Western Australian budget imposes massive utility increases (Austerity budgets, australian-style)

[Hannah Bell]

Working class families and low income earners in Western Australia are facing increasing economic hardship due to steep increases in household charges and levies imposed by the state Liberal government of Premier Colin Barnett in last month’s budget.

Water charges will rise by 17.7 percent. Electricity charges were increased by 7.5 percent on April 1 and will increase by a further 10 percent from July 1. They will again rise next year, by 22 percent. The emergency services levy has increased by 18 percent, or $28 per year; sewage charges are up 4 percent, or $21 a year, and drainage charges were hiked by 34 percent, or $23 a year. The government has also raised public transport fares and the motor vehicle licence fee. The average household is expected to pay 9 percent more in annual fees and charges, equivalent to $368 per year.

These regressive measures form part of a wider austerity agenda that is at the centre of the second stage of the global economic crisis. Having bailed out the banks and spent billions on various pro-business measures during the height of the 2008 financial crash, state and federal governments in Australia are, like their international counterparts, seeking to make the working class pay for the ensuing debts through higher taxes and reduced public spending programs. Premier Barnett absurdly declared that the higher utility charges represented a “sharing of the burden”...

http://wsws.org/articles/2010/jun2010/wabu-j04.shtml

[MrModerate]

1. While there is quite a bit of truth in this story, there's also a large portion of poppycock.

For one thing, Australia didn't "bail out the banks." Due to the fact that the banks have, for decades, been able to push the Aussie government around at will, they have created an environment where they are inherently more stable (as bank directors define the term) than US and European banks. Also, due to inherent conservatism, the Aussie banking industry didn't find itself exposed to the same magnitude of insane losses arising from exotic and unsustainable financial products that caused such damage elsewhere. They didn't need to be bailed out.

Additionally, while the mining magnates did very well during the boom running up to the GFC, so did the working class. Due to a whole lot of historical factors, the working class in Australia is both more empowered and better compensated than just about any similar "blue collar" or "pink collar" demographic on the planet. And the fact that Australia weathered the GFC, Phase I, as well as it did, job losses were minimal compared to other developed nations. Which meant that workers not directly in the supply chain of the mining sector still benefited by not having their customers unemployed and and not buying.

And one reason Australia weathered the GFC as well as it did was a huge increase in government stimulus spending. Not a lot by US standards, but with only 23 million people on the whole island, a few billion went a long way.

With regard to fees, since they're user-based, they are inherently regressive. No argument there. And very Australian -- they also have a GST here, which is about as regressive as it gets. However, $300/year or so is not a huge hit in a country with low unemployment and an expectation (barring GFC, Phase II) of entering another commodities boom that will result in near-full employment and, due to a skilled trades worker shortage, substantial wage increases.

As far as the government goes, they ain't no angels, but they ain't bloodsuckers either.

And for anyone reading this not familiar with Aussie political nomenclature, "liberal" means "right of center." "Labor" (not Labour, interestingly enough) means "left of center."

[Hannah Bell]

2. What's this, then?

The federal government pressed on with its startling splurge of taxpayers’ money last week with a range of one-off payments to boost spending and revive a stalling economy. The $10.4 billion package joins the $8 billion committed to buy residential mortgage-backed securities on behalf of small banks and non-bank lenders scalded by the meltdown of the global financial system. It follows the pledge to guarantee the estimated $700 billion that Australians have deposited in banks, credit unions and building societies.

http://www.politicalaffairs.net/article/articleview/7620/


http://epress.anu.edu.au/agenda/016/03/mobile_devices/ch09s03.html

"The second column in Table 1 relates to government purchases of financial instruments, not financial institutions, and is therefore a different notion from a ‘bailout’, strictly defined."


Semantics, to my mind. The government spent $8 billion to buy up dodgy bank assets to stabilize banks. To me, that's a bailout, & $8 billion ain't hay.

[MrModerate]

3. If you object to government intervention in financial markets in a crisis . . .

And want to call it a "bailout," well, so be it.

Keep in mind, though, it's not what other people mean by the term, and by applying your own definitions to what's being discussed you kind of muddy the waters -- and weaken your case.

I still stick to my central argument: The Australian government is not trying to climb out of the GCF pit on the backs of the working class. Instead, it's trying to maintain an even strain across the whole of the national economic environment, so as to enhance the recovery that's already been under way here for about a year.

And as far as the mining bosses go, have you heard about the 40 percent supertax the government plans to impose? It's not going to impoverish the plutocracy by any means, but they're definitely going to have to cut back on their consumption of yachts and supermodels.