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Cutting Aid: Why, At What Cost and For What Gain?

The Gillard Government has today confirmed their intention to shift hundreds of millions of dollars from the overseas aid budget to the immigration budget. A total of $375 million in foreign aid will now be redirected to paying for onshore processing of asylum seeker applications. Not surprisingly there has been a significant amount of anger directed at the government from overseas aid providers in the charity sector.

The refocused budget allocations will help pay for the living costs of asylum seekers, 400 of whom have been released into the community, while their refugee claims are being processed.

The move comes weeks after the end of the parliamentary year. The contentious decision has arrived at a time when the government’s budget surplus is looking an even more impossible and unbelievable prospect than when Treasurer Wayne Swan announced that there would be four successive budget surpluses during his May fiscal statement.

Governments have a habit of making bad decisions, ones that will cause a political storm, when they think few are watching. And few likely are paying as much attention to the political debate, not just because of the toxic year in politics, but because we are coming ever closer to Christmas and there is always much less attention at this time of year.

And this latest decision about the aid budget comes after an announcement by the ALP Government that, in search of the elusive surplus, they would delay increasing the aid budget to 0.5% of gross national income by a year.

With the Australian Government moving to temporarily decrease our contribution to foreign aid, the question must be asked: What will be gained by our decision in terms of our domestic political environment?

The answer is, absolutely nothing. The chances of our budget returning to surplus are non-existent unless much more dramatic cuts are made. Returning the budget to surplus is not even seen, according to some polls, as a political necessity to help curb the poll woes facing the Labor Government.

If the Labor Party is so desperate to return to surplus, perhaps they could have considered cutting unnecessary subsidies and government programs which offer assistance to people and businesses that do not require government help.

What makes this decision harder to contemplate, even more baffling, is, as Shadow Minister for Foreign Affairs Julie Bishop has pointed out, that it comes just two months after Australia won a seat on the UN Security Council. And what did we do to help our chances of winning a temporary spot on the Security Council? Why, we played around with our aid budget, offering significant financial incentives to developing nations.

But far more important than the terrible look this has in terms of our recently won UN campaign, is the human cost of such a short-sighted decision, from a government desperate to at least appear as if they have a shred of credibility when it comes to balancing the federal budget.

Of course foreign aid can always be better targeted and is most efficiently allocated when it is focused completely on our sphere of influence.

But development aid should never be cut . This is especially the case when such funds will not be replaced by payments from other nations, when our ultimate aim is to increase foreign aid and especially not when the domestic political situation is part of the equation and will not be changed by such a decision.

This is exactly what has occurred and in the shadow of Christmas.

Budget Announcements and Half Announcements are Outdoing Possible Leaks

It is a regular feature of Australian politics that in the days and weeks leading up to the delivery of the budget by the Treasurer of the day budget leaks and rumour generally abound from the Australian political centre that is Canberra. This year however, announcements of budget items seem to have outdone the whisperings about possible spending allocations and cuts that followers of politics are used to leading up to that Tuesday in May when the Treasurer steps up to the despatch box to inform the country of their governments fiscal priorities.

There has been, for some days now a rumour abounding in Canberra and fuelled by the heightened interest of politicians in ensuring it does not occur, that the Gillard Government is set to announce cuts to the foreign aid budget.

This follows a promise by Labor, under former Prime Minister, now humble backbencher, Kevin Rudd that the Labor Government he once led, would increase foreign aid spending to a total of 0.5% of Gross National Income (GNI) by financial year 2015-16.

The belief around Canberra and the aid sector seems to be that the government are set to scrap their commitment to head toward spending on foreign aid of 0.5% of GNI.

The rumour mill surrounding this has almost exploded from being overworked and it would appear, with the strength of the political backlash to the simple report of this possible move that there has to be a real element of truth in it, without any real details having been leaked on the matter. So this item, almost alone in specific and credible rumours will be one to keep an ear out for confirmation of or otherwise from 7:30pm next Tuesday, May 8th.

But for this one real virulent rumour there have been more confirmations of and half announcements of both cuts and new spending to be allocated in what the Labor Government hopes will be a budget that returns to surplus in 2012-13.

Aged care is set to be overhauled in the 2012-13 budget to be delivered by Treasurer Wayne Swan on Tuesday. Back in April it was announced that the government would commence, on the 1st of July 2012 a ten year plan costing $3.7 billion to transform the way aged care is delivered, allowing more people to seek care in their own homes and making the cost of aged care homes easier to bear for the most financially vulnerable.

The Australian Government, via Prime Minister Julia Gillard on Monday at the NDIS rally in Sydney half announced that there would be an allocation of funds toward starting the National Disability Insurance Scheme a year earlier, commencing at 4 different launch sites from July next year.

But it was only a partial announcement from the PM, albeit a very welcome development for Australian’s with a serious and permanent disability and their families and carers. Prime Minister Gillard announced that next year these 4 launch sites would assist an initial 10,000 Australians with a disability and double the next year to provide help to another 10,000 people.

What this announcement lacked was detail, including most importantly, the estimated cost of the program rollout, but also what parts of Australia would be given the opportunity to be covered by the Medicare-like framework. The PM said we must wait until the budget for the details, a real tease, if not a hope building one in this important area of government policy.

In a budget where the expectations were for savage spending cuts, a new spending initiative is a very interesting element in the budgetary discussion which is ramping up five days from its announcement.

Today too, the government have announced $214 million toward the planning of 12 new submarines to replace the Collins Class fleet which had their troubles, particularly in the initial stages of development and operation.

Again though, for these not insignificant spending allocations, the Labor Party have also flagged ahead of May 8, areas where they will seek to slash or defer public spending.

The government today also announced in the area of defence spending that there will be both cuts and the deferral of spending in the area of purchasing defence materiel.

It was announced today that the planned requisition of self-propelled artillery will be scrapped altogether and this alone would save the budget bottom line a total of $250 million dollars.

The trouble-plagued delivery of the F35 Joint Strike Fighter (JSF) will be delayed two years from the previously expected date of receipt, moving our acquisition of this defence capability into line with that of the US. In doing this $1.6 billion will be saved from the budget from this measure by itself.

In announcing the cuts to defence spending, both the Prime Minister and the Minister for Defence, Stephen Smith assured Australia that defence cuts would not impinge on or include cuts to spending related to our operations in Afghanistan and elsewhere overseas.

The leaks and rumour mill have been almost non-existent over the budget-planning period and look set to remain minimal with only three full working days left before the final announcement of spending priorities occurs in Canberra. This could be put down to the poll woes that have faced the government for a prolonged period of time, trying to get some messages out early to cloud what is supposed to be a difficult budget, according to the warnings repeatedly given, no matter how unbelievable.

Nevertheless it has been an interesting exercise to observe the seemingly comparative lack of rumours as we hurtle toward the 2012-13 budget.

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