This one's for mugs, not steelworkers

The following opinion piece in response to the Federal Budget on May 10, 2005, was published in The Australian newspaper on May 12, 2005

Union steelworkers do not support this budget and Mr Howard is being mischievous to suggest otherwise. If Howard had taken budget advice from our union, it would have been a very different document.

Whatever Howard says about easing his tax rip-off of steelworkers or all the other blue-collar employees paying top income-tax rates, this week's budget is no substitute for fundamental change.

The Australian Workers' Union would never support so-called tax reform where four out of five taxpayers are given $6 a week while the top income earners get $65 a week or more; where yet again lower and middle-income earners are left behind.

Tinkering at the edges of a rotten system is no substitute for building in incentive, competitiveness and fairness to our tax system for the long term. It is especially pernicious and inequitable to cut taxes at the higher end without any appropriate balance of benefit for lower income earners.

Workers know that the real tax rates are still going to be 47% plus 10% GST, or 42% plus 10% GST, or 30% plus 10% GST, or 15% plus 10% GST, and that's why we need real reform.

Australia still has its highest-taxing government in history - Howard is raking in an extra $24 billion more this year than when he came to office in 1996. And despite having the best trade advantage for 50 years, he's given us a record foreign debt.

You would have to be a mug to put so much reliance on buying stuff on credit - but that is exactly what the Howard and Costello economic recipe requires. This budget is adding to Australia's problems by fuelling further consumption instead of savings.

And don't forget that many of these tax cut are illusionary: bracket creep or interest rate increases will soon wipe them out. Surely it would have been better to build in savings through extra superannuation contributions that will compound over time.

If Mr Howard was really interested in following the AWU's advice, then the Budget would have moved superannuation contributions to 15%, cut the high effective marginal tax rates faced by lower income earners and eased the growing health, education and petrol costs of working families.

Much of the value of the $6 budget tax cuts will be destroyed by bracket creep within two years. Based on wages growth of 4%, workers will have given back over $300 a year of the promised tax cuts in that time.

For example, the benefit to singles or couples with no children earning $40,000-$50,000 a year will be completely wiped out by 2008.

And where is the plan for our future? There was nothing for water, power generation, infrastructure, the skills shortage or higher education.

Why is the Future Fund only benefiting financial institutions with windfall gains with no guarantee of investment in real nation-building? Where are the programs for new transport infrastructure and environmentally sustainable investments to build up our rural and regional communities?

It shows a lot of front for Mr Howard to suggest that steelworkers would support a Budget that fails to deliver the major policy reforms needed by working Australians.