Ben’s Blog

Tony Abbott has today announced what he would propose to cut in order to fund disaster relief and reconstruction in Queensland without using a levy. I’ll let others comment on the merits or otherwise of his suggested domestic cuts – a lot of money taken out of schools, a lot of spending “deferred” on water buybacks in the Murray-Darling basin, money withheld from the automotive industry, and so on…

The whole list of what the Coalition would like to axe (and what it costs) is here (pdf).

I’ll only comment on the proposed cuts to Australia’s overseas aid. Tony Abbott admits that cutting Australian aid to Africa was “vigorously discussed” – which I take to mean that he pushed hard to gut the program – but was not added to their list of savings. There’s a bit more detail about how, exactly, the Bishop camp prevailed on this matter here.

So that’s the good news on aid. The bad news is that if he were Prime Minister (and, of course, he’s not but his plans give some indication of what the Coalition’s priorities would be if they did form Government) Abbott would defer – “subject to review” – a 4-year program to build schools and provide training and support for teaching and school management in Indonesia. The annual cost of the program is roughly $110 million. You can find out more about the program at Ausaid’s website.

So, the answer to yesterday’s question about what he would cut is, “The building of schools to provide basic education for poor Indonesian children, and the training of teachers, principals and school management groups to improve the quality of education for those children.”

He offers the expected “charity begins at home” nonsense to justify this. Now, I don’t think that an Opposition leader, an alternative Prime Minister, should be equating disaster relief and reconstruction with “charity”. Surely It’s a fundamental obligation of government. This is not to say that budget cuts might not be necessary to fund the disaster response – but it is not a charitable act by Government to help out its own citizens when disasters strike.

He’s on stronger grounds suggesting that overseas aid as currently construed is more a charitable gesture. There is no way a government can be required to give aid. But here, too, I think we have fundamental human obligations of solidarity and support to help fulfill the legitimate rights, needs and aspirations of all people wherever they happen to live.

Recognising this, Australian Governments of every persuasion have repeatedly committed to giving 0.7% of our national income in aid to support poverty reduction and development in poor countries. (Though the bipartisan commitment is to reach 0.5% of GNI by 2015). It is poor form for the Shadow Cabinet to be even considering delaying the achievement of this bipartisan goal.

And it is just not necessary to cut this program. Australia has a $1 trillion a year economy. Annual government expenditure is around $350 billion. The total reconstruction costs for Queensland from the flooding and cyclone will be upwards of $5 billion. Cutting this program will provide an annual saving (“saving” for the Australian budget, but “loss” for Indonesian children) of only $110 million.

The flood figure of roughly $5 billion of direct costs for the Australian Government comes from early estimates, and is no doubt now on the low side because of the further impact of Cyclone Yasi. However, it gives you an idea of the size of this cost relative to Government expenditure.

So whether the disaster relief and reconstruction is funded by a levy, by deferring the return to budget surpluses (shock! horror!) for a year or two more, or by other budget savings… Australia can afford to fund the cost of disaster response without cutting or deferring any part of its overseas aid program.

Tony Abbott said that this “deferral” of spending on education support for Indonesia is “subject to review”, so now would be a good time to get in touch with your Parliamentary representative and tell them to leave the aid budget alone.

And don’t let the Government off the hook either. Though the PM rejected calls to cut the aid budget in the wake of the flooding, with Cyclone Yasi, further flooding and now fires in WA, the Labor Party, too, will be looking for budget savings to fund the disaster response.

Update
Others weigh in on the proposed aid budget cuts: morally bankrupt, alarming, and (politically) needlessly damaging.

The Opposition are considering cutting Australia’s aid to Africa in order to fund post-flood relief and reconstruction. Likely we won’t know the result of Shadow Cabinet’s deliberations until tomorrow’s Parliamentary session.

As unwelcome, unedifying and morally bankrupt as this call is, it should not be surprising. The Coalition was always going to oppose the Government’s proposed flood levy – having made political mileage from unrelenting opposition to almost any Government proposal, regardless of the accuracy, integrity, or policy outcome of its opposition. It can generally be relied upon to seek political advantage from any xenophobic sentiment in the voting public. (Do I really need to cite examples?) And it has waged a fairly constant – and consistently simplistic – campaign against increased aid to Africa for the last 3 years or so.

When the floods struck Queensland (and other parts of Australia) it was never going to be long before some people would call for Australia’s overseas aid to be cut. The first comment on this story is emblematic:

Cancell all overseas aid and use these funds to help aussie instead of a levy, stop our tax dollars going overseas until all Aussies that are affected by the Fires and floods in WA and floods in the east are back on their feet,why slug the Australian people again, we give so much to anyone in need, when are we going to get some in return???

Sadly, this viciously selfish parochialism is not limited to tabloid blog commenters, but also finds champions within Parliament House. Liberal MP Alby Schultz, too, thinks that overseas aid spending should be cut or frozen in order to pay for domestic disaster response.

Luckily this kind of parochialism is not reflected in international responses to Australia’s troubles – offers of aid have come to Australia from Papua New Guinea, Indonesia and elsewhere. And it almost certainly does not reflect mainstream public opinion. The Government promptly rejected such calls.

Quite apart from the morality of such calls, the economics are, of course, easily dispatched. Australia’s aid program amounts to roughly 1.5 % of government expenditure. We are not diverting huge amounts of money away from needy Australians to support needy foreigners. And – within that program – Australia’s aid commitment to Africa is small, only $163.9 million last year and $200.9 million in the current budget. There just aren’t big savings here to be made. And, of course, as one of the wealthiest nations on the planet we should – and can afford to – support Australians who have been affected by the recent climate-related disasters.

But this all feeds in to the Coalition’s use of the floods to continue, and amplify, its attacks on each and every program it had already decided to oppose. The National Broadband Network shouldn’t go ahead because of the floods. Schools that are still waiting for classrooms and other infrastructure that the Government has already committed should be kept waiting forever because of the floods.

Obviously, it’s an easy game to play: The Government should not spend money on thing x, or should stop spending money thing y because of the floods. (Where x and y were things we were always going to oppose anyway, literally come hell or high water.) And overseas aid, it seems, is no exception.

Since the 2007 election, the Opposition has opposed increases in aid to Africa and accused the Government of using this aid to bolster a bid to win a temporary seat on the UN Security Council. In this, they have been aided by various members of the conservative commentariat.

Shadow Foreign Affairs spokesperson, Julie Bishop, puts it like this:

The Coalition has repeatedly raised concerns about the Rudd Government’s diversion of aid funding to countries outside our region in pursuit of the campaign for a temporary seat on the United Nations Security Council

as if any aid to Africa must be inherently suspect and driven by base political motives.

I’d agree with Joel Negin at the Lowy Institute, though, that Australia’s aid contribution in Africa is about long-term development, including water and sanitation, education, maternal health, and sustainable agriculture. Bob McMullan, former Parliamentary Secretary for Overseas Aid, also responded to those insinuations by saying:

Our increased assistance is about contributing more effectively to achieving the Millennium Development Goals and being a good international citizen in a world that is becoming ever smaller and more complex.

In a world of need, the people living in the starkest poverty live in sub-Saharan Africa. It’s entirely to expected that the Labor Government – with a renewed commitment to the Millennium Development Goals – would focus again, even if only in a fairly niche way, on Africa. This was ALP policy before the 2007 election (and before any Security Council bid) and it has been the consistent policy call of the Australian aid community who wanted to see some strategic re-engagement of Australia’s aid program with Africa.

The Opposition are considering cutting Australia’s aid to Africa (among other things) to fund rebuilding costs in the wake of the recent floods and Cyclone Yasi.

It’s worth asking which specific programs will be cut, and how a reduction – even a small one – in Australia’s aid spending squares with the Opposition’s putative commitment to lifting aid to 0.5% of GNI by 2015.

So will we be cutting delivery of food aid to Ethiopia, Kenya, Niger, Sudan or the Democratic Republic of Congo?

Or, possibly, educational support to children orphaned by HIV/AIDS in Malawi, Mozambique or Tanzania?

How about reducing the number of women who can receive free fistula surgery in Ethiopia?

Oh, I know, how about cutting back on improving access to safe drinking water and sanitation? Or agricultural extension and research to improve food security?

So, in the search of a cheap political victory, and a negligible $200 million of savings (the annual size of Australia’s entire aid program in Africa), the Coalition are proposing that one of the wealthiest nations on the planet should be slashing support for some of the world’s poorest people in order to fund entirely affordable domestic disaster relief and reconstruction.

TEAR Australia has laid out the case, and the contact details, for getting in touch with Opposition MPs and telling them not to call for African aid cuts. Go there now, and come back here later.

And I’ll have a quick and dirty look at the (dirty) politics of this.

Tony Abbot says:

We won the election in every sense except we didn’t form government.

The tasty Danish iced-confection that leaves civil society demonstrators cold… (and beaten, and arrested), negotiators in a zombie state,  and the rest of us feeling a little uneasy that there is no Plan(et) B…

Here’s an opinion piece that my colleague Raju and I worked on that captures some of the last week’s procedural kerfuffle in Copenhagen from a Nepalese perspective. Published in today’s Kathmandu Post.

DEC 17 – At just 26 square kilometres, and with a population of only 12,000 people, Tuvalu is one of planet Earth’s smallest nations. Its political, economic and military clout is on par with its physical size — roughly zero. Yet the tiny Pacific nation of Tuvalu last week brought the entire Copenhagen climate change summit to a halt. Not with stunts or threats but with a powerful moral stand to defend the rights of its citizens and, indeed, its very survival as a nation against the ravages of climate change — rising sea levels and more numerous and ferocious tropical storms.

The confrontation came when Tuvalu insisted that its proposed ‘Copenhagen Protocol’ should be discussed formally by the meeting. Tuvalu’s proposed Protocol (to be added on top of the Kyoto Protocol) would commit all countries to take action to restrict global temperature rise to less than 1.5°C above pre-industrial levels and bring the level of carbon dioxide in the atmosphere down to 350 parts per million (ppm), from its current level of almost 380 ppm.

Developed countries baulked at the proposal because it would require emissions reductions far more ambitious than anything they have contemplated. In fact, the action of developed countries and their commitments to date do not give the world any chance of avoiding dangerous climate change and a global temperature rise far in excess of 2°C.

However, many developing nations — including China, South Africa, India and Saudi Arabia — also spoke against allowing the proposal to be discussed formally. Tuvalu’s proposal would require not only developed countries to take legally binding actions, but would make the same demand of the largest developing countries. In this way Tuvalu, supported by small island states and the Least Developed Countries of Africa, not only brought the meeting to a standstill, but also created a “rift” in the much hyped unity of developing countries.

Now, exposing the very substantial differences of interest that exist within the developing countries bloc (which though known for historical reasons as “G77 + China” actually consists of over 130 nations) is not necessarily a bad thing. Despite the negotiating power that comes with developing-country unity, there are some very real, and possibly irreconcilable, conflicts that need to be addressed. Small island states see their very existence threatened by climate change. Least Developed Countries including Nepal see rapid scaling-up of financing for adaptation as the highest priority. Rapidly developing nations such as South Africa, China and India recognise the environmental and human threat posed by climate change, but don’t want their economic development and poverty reduction efforts prematurely stifled — and particularly not while developed countries are still not making anything like the effort required to reduce their own emissions. Some oil-dependent economies, notably Saudi Arabia, seem to want to sabotage any deal that would lead the world away from dependence on oil and the fossil fuels that got us into this mess in the first place.

There is a pattern of confrontation and resistance emerging in Copenhagen in which developing countries, and especially the most vulnerable, are no longer prepared to sit passively and wait for their fates to be decided by whatever actions might or might not be taken by developed nations, and the largest developing country emitters. Tuvalu, along with the Alliance of Small Island States of which it is part, has long been a leader in this regard. This week, Africa stepped to the forefront demanding a suspension of negotiations unless developed countries renewed their commitment to the Kyoto Protocol. The African Group then led a walkout which was supported by all developing nations.

The Kyoto Protocol is currently the only legally binding mechanism for ensuring emissions reductions from developed countries. Though it only covers around a third of global emissions — since developing countries are not bound by it and the U.S. point blank refuses to ratify — it is a vital tool for delivering emissions reductions and equity, since it requires earliest and deepest action from developed countries whose historic emissions have done most to cause the problem of climate change. Some developed countries are reluctant, or even hostile, to renewing their commitments to the Kyoto Protocol, so the African walkout is a clear indication that they will not be allowed to wriggle out of their responsibilities easily.

The actions of Tuvalu and the African Group action should be a wake up call for all countries, and especially for those — like Nepal — that are most vulnerable to the impact of climate change. Nepal’s negotiators have until now largely focused on securing increased financing for adaptation, and placed very little emphasis on pushing for more ambitious commitments from all parties to reduce greenhouse gas emissions and prevent run away climate change. Certainly adaptation is undeniably a critical issue, and developed countries (who are the biggest climate change culprits) are still grudgingly offering only a small fraction of the guaranteed finance that will be needed to meet increasing adaptation costs.  Still, there are some welcome signs of new adaptation commitments from the European Union, support for “fast start” adaptation funding from many countries, and a concrete joint proposal for a new climate funding mechanism that has come from the U.K., Australia, Norway and Mexico of all places.

But we will find cold comfort (an ironic phrase indeed) if in putting all our negotiating muscle behind getting access to the adaptation dollar we find we missed the chance to stand with Tuvalu and push harder for deep cuts to global emissions. The climate change impacts that come with warming beyond 2°C are likely to be the kind that only the very wealthy and the very lucky are able to adapt to.

Yes, it would mean taking a different line to our most powerful neighbours — neither India or China want to take on binding emissions reductions targets at this stage in their development. It would require a tricky diplomatic balancing act of calling for more from them, while at the same time not letting developed countries — who are the biggest climate change culprits — off the hook for one second. Nepal is a small nation, and such a strategy is a big task.

But Tuvalu’s example just goes to show that when it comes to climate change — and to international climate change negotiations — size really doesn’t matter.

I wouldn’t ordinarily venture to dispute Sydney Cardinal, George Pell (that’s the Catholic dignatory, not a pitcher for a minor-league baseball team), but it can’t be a good sign of the quality of the Cardinal’s thinking that he’s quoted approvingly by Andrew Bolt.

Shorter Pell: people I like to read say that climate change isn’t happening. I’m sure they’re right.

There are a number of fundamental errors in the piece which have been addressed over and over again by others who are actually qualified in a way that I, along with the good Cardinal, am not. (The medieval warm period wasn’t warmer. Warming didn’t stop in 1998.) But I was saddened by this childish attempt to use basic confusion about definitions as what is, apparently, meant to be a devastating attack on the scientists who understand climate change.

Originally we were warned about the “greenhouse effect”; then it was “global warming”, followed in turn by “climate change”. Now we talk about reducing the “carbon footprint”.

Um. No. These are not four separate “scares” dreamed up by global warming fanatics, each one supplanting the preceding when it had failed to generate sufficient panic. These are definitions of inter-related aspects of a physical reality.

The greenhouse effect is a term that metaphorically denotes how greenhouse gases in our atmosphere keep the Earth at a fairly constant, and life-friendly, temperature.

Global warming is what happens when additional (human-caused) greenhouse gases in the atmosphere shift the Earth’s energy balance, leading to increased surface temperatures.

And when the average global temperature increases, we don’t only get warmer weather. There are multiple impacts on the climate system, including sea level rise, and changes to precipitation patterns. Climate change seems like a good term to describe that.

And as for reducing our carbon footprint.  Since carbon dioxide is a potent greenhouse gas and we’re releasing gigatonnes of the stuff right now, that sounds like good advice.

And does the Pope know what his Cardinal is up to? Caring for people and the planet, according to Benedict XVI, requires us to be concerned about climate change:

Care of water resources and attention to climate change are matters of grave importance for the entire human family. Encouraged by the growing recognition of the need to preserve the environment, I invite all of you to join me in praying and working for greater respect for the wonders of God’s creation!

Andrew Bolt’s taking his hard-earned dollars away from World Vision because (he says) it is blowing cash on the pagan cult of global warming. Which is a fine and principled move, since Bolt knows for a fact that climate change isn’t happening and/or isn’t caused by humans and/or won’t be a problem anyway. And it’s good to stick by your principles even if a few malnourished sponsor kiddies have to go hungry because of it.

And so Andrew goes off in search of a new sponsor-child who doesn’t have the misfortune of being supported by an agency that thinks climate change is real, and likely to affect the poorest people earliest and worst. Which is going to be hard. Very hard. Because it’s not just World Vision, but TEAR Australia, Oxfam, Childfund, Caritas, Care Australia, and who knows how many others who are also “blowing cash on this pagan cult”…

It’s almost like they think that the world’s poorest people might actually be vulnerable to climate change, what with being overwhelmingly dependent on small-scale rain-fed agriculture, having little by way of savings or insurance to avoid or recover from drought or flood, and living in countries and communities with little capacity to adapt to large-scale climate change impacts like sea-level rise, glacial melting and so on.

But that’s not the point. The point, as Andrew so cogently notes, is:

why is (World Vision CEO, Tim) Costello offering himself as a global warming expert?

Yes. I mean News Limited bloggers – and coincidentally Andrew Bolt himself is one of those –  are acknowledged global warming experts. What they say is not at all stupid and multiply disproven.

The people who are not global warming experts would obviously include everyone that World Vision (and others) might rely on for insight into climate change and its impacts on the poor, like – I don’t know – actual climate scientists, or even poor people themselves and the people who work with them.

Here’s the big picture of the volume trend in Australian aid:

____ = Budgets to present
_ _ _ = Forward estimates to 2012/13 (loosely planned expenditures for those years)
_ _ _ = Implied trajectory to reach Rudd Government commitment to 0.5% GNI by 2015
____ = Path to reach 0.7% GNI by 2015

As you can see, aid has now hit 0.34% of Australia’s Gross National Income (which, by the way, is a level of aid spending as a proportion of our national income that we haven’t reached since 1992/93). Aid spending slumped in the latter years of the Hawke/Keating Government, and then was gutted a couple of times under Howard before he really began to increase it in the lead up to the World Summit in 2005. Rudd has maintained that increase and put a definite goal (0.5% by 2015) to aid spending.

Though, note that the “slow and steady” increases to the aid budget under Rudd so far mean that more substantial increases need to be delivered after the three-year forward estimates period, well after the next election. This is problematic for a few reasons:

It increases the likelihood that the goal will not be met either because its delivery will be the responsibility of a different government (we have at least 2 elections between us and Kevin’s 2015 target date) or because a slower time-frame means more time for “unforeseen circumstances” to throw a spanner in the works.

“Backloading” aid (ie. postponing or delaying the major aid increases) limits the contribution it can make to the achievement of Millennium Development Goals and limits the support and resources available to poor countries to weather the storm their are facing right now. Instructively, European donors are frontloading much of their aid (spending more of the committed budget in earlier years) so it does the most good to those who need it under the current circumstances:

The Commission is frontloading €3 billion, or 72% of its foreseen budget support to African, Pacific and Caribbean nations thereby ensuring that social spending is not forsaken when most needed… Overall, frontloading by the European Commission should bring forward €4.3 billion resources to 2009.

Sure, frontloading implies a tailing-off of aid in later years, just as backloading implies a scaling-up of aid in later years. But if investments are made now that address the current shocks, and build resilience and capacity in poor countries and communities, this needn’t be a huge problem.

Despite the dire global economic circumstances Australia can still afford to lift its aid to the internationally-agreed target of 0.7% GNI. Our aid budget is still small as part of the Government’s overall revenue and expenditure (just over 1% of total expenditures) and you can, in some respects, think of it in the same light as the domestic stimulus package (worth tens of billions) put forward in the same budget. If we are seriously committed to limiting “the scale of the human impacts” of the global recession, and tackling the tragedy of global poverty, then it’s a reasonable proxy indicator of that commitment. (The green line on the graph above shows the straight-line trajectory our aid budgets would need to follow to reach 0.7% by 2015. It’s ambitious, but achievable.)

I’ve discussed this 0.7% target a little bit before. I understand that the political and economic circumstances don’t seem good for setting a timetable to reach this target. (However, circumstances were also apparently never quite right during 16 years of uninterrupted economic growth and a dozen or so massive budget surpluses either…) I think it’s high time the Australian Government made a timetabled commitment to increase its aid to 0.7% of Gross National Income (that’s 70 cents for every $100 of our national earnings) by 2015. C’mon Kevin 0.7!

OK, so the aid budget has increased since last year’s budget (by 5.6% in real terms). And  it seems like there are quite a handful of small things, as well as a few medium-sized ones, to be happy with in this moderately expanded budget.

First off, the budget statement is framed with a very welcome recognition of the way in which the global economic downturn will affect poorer countries (who have largely been ignored in media coverage about the issue – I mean they’re always poor, right? A global recession can’t make any difference to them…)

The global recession will generate enormous difficulties for developing country governments. While needing to help newly vulnerable populations, they will have less tax and other revenue to fund crisis responses and to maintain basic services such as health and education. This place a special responsibility on donor government to support developing country counterparts to generate employment and help limit the scale of the human impacts.

To this end, there are very welcome increases in investment in basic services, such as:

• basic education (increased roughly 46% on last year)
• water and sanitation (up 278% on last year)
• rural development (up 77% on last year)
• health (increased around 38% on last year)

The increase for maternal and child health (according to the estimates of the inestimable Garth Luke, now a senior researcher at World Vision) is very substantial, and will rise to $370 million from last year’s budgeted $260 million. Campaigners active in the MakePovertyHistory and Micah Challenge campaigns should be pleased, because maternal and child health in our region was one of the key issues they focused on.

There’s also some new $$ for economic infrastructure development – particularly rural electrification, roads and labour-intensive public works to help tackle unemployment. After long periods of neglect by all donors, not just Australia, rural development and agriculture is also starting to get renewed attention, particularly in light of the crisis in staple food prices of the last two years. For its part Australia puts up around $230 million for rural development (up 77% from around $170 million last year) focusing on agricultural productivity, the strengthening of markets, and support for poor farmers and communities.

A quick sample of the sectoral breakdown of aid budgets over the last decade shows a hopeful trend, I think.

As you can see, from around 2002/03 Australian aid (under Howard and Downer) went on a bit of a governance binge. Law and order programs, placement of Australians in senior positions in Pacific Island bureaucracies, capacity building of government institutions, were the flavour of the day (actually, of most of the decade). These programs have their place, but in 2005/06 these programs accounted for more than one-third of Australian aid. More Australian aid money was being spent on governance programs than on health and education combined. So it’s good to see that health and education now seem to be getting some sustained attention.

However, greater investments are going to be needed if Australia is to make a substantial contribution to stemming the wave of poverty and hunger that is likely to hit the poor over the next few years. The budget statement itself acknowledges that, according to a World Bank study, up to 90 million extra people worldwide (including 62 million people in our neighbourhood) will live in extreme income poverty this year because of the global recession.

A small aside on the right to food, and the livelihoods of poor, small-scale farmers – it’s worth checking out this statement made to the UN General Assembly by Olivier de Schutter, the Special Rapportuer on the Right to Food.

He notes that,

Since hunger is not the result of too little food being produced, but rather of marginalization and disempowerment of the poorest, who lack the purchasing power they need to procure the food that is available, guaranteeing such a protection should be a top priority.

He argues that prioritising the hungry and those vulnerable to food shortages should be the highest priority for policy makers. The priorities he outlines in this short speech are well worth keeping in mind as Australia’s aid program begins to scale up (though maybe slowly) its investment in rural development and agriculture.

The last observation I have is another small encouragement. When Rudd first announced his policy of lifting aid to 0.5% GNI by 2015 in a speech to the Lowy Institute he was very careful, as I noted at the time, to rule out budget support as a way of delivering aid through Pacific Partnerships, preferring instead Australian-directed and delivered projects. However, this budget statement seems to point in the opposite direction:

Working in partnerships means that increasingly Australia will work through, rather than alongside, different countries’ own systems of government and service delivery.

This is a good thing.

The last thing we need is the Australian Government behaving like an NGO, setting up and running an ever-increasing multitude of projects*. Working through countries’ own health, education and general budget processes and systems is much more efficient than a Government trying to micro-manage too many projects, it ensures better coordination of donor and recipient country development goals, and can lead to greater effectiveness and development of recipient country’s own systems. See here for an exploration of this kind of budget support.

*I’m not saying that Governments can’t run projects, and I’m certainly not saying that NGOs shouldn’t. Just that they have different capacities, functions and niches and they should make the most of those.

Wow, I just read the transcript of Wayne Swan’s speech. Scary stuff. Noun/adjective combinations perfectly pitched to give you the heebie-jeebies, which might be stilled a little – but only a little – by the Churchillian stuff about opportunities rising out of challenges, Australians being too strong, resilient and united to be overwhelmed, and all that…

Recession. Challenging. Severity. Brutal. Downturn. Uncompromising. Ferocity. Adversity.

And the change in budget position from a $21.7 billion surplus in 2008/09 to a projected deficit of $57.6 billion this year gives a pretty good indication of what the government intends to do in response to this ferocious, uncompromising and brutal downturn. And let’s hope the Government’s spending/investment/stimulus plans work out.

Because I’m no economist, but if the Treasury forecasts turn out to be accurate:

• real GDP returns to modest positive growth in 2009/10, and then 4+1/2% growth in the following years
• unemployment peaks next year at 8+1/2% and falls back to last year’s levels over the following two years

then I’d say we’ve been extraordinarily lucky.

Now, as for the aid budget…

The headline figures are that in 2009/10:

Australian Official Development Assistance is budgeted to increase to $3.82 billion (a 5.6% real increase on last year’s $3.66 billion) which, given the circumstances, and the fact that hundreds of millions of $$$ of Iraq debt cancellation are no longer included, is actually pretty good.

Australian ODA will reach 0.34% of Gross National Income (up from 0.33% last year, though falling short of last year’s forward estimates which aimed to reach 0.35% this year, and still well short of the OECD average country effort of 0.47% GNI and leaving us 15th most generous of 22 rich country donors).

More detailed discussion of what’s behind the headlines shortly…