Intergenerational Report, a 'Class Act' of theft
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The 2015 intergenerational report (IGR) is a 'class act' of fabrication and skulduggery by the LNP government. Using smoke and mirrors, Hockey the Federal Treasurer made the claim when presenting the IGR that the nation has to reduce spending on social services and welfare, otherwise future Australian generations will be impoverished by compound debt. By counter-posing potential budget spending on social services and welfare against the nation's future weakening finances, Hockey labels our generation as guilty of "intergenerational theft".
Whilst the IGR ostensibly demonstrates the relationship between budget projections and population changes 40 years into the future, in actual fact it illustrates the breakdown of global capitalism and the worsening impact on countries like Australia. However the LNP are guilty of fudging figures in arguing their prescription for budget surplus recovery.
Fudging the figures
The IGR sets out a number of doomsday scenarios of inflating debt and warns of surging spending and diminishing tax revenues over the next 40 years. The corollary of this is that productivity will bottom out unless more of the population are lured into the labour market and compelled to work longer. The document calls for more economic structural 'reform' and the uptake of technological change.
The disaster scenarios that the IGR presents about the Australia's economic future are:
Model 1 (termed previous policy): Under the former Labor government’s budget policies debt would reach 122% of GDP by 2055, equivalent of $56 trillion. This would create a government deficit of 11.7% of GDP.
Model 2 (termed currently legislated): Under the current budget measures that the LNP have been able to pass a debt of 60% of GDP by 2055 would occur, which amounts to $26 trillion 1. A deficit of 6% of GDP.
Model 3 (termed proposed policy): This is the LNP's rescue scenario where Australia would be free of debt by 2032, only if all their budget cut backs are accepted by parliament. The budget surplus would reach 1.4% of GDP by 2040.
However the model 1 scenario is a fudge by the Treasurer, for it is based on the assumption that the unemployment rate over the long run, the non-accelerating inflation rate of unemployment (Nairu), would be 6% in the 2013 mid-year economic and fiscal outlook (Myefo). Normally a 5% Nairu is assumed in the Treasury's long-run modelling for the economy.
Hockey's chicanery becomes all too apparent when he has the IGR revert to a 5% Nairu for the models 2 and 3. This devious change accounts for the huge differences in figures between the scenarios.
By altering the Nairu from 5% to 6% the Treasurer inflated the debt to GDP ratio by approximately 45% of GDP over a 40-year horizon. So by trickery of a pea and thimble con artist, Hockey has fabricated an inherited budget position of catastrophic proportions.
Protecting Capital not living standards
Of greater importance than the above bourgeois economics argy bargy is the fact that the structural changes demanded by IGR and other reports (like the Audit Commission) are to bankroll funds for finance houses and the banks so as to protect them in coming global financial crises; permit more corporate tax cuts so that Australia can stay an internationally competitive investment site; and the above two will guarantee the continuation of Australia’s triple AAA credit rating.
The IGR and all the other structural change reports are not aimed at improving living standards. This is a furphy.
The history of structural adjustments under capitalism actually shows a redistribution of wealth from workers to capitalists. In 1975 the profits/capitalists share of the Australian national income was 17% of GDP and now it is 27%.
The extra 10% of GDP that capitalists now enjoy is a $150 billion a year windfall. Whereas workers who now produce more than ever before have seen their wages fall from 61% to 54% of GDP.
The actual culprit of the nation's and government’s debt is finance capital. Its survival is dependent on countries and governments drowning themselves in expanding debt. One way to eliminate government debt would be to heavily tax the big banks, mining corporations and other multinationals who are the worst offenders when it comes to paying any tax at all.
Unfortunately this won't happen because governments under capitalism are complicit captives of the big corporations.
Their (corporate) robbery from wages, by increasing the amount of surplus value they take from what workers produce, is not enough for them. Corporations and business institutions now pressure governments to carry out cuts to pensions and social services so that these finances can be redirected to strengthen the position of financial and corporate capital, as the global economy accelerates towards another crisis.
Hockey's performance as treasurer and the IGR are a 'class act' of theft alright - from the working class to the bourgeois class! It is dishonest thievery of grand proportions which has the visible hands of Capital all over it.
1 The original figure in Philip Coorey’s AFR article was $2.6tr, which would seem to have been a typo. We have corrected it to $26tr.
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