Rudd's $10.4 billion bonus for big business

By Peter Boyle

“This strategy is designed to help pensioners, carers and families, and first home buyers”, declared Australia’s Labor Prime Minister Kevin Rudd in his October 14 address to the nation. Rudd was announcing a $10.4 billion “economic security strategy” in response to the global financial crisis.

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Well, that’s total bullshit. It was a $10.4 billion package designed to help the capitalist system recover from the “worst global financial crisis since the Great Depression”, as Rudd described it.

Some 25 banks around the world have already gone under, and despite the world’s richest capitalist governments throwing more than $6 trillion at this crisis, it shows no sign of abating. Indeed, the crisis that began in the speculation-rife financial sector of the economy is now sending the rest of the world economy into recession.
 
Rudd is now railing against “extreme capitalism” and “excessive executive compensation” in finance companies, and pretending to be protecting its victims. Under his “economic security strategy”, pensioners and most parents with dependent children get a one-off Christmas bonus ($1400 for single pensioners, $2100 for pensioner couples and $1000 per child for most parents). The government anticipates that this will be spent straight away in shopping malls, so Rudd should call this package what it really is: a $8.7 billion handout to help the retail giants.

Pensioners do not get their payments increased to the living wage that they need and deserve. This is just a one-off payment.

The unemployed miss out altogether, never mind that their ranks are going to swell before Christmas. Car manufacturers around the world have begun laying off thousands of workers and other industries are putting layoff plans in place.

First home buyers get a doubling or tripling of their grant, but again, let’s call that what it really is: a $1.5 billion handout to help the building companies.

In fact, new home buyers will be real losers in this deal because the building companies will use the extra rebate to temporarily keep up house prices that are already seriously inflated. The International Monetary Fund warned this year that Australia’s house prices are overvalued by at least 25%.

Labor’s move will suck new home buyers into borrowing $70,000 more than their homes will soon be worth, as University of Western Sydney associate professor of economics and finance Steve Keen explained in the October 15 Melbourne Age.

The Rudd Labor government has already sent $1.2 trillion the way of the financial institutions via soft loans and the nudge-nudge wink-wink deal that enabled the banks to keep 20% of the last Reserve Bank interest rate reduction.

So if Rudd is Santa Claus, all the pressies are really for the corporate rich. His $10.4 billion “economic security strategy” is designed to soften the blows to Australian big businesses in the face of a mounting world recession that will end the relatively long boom.

Australia will not escape the impact of this recession by selling coal, iron ore, gas, aluminium and other minerals to China because, as mining giants BHP and Rio Tinto revealed last week, the Chinese economy is already slowing. China is being hit by a double external shock — a recession in its export markets plus its massive foreign reserves being ensnared in the mess that is the US finance market.

Beyond the mining sector, much of the Australian economy has already slipped into recession. When the mining boom ends, the whole economy will slide into recession.

If the Rudd Labor government was serious about helping the victims of “extreme capitalism”, it should:

•cut the bullshit and stop bailing out the capitalist system;

•nationalise the banks (for a start) and run them in the community interest;

•give pensioners and the unemployed a living wage now; and

•immediately invest the $64.18 billion “Future Fund” and the entire forecasted $22 billion federal budget surplus (and borrow at least the equivalent again) into renewable energy conversion, public transport, public health, public education and public housing.

This would create jobs for all the workers who are about to be thrown on the unemployment heap by a capitalist system that’s in a crisis of its own making.
 
Peter Boyle is DSP national secretary and this article appeared in Green Left Weekly, 22 October 2008.
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