May 31st 2003

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Articles from this issue:

COVER STORY: The Twilight of the Elites

EDITORIAL: The issues the Budget ignored

NATIONAL AFFAIRS: Budget proves paralysis in family policy

Family Law Act: the damage continues

SUGAR: A return to feudal agriculture?

STRAWS IN THE WIND: Tories favoured / West Europe model

How water rights can be eroded: lessons of the Barmah-Millewa Forest

ECONOMY: Where the Budget leaves us

HEALTH: Over-the-counter sale for morning after pill?

OBITUARY: Tom Perrott (1921-2003)

Why Washington is warming to India

President Vicente Fox and Mexico's demographic threat

TAIWAN: SARS response shows strength of democracy

Dollar drive 'dumbs down' the media

BOOKS: FORCED LABOR: What's Wrong with Balancing Work and Family?, Brian Robertson

BOOKS: Italian Travel Pack CD

Books promotion page

Budget proves paralysis in family policy

by Patrick J. Byrne

News Weekly, May 31, 2003
Family and Community Services Minister Amanda Vanstone's comment that the Federal Budget's family tax cuts wouldn't buy a hamburger and a cup of coffee is indicative of the Government's paralysis on family policy.

Robert Menzies founded the Liberal Party on his appeal to the 'forgotten people' of his era - small business owners and farmers - and his post-war policies built a thriving middle class.

John Howard's Government was originally elected on his appeal to 'Aussie battlers'. However, the cumulative effect of two decades of deregulationist policies - begun by Labor and continued by the Coalition - has seen

  • the hollowing-out of the middle class;
  • the formation of a huge, welfare-dependent underclass;
  • the growth of welfare payments to this group; and
  • the remaining middle-class carrying the welfare cost of this underclass.

The middle class has been hollowed out as the number employed in agriculture declines, as manufacturing industries either shut down or move offshore, and as imports have flooded in.

Consequently, at the 1997 Census, 32 per cent of men aged 25-44 years - in their prime income and family formation years - were not in full-time work and living on less than $21,000 p.a. Indeed, 20 per cent were living on less than $16,000 p.a., and showing disastrous marriage and divorce statistics. There are 850,000 children living in 435,000 no-job families.

According to Professor Bob Gregory, of those Australians who are potentially full-time workers, only one-in-twenty received welfare in 1970. Today, one-in-four are welfare recipients.

Not only have government policies created a huge $62.4 billion family and community services bill, but family benefits, that were once granted to both low and middle income families, are now targeted only at lower income earners and fall dramatically if a family's income rises towards average weekly earnings.

Workplace Relations Minister, Tony Abbott, described this problem earlier this year. He said that a couple renting privately whose earned income increases from $285 to $585 a week is just $29 better off after paying tax and losing benefits; a couple renting privately with three children whose earned income increases from $610 to $860 a week is actually $28 a week worse off after paying tax and losing part or all of their rent assistance, family payments and Austudy.

The middle class has been left to carry much of the welfare bill. As Lucy Sullivan has described in Tax Injustice: Keeping the Family Cap in Hand, 'In 1960 virtually no tax was paid by the family earner until 150 per cent average weekly earnings (AWE) was passed, and that tax on moderately high-income family earners (up to 200 per cent AWE) was considerably less than that on single earners at the same income level.

'... in 1997 there was virtually no difference in tax paid by the single and the family earner (again with wife and three children) at any level of income. Today tax simply rises with rising income and no recognition is given of the fact that members of the family on 150 per cent AWE have less income per head than the single earner on 50 per cent AWE.'

Clearly, today's political elites have dismantled the Menzies era social contract that saw corporations pay a living wage; governments help to maintain domestic industries, small business and family farms; and the accepted provision of a welfare net for those unable to provide for themselves.

The result is the unravelling of the middle class as politicians pursue the free-market policies of deregulation and privatisation, which are part of the economic ideology of globalism.

The crisis of family incomes can only be solved with the creation of industry and meaningful jobs. As a first step, the immediate challenge is for strong campaigns to put a halt to further deregulation and to start the rebuilding of industry.

In the rural sector, key campaigns are needed to stop the deregulation of industries like sugar and wheat, to protect farmer's property and water rights, and to stop any erosion of Australian quarantine standards.

A national infrastructure policy is needed to take a small fraction of our huge, untapped northern water supplies and turn them southwards for both rural and urban use. A national, fast-freight rail system is needed, focused on Darwin as an export base for our perishable food products and manufactures to the rapidly growing markets in Asia.

A new government-backed development bank is needed to develop small businesses, farmers and new manufacturing industries.

Our anti-dumping laws need to be strengthened to stop the dumping of subsidised food and fibre products into Australia.

Then the huge issue of our burgeoning foreign debt must be addressed.

In the process, the Federal Government needs to be shown that it is cheaper to pursue these enlightened policies, building industries and jobs and a strong middle class, than to pursue policies that create a huge underclass and an unsustainable welfare bill.

Around these issues and campaigns, a new base of activist leaders is needed to bring about social and economic change that once again puts the economic system at the service of the family.

  • Pat Byrne

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