The Budget in Context: Beyond the Nuts and Bolts

The Budget in Context: Beyond the Nuts and Bolts

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It’s been more than a month (at time of writing) since the release of the 2014/2015 Federal Budget. And so much for the political ‘apathy’ of today’s youth—we’re all still talking about it. This is certainly one of the most controversial Budgets in recent history. Some are even thanking the Coalition for re-igniting the fire of student activism and outrage. But so much of the coverage of the Budget, in all forms of media, focuses on particular policies or areas: a piece on university fee deregulation here, an article on the GP ‘co-payment’ there, and plenty of political cartoons depicting a cigar-chomping Treasurer rolling in piles of money. One could colloquially refer to these as the ‘nuts and bolts’ of the Budget. As important as criticism of specific policies is, sometimes we get caught up in these types of coverage, and fail to appreciate how all these proposed changes fit into a broader context. That context is the current hegemonic paradigm of ‘neoliberalism’. Those of you who have done the kinds of Units where you do essays—politics, economics, business, sociology, etc.—have probably come across this term. If you haven’t, however, don’t stop reading! I’ll try to keep this accessible and brief. Your may have heard people describe neoliberalism as ‘the ideology of free markets’, but it is a little more complex than that. Certainly we associate neoliberalism with the rhetoric (or language) of ‘free markets’ (1), but it is a multifaceted paradigm. In the words of David Harvey, a key scholar in this area:

We can interpret neoliberalisation either as a utopian project to realise a theoretical design for the reorganisation of international capitalism, or as a political project to re-establish the conditions for capital accumulation and to restore the conditions for capital accumulation and to restore the power of economic elites. (2)

Basically, taking this definition of ‘neoliberalism’, there are two sides to what Tony Abbott is doing. A dramatic oversimplification of Tony’s reasoning for the budget is that ‘markets are the proven answer to the problem of scarcity’ (3). That is the ‘utopian project’ aspect of the Liberals’ neoliberalism. But what does Harvey mean when he refers to the ‘political project’ part of neoliberalism? This is where things get interesting.

Generally speaking government spending as a percentage of Australia’s GDP fluctuates between 24% and 26%. This figure is significantly lower than many other OECD (or, more simply, ‘rich’) countries. Most importantly, the spending cuts that have been proposed by the budget lower that percentage by 0.1%. That’s right. $80 billion cut from health and education, wide ranging cuts across the public sector (4), further cuts to foreign aid (which directly contradicts a plethora of international agreements and treaties, by the way)…I’m sure you know this list off by heart. All of these cuts, justified by a manufactured budgetary crisis, make essentially no difference to the government’s bottom line. The rhetoric of neoliberalism – which the Coalition uses with panache – calls for reduction in the size of government, and yet the size stays the same? That is why all of this is a political project.

The budget wasn’t just a list of cuts. In fact certain people and corporations will either continue to receive entitlements without change, or even be significantly better off, thanks to this budget. Hundreds of millions extra to fund mining exploration (as if those mining companies can’t afford it themselves). Hundreds of millions for a school chaplaincy program (remember how hard-core-Catholic Tony is?). At least $24 BILLION for Joint Strike Fighter jets, with some experts suggesting that figure will blow out even more.

When Joe Hockey talks about ending the ‘age of entitlement’, it would be silly to think that would apply to everyone! No, entitlement continues: $11 billion given in the way of subsidies to the fossil fuel industry; $9 billion of funding for private schools, while public schools are looking at massive cuts; even negative gearing in the housing market costs the government $15 billion a year.

The ‘crisis’ that this Budget is supposedly solving doesn’t exist. I won’t go into detail here, as this has had plenty of coverage in mainstream media – suffice to say several Nobel Prize-winning economists, and even the IMF, have said categorically that Australia does not face any kind of economic or budgetary crisis. But the really incredible thing is that all of these cuts don’t actually decrease the deficit. That is why we need a more nuanced definition of ‘neoliberalism’. The ideas behind this budget are not new. All it does is re-direct government spending: from public schools to private schools; from foreign aid to fighter jets; from renewable energy investment to further subsidies for fossil fuel; from pensioners to upper-middle-class parents – you get the idea. It is about changing government spending, not reducing it.

This Budget is not about a crisis. It’s not about creating jobs (unemployment figures have been forecast to rise thanks to this budget). It’s not about making hard decisions now so for the sake of long term diversified growth. It’s about creating markets where there were none (aka university deregulation), and creating structural conditions in which wealth inequality can continue to grow. If the Budget is understood in the context of neoliberalism, it can be understood for what it is – a purely ideological project.

Matthew Ryan Honours Student Department of Political and International Studies UNE.

Note: Any card-carrying Liberals reading this might assume that I’m a Labor voter, or worse, a ‘greenie’. No I am not, and just because I am critical of the current government does not mean I am not also critical of other parties. Disagree with my ideas, fine, but don’t be lazy and pigeon-hole the writer.

1. ‘Free markets’ refers to the belief that all government taxation, spending, and regulation stop the magical ‘market’ from working properly, and is inherently bad. 2. Harvey, D. 2005, A Brief History of Neoliberalism, Oxford University Press, Oxford. 3. Abbott, T. 2014, ‘Address to the World Economic Forum, Davos’. 4. By the way, why is it that 17 000 job losses in the PUBLIC sector is GOOD, whereas job losses in the PRIVATE sector are BAD?

Illustration by Sam Wallman (penerasespaper.com)

 

Matthew is the Senior Academic Mentor at Earle Page College, and is currently studying toward a Bachelor of International Studies with Honours. When he isn’t boring his friends by talking endlessly about Afghan elections (fingers crossed for Ashraf Ghani) or political economy, you can find him running around ‘The Triangle’. Or drinking red wine - from a bottle!

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