Austerity measures in the lucky country

Australia currently faces the paradox of poverty in a land of plenty. Our economy is enviable when compared to the rest of the world and yet there have been measures announced in the recent federal budget that we would describe as "tough but cruel". Read Vinnies budget response in full.

Vinnies believes a good government acts a good global citizen: it does not build its prosperity at the expense of others.  We recently supported a shared statement on The Role of Government that was prepared at a Community Summit. The statement argues that a good society does not humiliate any of its people. People are humiliated when they are denied the essentials of life - a place to live, a place to work and a place to learn.

What is austerity policy?

Austerity is a word that describes a range of policies that generally involve central government reducing its spending. 

There are a range of flow-on ramifications of these policies. These include service cuts and reducing the size of the public service, outsourcing to private or Not-For-Profit providers, devolving powers to local government, and trying to place more responsibility in the hands of individuals themselves.

Vinnies believes any austerity measures that result in cuts to essential social expenditure, such as, education, housing and income support payments are politically rather than economically motivated.

We are concerned that our identity as a nation is changing, becoming less fair, kind, and compassionate on the one hand and more individualistic on the other. In our report Two Australias - Poverty in the land of plenty released in 2013 we recommended the government find savings in revenue foregone in tax concessions and implement appropriate tax reforms as outlined in the Henry Tax Review.

Vinnies believes many of the recommendations in the recent Commission of Audit Report would place an unfair burden on the poor and therefore are a recipe for rising social inequality.

What has austerity meant overseas?

In the United Kingdom, austerity was a core plank of Thatcherism, and has since been revived by the UK Conservative Party with the “Big Society” policy from 2010.  Austerity in the UK has resulted in deep and universal funding cuts. Social housing spending has been reduced by 52% since 2010, and this seems to have contributed to a 14% increase in homelessness over that time. There have also been cuts in spending on mental health services, leading to increased relapse and readmission rates. Local communities have not been given extra resources to help manage their new responsibilities – in fact, local governments have had funding cut. Charities have not had funding increased to meet increased need – in fact, there has been a 35% funding cut to the religious and community sector.  Volunteering and charitable donations have not increased. In short, the vacuum in services has not been filled in any way. Moreover, outsourcing has resulted in predictable drops in the level of care and service provided, as the corporate structure of the providers is geared towards profits rather than people.

Recent fiscal policy in the United States has also seen austerity measures take hold. What began as a banking crisis soon saw the blame and the cost pushed downwards, and local units of government, and individuals, appear to be paying the price. Limitations have been placed on local government spending, which has seen cuts in pensions, and increased user fees. Privatisation has also taken hold, along with selling public assets. As well as this, there have been severe cuts in public sector employment, in some areas as much as 70 per cent. Very lean local government has proven unable to deliver the range of services required of it; for example, a surprising number of cities have had to turn off their street lights due to an inability to pay providers. 

Read more

  • In our report Two Australias - Poverty in the land of plenty we recommended the government find savings in revenue foregone in tax concessions and implement appropriate tax reforms as outlined in the Henry Tax Review.
  • The Autumn Record 2014 focused on homelessness and how ongoing funding insecurity effects the community sector and more than 105,000 people who experience homelessness of any given night.
  • Vinnies says the Commission of Audit Report released on May 2, 2014 was a recipe for inequality.
  • Read a shared statement complied on 15 April, 2014 by Vinnies and other civil society organisations on The role of government.