Australian treasurer reveals economic and political uncertainty

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After claiming for months to have generated a strong economic ‘recovery’, despite the resurgence of the global COVID-19 pandemic, Prime Minister Scott Morrison’s government made another anxious comeback this week.

In a speech that reversed the fiscal policy of the seven-and-a-half-year-old Liberal-National government ahead of the May 11 annual federal budget, Treasurer Josh Frydenberg delayed plans to cut government spending to pay off the hundreds of billions of dollars invested in companies. checkouts during the past year.

Treasurer Josh Frydenberg in conference with the Business Council of Australia [Credit: @JoshFrydenberg, Twitter]

“We will not be making any sharp swings towards austerity,” the treasurer told a large business audience on Thursday at a luncheon at the Australian Chamber of Commerce and Industry.

Frydenberg effectively postponed the so-called “budget fix” to recoup record budget deficits and reverse the soaring public debt to $ 1 trillion, largely produced by business stimulus programs and federal and state grants. ‘worth over $ 400 billion in 2020.

This is a government that two years ago falsely bragged about producing a budget surplus in 2019-2020 for the first time since the global financial crisis of 2008-2009. “Back in black” was even inscribed on party coffee mugs in May 2019.

Despite all the government’s opposition to even partial lockdowns and its increasing demands to lift COVID-19 security restrictions to completely “reopen” the economy, the speech revealed nervousness about the global situation.

“[We] continue to face enormous uncertainty, both health and economically, ”said Frydenberg. He noted that the global death toll had exceeded 3 million, vaccine rollout was limited around the world, and many health systems, including India’s, were overwhelmed. “As long as the virus remains a threat, we face increased risks to the global and national economy.”

Corporate media have almost exclusively portrayed the government’s flip-flop as an attempt to postpone damaging election cuts to social spending until the next general election, scheduled for a year from now.

More fundamentally, however, the delay in inflicting “austerity” reflects the concern of the political elite in the face of growing working class dissatisfaction with the health, economic and social toll produced by government responses to the pandemic, motivated by profit, which allowed it to spiral downward. out of control around the world.

Not only has the Morrison government’s vaccination program turned out to be a mess, ending hopes of a proper inoculation before next year. Quarantine facilities have failed to prevent repeated outbreaks of potentially disastrous COVID-19, and the social crisis is deepening.

At the end of March, the government ended the JobKeeper wage subsidy program, on which more than a million workers still depended for their survival, and reduced unemployment and social benefits to starvation levels. ‘about $ 44 a day, condemning about three million people to poverty.

Payroll and wage data released by the Australian Bureau of Statistics (ABS) on the same day as Frydenberg’s speech provided an early and partial view of the resulting intensification in employment and the financial impact of the pandemic.

Salaried jobs fell 1.8 percent in the fortnight to April 10, and total wages paid fell, even more, by 3.1 percent. Since ABS did not provide any real payroll jobs number, it is difficult to calculate the job losses. But if salaried jobs represent about half of the working population, that would mean the loss of some 120,000 jobs in two weeks.

Young workers are the most affected. The decline in paid employment was caused by a 2.9% drop in jobs held by 15-19 year olds and by more than 4% declines in accommodation, food services, the arts and Hobbies. Despite government claims that employment has returned to pre-pandemic levels, wage employment in the accommodation and food services industry has fallen to 11.2% below pre-pandemic levels. pandemic.

In addition, the pandemic is being used to further insecure the working class and reduce wages and working conditions. Almost 60% of the net new jobs created since the worst time of the pandemic are casual jobs, and almost two-thirds part-time jobs, according to a report by the Australian Council of Trade Unions released this week.

At the other end of the social pole, for the rich, Frydenberg’s speech amounts to a pledge to keep pumping billions of dollars into business support programs and expanding the ultra-cheap rate credit scheme. interest rates close to zero and unprecedented “quantitative easing”. by the Reserve Bank of Australia.

The windfall – pouring money into the financial markets – has produced a surge in stock and real estate prices. This has propelled the fortunes of the rich to sky-high levels, while pushing up house prices, making homeownership even more out of reach for many young people and creating a new bubble.

Cynically, Frydenberg framed his rhetoric in terms of reducing the official unemployment rate below 5% before turning to “austerity” measures, saying it would lead to “better paying jobs”. At the same time, he insisted that higher wages would only come “by increasing productivity”.

In fact, as indicated by the 3.1% drop in total wages in the fortnight to April 10, the capitalist class is exploiting the pandemic to further lower wages, which have already stagnated throughout the decade after the 2008-2009 crisis, and have fallen sharply as the share of national income since the 1970s.

As the corporate elite and wealthy strata benefit from historic corporate and income tax cuts, a series of pre-budget reports produced by welfare agencies and charities have highlighted a cost. growing social.

A study by the University of New South Wales, commissioned by the Australian Council for Social Services, reported a sharp increase in demand for services that help cope with economic hardship, homelessness, health mental health and domestic violence.

An Anglicare housing survey found that only three rental properties nationwide were affordable for a single person living on the reduced government job seeker payment, and were intended for shared accommodation.

The Morrison government’s other main response to growing social unrest has been to step up its war drumbeat against China, both to try to divert class tensions to an external “enemy” and to satisfy the demands of the Biden administration for an intensification of the confrontation with Beijing.

Last week, as part of a coordinated campaign, the head of the Department of Home Affairs declared that the country must be ready to “send, once again, our warriors to battle”, as in World Wars I and II , and Morrison announced the upgrade of military bases in the north that the United States would rely on in the event of war with China.

The Labor Party responded to Morrison and Frydenberg’s announcements by endorsing the underlying program, while criticizing the government for not going far enough. Labor leader Anthony Albanese has urged the government to end the lease of the civilian port in the strategic northern city of Darwin to a Chinese company.

Labor shadow treasurer Jim Chalmers berated the government for saying public debt “north of a trillion dollars” was “manageable”. He offered more of the “constructive” advice the Labor Party has provided to the government since the pandemic struck.

“We have made all kinds of positive suggestions, which the government should follow and follow if it is serious about growing the economy in a broader, more inclusive and more sustainable way, so that we can reduce unemployment. full employment, and so we can get the wages that Australians desperately need and deserve. “

As always, the Labor Party and its affiliated unions seek to perpetuate the myth that the crisis-ravaged capitalist profit system can be forced to produce decent jobs and wages. Labor and unions have worked closely with the corporate and financial elite for decades to help relentlessly impose pro-business restructuring at the expense of the working class.

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