I am Joe Blog’s Left Ventricle

http://www.budget.gov.au/2007-08/index.htm

This year’s budget dissection is so fresh, it’s organs are still twitching.

Some highlights:

• 2.8 billion towards climate change… over five years. The real figure is 499 million for this budget, or 0.21% of total expenditure. Not even a quarter of a percent.
• Road infrastructure investment is seventeen times the size of rail investment
• Total ‘communications’ spending is 815 million (0.35%), not a cent of which goes toward reducing the cost of telecommunications and bandwidth to business
• Only 4.8 billion of the 96.45 billion dollar Social Security budget goes to unemployment
• Personal income tax comprises is 50.66% of revenue and the total amount collected will go up 3% (almost 4 billion) despite tax ‘cuts’ - due to income growth
• Total budget Expenditure: 236 billion (thousand million), revenue: 247 billion, 10.6billion surplus.

Firstly, the environment. The five year funding plan includes things like 7.9 million on light bulbs, 53.3 million on guilt advertising for household emissions, 200million on global deforestation (read: foreign aid) 43.6 million on climate prediction, 32.5 million on further foreign aid with a twist of environmentalism, and 126 million on adapting to climate change. All of these are wasted money - none of them will do anything about the amount of greenhouse gases in the atmosphere.

Then we’ve got the general economy, and the government’s constitutional responsibility (which includes roads, rails, airports, telecommunications) to provide the infrastructure we need to meet the demands of the future global economy.

The International Monetary Fund predicts (page 2 of that link) that world non-fuel commodity prices will begin to fall in 2008, by as much as eight percent. The commodities boom, which includes things like coal and metals that we export, is going to end. The boom was caused largely by very rapid economic expansion in China and India causing demand to outstrip supply - forcing prices and profits up - but supply will catch demand, and prices and profits will fall again. Australia’s economy has grown strongly on the back of this boom. How will we cope with falling prices when they come?

What I wanted to see in this budget was some sort of investment in “smart” business infrastructure. Rather than just digging things up and selling them, or growing things and selling them, when the mining boom dies off we will need a strong business sector to keep the economy fit and healthy. But conducting an office-worker style business in this country is expensive.

Wages are relatively high, but this is offset by the fact that our workers are well educated and highly productive.

Banking is expensive. We have a very fat banking sector. This is offset by not much.

Transport is expensive and inefficient. We have a huge country with vast distances (often a thousand km or more) between major cities. Almost all transport of goods is by road (one driver, one engine and eighteen tyres per 40 tons or so). We have terrible inter-city rail transport; each state has a different track width and there is only a relatively tiny national rail service.

Telecommunications is prohibitively expensive. A single phone line can cost $30 a month just in rental, and internet bandwidth is many times more expensive than in the US. Check out the prices of any webhosting company in Australia and compare with the US or Europe. We simply cannot compete.

What is the government doing about this?

Spending 0.35% of its budget on ‘communications’ initiatives, none of which are about business telecommunications or Internet. Much of that 0.35% goes to TV and Radio infrastructure, and the only internet related funding is for home users - typically out in the middle of nowhere where the infrastructure is so crap they’re still using 56k modems.

Spending 169 million on rail infrastructure - that’s 0.07% folks. Do you want to send a small box from Melbourne to Sydney? That’ll be $10 thanks. Ouch. Meanwhile, the government is spending 2,875 million on roads - the least efficient transport method for freight.

Meanwhile, we’re looking at a 10.6 billion dollar surplus. Why? The federal government eliminated its debt years ago - what is that spare 10 billion for? Why not cut 10 billion off of tax, or spend it on the environment or infrastructure we might need? What is the purpose of this money?

I think this budget shows that the current federal government had no plan beyond “balance the budget, pay off the government debt and cut taxes a bit” and still has no plan beyond that. Its still running a massive surplus and can’t think of anything good to do with the money. It’s probably going to lose the next election over the environment, industrial relations and a general lack of shine, and this budget will do nothing whatsoever to prevent that.

If they’d come out fighting with a great new plan for our future, they might have had a chance.