Aborigines add to dissent over federal cuts

Thousands of Aborigines demonstrated in Canberra yesterday, playing didgeridoos and stamping on the Australian flag as John Howard's conservative coalition government introduced a budget containing cuts affecting welfare, job schemes and indigenous Australians.

The rally came after the most violent scenes the capital has seen, when protesters stormed Parliament House on Monday, fought police and left the building's entrance hall stained with blood and littered with glass.

Although the Aboriginal protest was more subdued, its target was the same as that of the 25,000 trade unionists who marched on Canberra on Monday to protest at Mr Howard's strategy, which is to curb union power and slash A$8bn (pounds 4bn), or 2 per cent of gross domestic product, from public spending over the next two years.

Aboriginal affairs, higher education, the unemployed, the federal civil service and public broadcasting through the Australian Broadcasting Corporation (ABC) will bear much of the brunt.

In the Liberal-National government's first budget since it ended 13 years of Labor rule five months ago, Peter Costello, the Treasurer (finance minister), undertook to balance the budget by 1999. "If we avoid the hard decisions now, we will be leaving Australia on a path of debt and deficit into the next century," he said.

The budget he presented to the House of Representatives last night was a blueprint for a government that intends to end what it sees as the special treatment accorded during the Labor years to such groups as Aborigines, environmentalists and the cultural lobby.

It wants a smaller government, which will impose greater self-reliance on ordinary Australians for their health care, education and retirement income. Mr Howard had hoped to soften the political blows by announcing the most controversial cuts in advance. University funding will be cut by 5 per cent and students will have to contribute more to their education by paying it back in extra taxes after graduation.

The federally funded ABC will lose 15 per cent of its budget and has already announced it will have to cut programmes and merge radio networks. About 30,000 federal bureaucrats will lose their jobs. The Aboriginal and Torres Strait Islander Commission, which controls spending on Australia's indigenous and poor minority, will have A$400m, or 11 per cent of its budget, cut.

It was these cuts and the government's plans to diminish trade-union power through changes to the industrial-relations laws that sparked the demonstrations. It was left to Mr Costello last night to sell the budget strategy by presenting it as one that calls on the rich, as well as the less well-off, to make sacrifices.

The government will set up a task force to pinpoint how the rich avoid and minimise paying tax and to win back some of the A$800m a year lost from tax avoidance. Big earners will be encouraged to take out private health insurance by having an extra 1 per cent levy imposed on tax they already pay towards Medicare, the public health-insurance scheme, unless they switch to private care.

The unemployed, 8.5 per cent of the workforce, will suffer even more. The government will cut almost A$2bn from job-creation schemes.

The two groups that will benefit most will be families and small business, both of which Mr Howard sees as the heart and soul of middle Australia. Almost 2 million low- and middle-income families will receive tax relief, while small businesses will obtain relief on capital-gains taxes. The costs of these measures will be more than offset by the public-spending cuts.

But the government faces political hurdles as it attempts to keep its economic strategy on track. The industrial-relations legislation, now before parliament, has provoked an outbreak of strikes and protests.

The Labor Party, with the support of the Democrats, one of the smaller parties, has announced that it will block the bill in the Senate, the upper house, where the Democrats and the Greens hold the balance of power.