What's happening at the
Sunday 20 Aug 2017 | 17:59 | SYDNEY
Sunday 20 Aug 2017 | 17:59 | SYDNEY
Debates

Australian budget

12 May 2010 09:24

The annual budget always offers a world view beyond the tax and spend hoopla. In previous decades, the US and Japan were the north and south stars to guide fiscal navigation. Over the past ten years, the China constellation has shone ever brighter. Kevin Rudd's recent China speech outlined various dark scenarios: China as a threat, China as a direct competitor with the US for control of the international system, or China as self-absorbed mercantilist bully.

There's not much evidence of those outlooks lurking in the budget crystal ball. No one needs to teach Treasury about one of the iron laws of politics: follow the money. Treasury can ignore Rudd's geo-political worries and glory in the geo-economics: the best terms of trade since the middle of the last century and Australia back to four percent growth by 2011-12. Here's the terms of trade golden glow, rendered in Treasury speak: 

The terms of trade are forecast to rise by 14¼ per cent in 2010-11 to their highest level in 60 years, largely due to strong price rises for Australia’s iron ore and coal exports, driven by a recovery in global demand.

COMMENTS

12 May 2010 11:01

The Rudd Government has announced an increase to international development assistance for the next financial year from $3,818 million in 2009-10 to $4,349 million in 2010-11.

It's a decent increase in challenging times which the government says is consistent with its commitment to scale up ODA to 0.5 per cent of GNI by 2015-16.

Foreign Minister Stephen Smith’s media release says Australia’s ODI/GNI ratio is forecast to increase to 0.33 per cent over the 2010-11 financial year. Last year, however, Mr Smith’s media release on the aid budget said the ODI/GNI ratio was forecast to increase to 0.34 per cent in the 2009-10 financial year.

A ratio that appears to be going backwards would seem to indicate that the Rudd government is not as committed as it claims to manage the scale up of Australian aid. 

COMMENTS

12 May 2010 12:00

There's no joy in the budget for Australia's diplomacy. The deficit we reported last year and reiterated this year continues unabated.

There's been a modest increase, as Hamish McDonald termed it this morning. The Departmental appropriation is up to $1.328 million, $83 million more than last year (or a 6.7% increase). The Department's administered expenses (programs which it oversees but lacks ultimate control, such as the funding of the Australia Network and the running of the Shanghai Expo) fell by around $100 million.

COMMENTS

12 May 2010 14:53

Major Gen (Retd) Jim Molan is author of Running the War in Iraq.

Here's a new slant on Treasurer Wayne Swan's new budget — this is a Defence-based budget!

If it was not for Defence — specifically the $8.8 billion that was deferred in last year's budget from the 2009 Defence White Paper only ten days after the White Paper was published (see p.13 of this ASPI report) and which does not appear to have been put back into this budget — no way could we be back in surplus in three years' time.

In truth, though, it is getting harder to come to any conclusion on Defence's financials, because the process is even murkier than usual.

COMMENTS

13 May 2010 09:39

John Hannoush writes in response to my post:

Is it reasonable to assume that number of overseas missions is a reliable indicator of diplomatic efficacy? Maybe Iceland or Finland are being a bit wasteful. A targeted approach might work better: for example, we could use as an indicator numbers of staff working in countries of high priority. If we were significantly cutting staff numbers at the Washington mission, for example, that would presumably be of concern.  If we decided to get rid of the mission to the Holy See and accredit from Brussels, that might not be of such moment.

Good point. At the time of the Blue Ribbon Panel report, around 40% of Australia's posts overseas were small posts, a number which has grown sharply since 2000. With the best of intentions, staff at small posts often struggle to meet the most basic commitments, and if accredited to more than one nation, there's little scope for much beyond the minimum required to maintain formal diplomatic relations.

COMMENTS