By Denis Hay

Description

How the Australian monetary system prioritizes corporations and political elites over citizens. Learn how to reform this for a fairer society.

Introduction: The Misuse of Australia’s Monetary Sovereignty

Australia holds a significant advantage in being a sovereign currency issuer. Yet, despite the ability to fund essential services, the system is geared to support corporate interests and political elites. Why is this happening?

The answer lies in the neoliberal policies that have shaped Australia’s monetary system over the last 40 years. This article delves into the mechanisms that favour the powerful, leaving everyday Australians to endure the most of underfunded public services and stagnant wages.

Monetary sovereignty offers the Australian government the ability to spend without constraint, yet it’s used to help corporations and political backers. This has created a system where corporate welfare is prioritized, while public services, healthcare, and education are underfunded. Let’s explore why this system exists and how it can be reformed to serve all Australians, not just the elite few.

What Is Australia’s Monetary Sovereignty?

Australia, as a sovereign issuer of its currency, holds monetary sovereignty. In simple terms, this means the Australian government can never run out of its own currency and can fund public services without borrowing from private lenders. However, the way this power is used reveals a disturbing trend—government spending primarily benefits corporations and high-income individuals rather than ensuring economic security for all Australians.

Modern Monetary Theory and Australia’s Spending Power

Modern Monetary Theory (MMT) argues that a sovereign currency issuer like Australia is not constrained by budget deficits. Instead, the real constraint is inflation. Using MMT principles, the government could significantly increase public investment in healthcare, education, housing, and infrastructure without the fear of “debt.” However, policymakers cling to outdated neoliberal ideas that prioritize budget surpluses over public welfare.

Neoliberal Influence on Australia’s Monetary Policies

The shift towards neoliberalism in the late 1970s and early 1980s reshaped Australia’s economic landscape. Neoliberal policies emphasize free markets, privatization, and reduced government intervention, all of which significantly change how the government spends money.

How Neoliberalism Shaped Government Spending

Neoliberalism encourages the idea that the market should dictate economic activity, pushing the government to focus on keeping low inflation and budget surpluses. This has led to a persistent underfunding of public services as the government prioritizes fiscal austerity. The private sector benefits from this arrangement, receiving tax breaks, subsidies, and deregulation, while ordinary citizens face rising costs and inadequate public services.

The Role of Corporate Interests

Corporate lobbying plays a critical role in how Australia’s monetary system is structured. Industries such as mining, banking, and construction exert significant influence on government policies. This results in preferential treatment through tax breaks and subsidies while essential public services are still underfunded. For instance, Australia’s large tax concessions for mining companies have led to billions in lost public revenue, money that could have been invested in social services.

Supporting Corporations Over Citizens: The Role of the Government

Government policy often reflects the desires of powerful corporate interests. This section examines how specific policies benefit corporations while leaving regular Australians with fewer resources and opportunities.

Corporate Subsidies and Tax Breaks

Australia’s largest corporations enjoy substantial tax breaks and government subsidies. For example, in 2019, over 30% of Australia’s top 200 companies paid no tax. These corporate tax concessions significantly reduce the government’s ability to fund essential services such as healthcare and education. Instead of investing in the common good, public money is funnelled into private profit.

Public Services Underfunded

Despite Australia’s wealth, public services such as housing, healthcare, and education remain severely underfunded. The government often claims that budget surpluses are necessary for economic stability. However, the push for a surplus benefit the elite more than the average citizen. These surpluses often come at the expense of reducing funding for critical services, which disproportionately affects low-income Australians.

The Two Major Parties: Serving Their Financial Backers

Both major political parties in Australia – Labor and the Liberal-National Coalition – receive significant donations from corporations and wealthy individuals. These financial contributions inevitably influence policy decisions, prioritizing corporate profits over public well-being.

Political Donations and Their Influence

The Australian political system allows for large-scale donations from corporate interests, particularly in industries like mining, banking, and real estate. These donations often translate into policies that help donors. For instance, generous tax breaks for property investors are a direct result of lobbying from the real estate sector, further driving up housing costs for ordinary Australians.

Impact on Policymaking

The revolving door between political figures and corporate executives solidifies this relationship. High-ranking government officials often take up lucrative corporate positions after leaving office, incentivizing them to enact policies favourable to these industries while still in power. This relationship erodes public trust and makes it difficult for ordinary citizens to influence policy outcomes.

The Impact on Public Services: Housing, Healthcare, and Education

The Housing Crisis

Australia’s housing market has become increasingly inaccessible, with home ownership rates falling dramatically over the past two decades. A major factor is the lack of government investment in public housing, worsened by neoliberal policies that favour private developers. Instead of directly funding public housing projects, the government offers subsidies and incentives to private developers, who prioritize profit over affordability.

Healthcare Under Pressure

Australia’s public healthcare system is also under strain. Despite the country’s wealth, access to healthcare is increasingly dependent on private insurance, leaving many Australians unable to afford essential medical services. Government underfunding and cuts to Medicare have led to longer waiting times and reduced access to treatments, disproportionately affecting low-income citizens.

Education Inequality

Public schools in Australia suffer from chronic underfunding, while private schools receive help from generous government grants. This two-tiered system perpetuates inequality, as children from wealthy backgrounds have access to better resources and opportunities, while those in public schools face larger class sizes and fewer extracurricular programs. Despite calls for reform, government funding continues to favour private institutions.

The Illusion of Budget Surplus and Fiscal Austerity

For decades, Australian governments have prioritized achieving a budget surplus, arguing that this is necessary for economic stability. However, this fiscal austerity has actual costs for everyday Australians, as it limits the government’s ability to invest in critical services.

The Myth of the Surplus

Contrary to widely held belief, a budget surplus is not inherently beneficial. In fact, it can be harmful when it comes at the expense of funding vital services. The focus on achieving a surplus restricts government spending, particularly in times of crisis, and contributes to the underfunding of public services. Furthermore, by prioritizing a surplus, the government limits its ability to create jobs and stimulate economic growth.

Austerity’s Human Impact

Austerity measures, such as cuts to social services, disproportionately affect vulnerable populations. Low-income Australians endure the most of reduced welfare payments and underfunded healthcare systems. Meanwhile, the wealthiest Australians see their tax rates reduced, creating an even greater wealth gap.

The Path Forward: A Fairer Use of Australia’s Monetary System

Australia has the power to reshape its monetary system to serve all citizens, not just corporations and the elite. By adopting policies based on Modern Monetary Theory (MMT), the government could prioritize public welfare over budget surpluses.

Public Investment in Services

The government could use its monetary sovereignty to invest in public services without fear of creating unsustainable debt. This includes funding public housing projects, expanding Medicare, and increasing investment in public education. Such reforms would lead to a fairer society, where all citizens have access to essential services.

Reigning in Corporate Power

To address corporate influence, reforms must be made to reduce the power of lobbyists and increase transparency around political donations. Stricter regulations on corporate donations and lobbying could help shift government priorities back to serving the public interest.

Conclusion

The Australian monetary system has the potential to serve all citizens, but current policies benefit corporations and the wealthy. By embracing modern monetary principles and redirecting public funds towards healthcare, housing, and education, Australia can create a fairer and prosperous society for all. It’s time for a shift in priorities that puts people ahead of corporate profits.

Call to Action

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This article was originally published on Social Justice Australia.