3 April 2019
The budget’s pitiful response
Tucked away inside last night’s budget papers was a surprisingly candid – and slightly alarming – note that revealed the extent of the government’s concerns about Australia’s global outlook. The note appeared on page thirteen of the budget statement for the foreign affairs and trade portfolio. It began by stating that the 2017 Foreign Policy White Paper had warned of an increasingly contested world and had presented a “narrative . . . of change and uncertainty”. And then it continued:
“Since the White Paper’s release, many of the international trends identified within it have intensified – rising nationalism and geopolitical competition, anti-globalisation and trade protectionism, a shift in power in the Indo-Pacific without precedent in Australia’s modern history, rapid technological advances that are changing the way economies and societies work, and mega trends such as climate change and urbanisation. These trends are testing Australia’s policy settings and demanding new efforts in several areas.”
In light of this catalogue of gloom – and, unfortunately, I don’t think this jeremiad overstates the challenges – the government’s response, as detailed in last night’s budget, seems pitiful.
Admittedly, many of the problems that the nation and region face will not be solved by spending measures but by careful, creative diplomacy. This would include handling alliances and partnerships shrewdly, and demonstrating a commitment to active and humane global cooperation that can serve as an international example and ensure that Australia has a credible voice when it demands that other nations do more. Yet, when it comes to funding, the budget indicates that the government is unwilling to commit to long-term solutions to the challenges it outlined.
Australia’s aid funding continues to drop to record lows, from $4.16 billion this year to $4.04 billion next year. This amounts to 0.21 per cent of gross national income and will continue to slide to levels that have put Australia among the lowest aid providers in the developed world. The United Kingdom, by contrast, provides 0.7 per cent of its gross national income.
The aid funding that remains has been diverted from Asia to focus on the Pacific, which will receive $1.4 billion next year. By 2020–21 five new diplomatic missions will be set up, in the Cook Islands, French Polynesia, Niue, Palau and the Marshall Islands. In addition, a $2 billion scheme will support infrastructure projects such as telecommunications, energy, transport and water in Pacific countries. According to ABC News, this will be rolled out gradually and will begin with $50 million in grants in 2020.
This so-called “Pacific step-up” was overdue, and it was clearly prompted by concerns about China’s growing influence in the neighbourhood, but it should not come at the expense of other foreign relations. Aid funding to five nations in Asia has been cut, including Indonesia, Cambodia and Pakistan. As Singapore-based Sarah Teo observed in the most recent issue of Australian Foreign Affairs, such spending has not only promoted regional stability and assisted countries to develop, it has bought Australia enormous goodwill. Australia’s disaster recovery support, she wrote, has been noticed and appreciated and has “helped to shape perceptions of [Australia] as an important stakeholder with much to offer”.
Beyond the meagre aid spending, the Coalition remains committed to lifting defence spending to 2 per cent of gross domestic product, or $38.7 billion next year. Undoubtedly, the government’s dedication to strong military capability is consistent with the challenges listed above, but the 2 per cent target is arbitrary – spending should instead be guided by outcomes and an assessment of the national need.
Of course, this is a pre-election budget – and effective foreign policy measures tend to require spending to secure long-term interests rather than short-term domestic gains. But it is worth noting that the government’s plans contain much scope for savings that could easily have set Australia on a path towards an effective aid program: for example, the $498 million that is due to be spent on expanding the Australian War Memorial, or the $185 million to reopen the Christmas Island detention centre before promptly reclosing it.
It is also worth noting that Canberra is easily capable of developing effective long-term solutions to Australia’s global problems, and of finding the funding for them. A good example is the New Colombo Plan, which has been sending tens of thousands of Australian students to work, study and learn a language in forty countries across the region, with the overall aim of increasing the nation’s knowledge of Asia and the Pacific. The latest budget includes $50.9 million a year on the New Colombo Plan for the next four years. The scheme will be Julie Bishop’s enduring legacy and will help to ensure that Australia’s next generation of professionals, bureaucrats, entrepreneurs and politicians forge strong, meaningful links across the region. More such schemes will be needed if Australia wants to understand and adapt to – and make the most of – the coming era of change and uncertainty.