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Budget forebodings « Previous | |Next »
May 5, 2009

We know that the global recession overshadows the Rudd Government's budget and that the recession will shape the series of reforms that had been set in place. So what is going to happen? Tax receipts are falling, welfare claims are climbing, the global recession has hit home and there are political commitments to meet, such as the pension hike. What will be pushed into the background?

Moirbudget.jpg

Lindy Edwards in the The Age says that:

The big gamble of this budget is how deep the recession will be and whether stimulus can effectively offset it. Will some of the more benign local forecasts be right? Or will unemployment spike enough to drive a collapse in housing prices, unleashing a downward spiral and making the IMF's doom and gloom more prescient?

Edwards adds that a milder recession means that a good stimulus package might be enough to keep things on the rails.

However, not being able to escape the worst of the global downturn means that the stimulus money might disappear as a drop in the bathtub as we all go down the gurgler. If the spending isn't initiated quickly enough to avert the worst of the recession, there are no guarantees the Rudd Government will be re-elected.

One consequence of the budget is that we can kiss the education revolution goodbye. As Simon Marginson says most of the recommendations of the Bradley report on higher education and the Cutler report on innovation will be "postponed". Priority will be given to measures that extend the capacity of education to meet unemployment, and advance social equity.

Treasury, he says, is less interested in the education revolution than in growing exports and education is our third largest export sector in dollar terms, behind only coal and iron ore. Education earns more than wheat, beef, wool, gold, tourism and other staples. The growth of commodity exports has been slowed by the recession but education exports will grow in 2009 and look recession-proof, for the time being at least, and those educational exports will be supported at all costs.

Paradoxically it is the public underfunding on higher education that drives the exports since the universities seek to overcome the loss they make on domestic students with international students paying full fees. The price is the decline in the average student-staff ratio, from 15 to 20, and middling research capacity.

| Posted by Gary Sauer-Thompson at 9:01 AM | | Comments (12)
Comments

Comments

I'd always suspected that the education revolution was a damp squid. Great on symbolism--a computer for every kid---but the educational emphasis was on training and apprenticeships not digital literacy or the information society.

will the Federal Government deliver on its eight-year project to build its own fibre-optic network covering Australia?

Nan,
they can if they do what the IT industry advises and build the new fibre to the premises network 'outside in' -ie., fixing blackspots first and installing where ADSL2+ is present, later.

Everyone wins then because people with no broadband get it, while people who already have broadband can use the ADSL2+ competitive landscape in the meantime. This would allow companies that have invested in the ADSL2+ technology on the old copper wires to recover their investment before the new fibre broadband network renders it obsolete.

But even then, like dialup access, that old access technology on the copper wire network may stay around for years.

From the link:
"Last year there were 543,898 international students, half in higher education. They generated $15.5 billion in export earnings through tuition fees, accommodation, food, living expenses and entertainment. Education was our third largest export sector in dollar terms, behind only coal and iron ore."

I had no idea education as an export was so valuable for this country.
Thank you for..well...educating me.

I'm going to have to adjust my thinking.
Got anything else that is as illuminating?

Nan,
I dont think this Government has 8 years to do anything.
18 months to do something is more like it.

You could be right about that Les. They've largely wasted a dream run in the polls, and while $950 is a popularity guarantee, it will only last as long as the cash does.

What have you done for me lately, Kevin?

Lyn,
It is normal for governments as unemployment grows to lose points in polls.
As it is normal to lose points when election campaign formats are reneged apon.

daedsinivek

fred,
so they are not going to do anything to undermine the education export industry. It is very significant for Adelaide ----you can see the mass of the international students in the CBD---given the decline in car manufacturing.

Adelaide now looks quite multicultural

Les,
unemployment is going to rise as the economy continues to rapidly tank ("downturn" some call it) --that's hundreds of thousands of jobs---and that puts pressure on the Rudd Government.

I don't think that rising unemployment =being tossed out of office.

Lyn,
retail sales figures have risen, which pretty much means that the government's stimulus strategy is working in the short term. The strategy is one of going hard, and early, targeting the big-employing sectors of retail and construction, with staggered impacts.

The aim was to trying to prop up temporary demand with handouts and home buyers’ grants until its infrastructure spending began to kick in from the second quarter of this year.

It appears to be working----the stimulus package has worked its way into the economy and is softening the impact of the decline. It is not just a cash splash, as claimed by the Liberals.

In his Press Club address Malcolm Turnbull claimed that the Rudd Government’s stimulus spending had been futile. It was a claim not an argument, and one that look retail sales figures.

However Turnbull was dead right on this governments spin:

And you see the spin of the Government is well demonstrated in the way they talked about the cash splash back in December, as was revealed last night on Channel Seven with the documents they obtained from the Treasury. You could see there that there was no reasonable basis at all for the Government to say the $10 billion handed out in cash in December would create 75,000 jobs. That was, at best, an unreal outcome, a highly unreal outcome, based on the assumption that every single dollar of it would be spent and would be injected into the Australian economy, which of course would never happen – 80 per cent of the money was saved. It was always inevitable most of it would be saved and so it was. But the Government went out there and said this would create 75,000 jobs and they had no basis for saying so. So how can we trust them?

Rudd and Co were crazy to make such a claim.

Gary,
I guess it depends on what level of unemployment we reach.
The rising dole numbers do tend to impact on other areas like homelessness,public hospitals,crime, small business. So it isn't just the person who becomes unemployed that becomes a vote changer. There is a certain degree of flow on.