a further 5400 jobs.

Amazingly, while the Bureau of Metereology budget will be cut by $13 million, Labor is opening the web site to commercial advertising.

The promise to increase foreign aid has also been broken.

Hitting the rich?

Big business is up in arms over Labor’s decision to postpone the reduction in corporate tax from 30 to 29 per cent. But this was actually forced on the government by the refusal of The Greens and the Liberals to support it in the Senate. Gillard still says she is “very determined” to deliver the tax cut in the future and Wayne Swan has already pledge “more relief” for business in future.

The government is spending the $4.75 billion this saves on cash handouts to families, designed to send the message the government is acting to relieve cost of living pressures and take some of the sting out of the carbon tax.

Wayne Swan says the budget is “Labor to its bootstraps” but John Howard was also willing to hand out one-off cash payments to try and win votes.

The decision to deliver cash handouts comes at the expense of any serious spending on services. Labor has talked up funding for a National Disability Insurance Scheme. But it gets next to nothing: $250 million a year over the next four years. That’s a long way short of the $8 billion a year needed for the full scheme.

There is some money for dental care but it averages just $156 million a year over the next three years, and just $60 million a year is new money, with the rest redirected from another dental program. The government’s report on dental care said it needs $1.8 billion a year just to provide proper dental care for those who can’t afford it.

Add in the $4 billion in annual subsidies that the Australia Institute calculates the government already gives the mining industry—which went untouched in the budget—and the timidity of Labor’s supposed attack on business becomes clear.

Rose-coloured glasses

Ignore Tony Abbott and squeals from the big business. Labor is running a pro-business neo-liberal government. This budget is not a break from that.

And the cuts would be even more savage if not for the rosy projections of economic growth and government income over the next year.

Treasury is banking on a revenue increase of 11.8 per cent in 2012-13. If that doesn’t come off, Labor’s fetish for a budget surplus will force it to wield the axe again next year.

The budget sums rest on the hope that growth in Australia’s economy will speed up to 3.25 per cent next year. But the economic crisis across the globe makes this doubtful. Growth is faltering in the US and China. Europe is spiralling downward to the point where the Economist says it is, “walking, eyes wide open, into depression”.

The Reserve Bank’s decision to cut interest rates by 0.5 per cent a week before the budget shows that the Australian economy is not so strong either. Labor’s push to create a surplus could easily backfire and end up helping drag the economy back into recession.

And for all the spin, it’s clear from this budget that big business wouldn’t be the ones forced to pay for it.

James Supple and Ian Rintoul

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