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Foreign Minister Julie Bishop. Picture: AP Source: AP
THE Government’s razor gang has launched another raid on foreign aid, with today’s Âfinancial update to show a further $3.7 billion stripped from Australia’s overseas assistance budget.
The money will come out of the forward estimates during the next four years, with foreign aid allocations to return to 2007-08 levels.
The move, which comes on top of $7.6 billion in growth cuts announced in the May Budget, will infuriate Foreign Minister Julie Bishop, who was involved in a row with Finance Minister Mathias Cormann at an expenditure review committee meeting two weeks ago when the proposal was raised.
Foreign aid has emerged as easy pickings for a government desperate to find savings it does not have to pass through the Senate.
Foreign aid would be frozen at just under $4 billion a year in 2016-17 and 2017-18, then would grow in line with the Consumer Price Index.
Treasurer Joe Hockey confirmed there would be cuts to foreign aid.
“We don’t like having to do this on foreign aid, but we have offset all of our new spending,’’ he said.
“That includes funding critical national security to keep Australians safe.
“So, if Labor helped, we would see a whole different story and we would be able to provide more support for this and other programs.â€
Savings are needed to offset $630 million in new national security initiatives and Australia’s involvement in the war against Islamic State terrorists in Iraq, expected to cost $500 million a year.
The Midyear Economic and Fiscal Outlook will reveal a larger deficit and surpluses delayed beyond 2018-19, with Mr Hockey blaming massive drops in the prices of iron ore, thermal coal and wheat.
The price plunges mean Australia’s terms of trade — the difference between what we pay for imports and earn on exports — will record the largest decline since records began in 1959.
“If we don’t use the Budget as a shock absorber for this ... then Australians will lose jobs and we will lose our prosperity,†Mr Hockey said.
The unemployment rate would grow higher than originally predicted, he said.
Shadow Treasurer Chris Bowen said Mr Hockey was full of “more pathetic excuses and alibis†as to why he had “lost control of the Budgetâ€.
A hostile Senate is holding up $28 billion in savings slated in the May Budget.
Originally published as Foreign aid in razor gang’s sights