Earlier this evening, Australian Treasurer Wayne Swan presented the Rudd Government’s 2009 budget in Parliament House, Canberra. This early report in Bloomberg.com – Australia Budget Deficit Grows to Record on Recession - summarizes the budget’s main initiatives and most of the key assumptions.

Australian Treasurer Wayne Swan: punting that growth will return
Swan announced the largest Federal budget deficit in history. The deficit is projected to decline only by 2011-2, by which time it’s assumed high rates of economic growth will have returned. Restoration of a Federal surplus is not expected for six years – and projections are the accumulated deficit will spike at around $120 billion!
A prompt and sustained return to global economic growth is therefore the crucial assumption in today’s budget.
The prospect of returning to surplus within a few years – and paying off the national debt in the foreseeable future – is entirely dependent on the resumption of rapid growth, worldwide and in Australia.
This assumption is problematic. I want to highlight one problem that almost certainly won’t be mentioned in tomorrow mornings’ newspapers.
Israel is pushing for another war in the Middle East. Its new, even more extremist government is chomping at the bit to pummel Iran. Few governments in the western world – certainly not the Australian Government, judging by its record – have the guts to demand that Israel halts its murderous plans.
IF there’s an attack on Iran in the next few years, expect oil prices to rise to AT LEAST $200 per barrel – plunging the already ailing world economy into a tail-spin. Other commodity prices would probably plummet as growth contracts even more sharply; in that scenario, Australia would be pushed towards implementing savage cuts in social benefits.

Australian Foreign Minister Stephen Smith: needs to make maniacs see reason, daren't say boo to a Zionist goose
The man in cabinet with the toughest job of all, in my opinion, is Foreign Minister Stephen Smith. He has to tell yahoos like Netanyahu and Lieberman to pull their horns in – without upsetting Kevin’s insidiously powerful chums such as arch-Zionists Frank Lowy and Rupert Murdoch. Alarmingly, there’s no indication he’s even trying.
Let’s hope Mr Smith – and his counterparts in the USA, Britain and other countries – succeed in pursuing peace in the Middle East. In practical terms, that means at minimum getting the Israelis to stop attacking other countries. If Israel does start a war with Iran, the Australian budget following would be like a funeral for our national prosperity.
I’m also concerned about the nature of the growth in the Australian economy that’s projected for when economic expansion returns. I fear large components in the government’s growth projections are exports of coal and other minerals. If so, the Government is effectively banking on rising greenhouse gas emissions. It’s a short-term solution similar to giving plenty of heroin to an addict. It avoids cold turkey, but the underlying addiction is untreated.
Beyond that, the most shocking comment I heard in the ABC’s post-budget commentary was when Shadow Treasurer Joe Hockey claimed the dollar value of the government’s cash handouts exceeds all infrastructure components of the stimulus package. I’d like to hear more analysis on that. If true, it does seem grossly excessive emphasis on sustaining the consumer economy in the short term, as opposed to laying the foundations for long-term success and sustainability.
It was recently reported in the Melbourne Age that some 80% of the South Korean stimulus package is being invested in green technology. The same statistics put the equivalent figure for Australia at around 10%.
Instead of listening so intently to the Lowy institute, the Rudd Government should send a fact-finding delegation to Seoul. It must learn how to fashion polices that advantage the long-term interests of all Australians, as opposed to the short-term profits of shopping centers.



