National Budgets - Some Thoughts

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Each year we are subjected to the performance of our Treasurer as they present the Government’s budget (for national budget details see theopenbudget.org). A few days later the Opposition Leader gives a speech in reply. It is all part of the Parliamentary process that offers citizens a chance to learn something of their financial plight and also for the public sector to have confirmed their expenditures for the financial years ahead. This is not the end though, as there is commonly a review of certain budget initiatives in the Senate. However, we are fortunate that there is acceptance that Senate will not block supply, something we learnt from those traumatic days in 1975. This is not the case in the USA where Congress can effectively shut down the public sector during budget review. But Congress can do things to a budget that our Parliament cannot as I will show below.

Like many, I find the budget process obscure and often misleading. Reading articles by economics journalists Ross Gittins and Michael Keating in recent weeks makes you wonder about the tricks that are used to convince the taxpayer of their fate. We are subjected to binding targets such as the 23.9% of GDP revenue limit (why 23.9?) beyond which money should go back to the taxpayer, and not to any long term investment such as reducing debt or a future fund to cover the known unknowns of climate change adaptation. Then there are the assumptions underpinning not just the forward estimates but the so-called projections out beyond 2025! That is 3 elections or more away? Yet when you read the Dept. Environment and Energy portfolio budget statement you find an item Reef 2050 long-term sustainability plan involving $500m over 7 years then ongoing $10.2m from 2024-25. Sounds great and welcome but confirmed in stone?

In the USA there is much angst amongst scientists and the public sector on the cuts to the annual budget by the Trump Administration. They have been quite severe. Information I have received from The Oceanography Society indicates that the Administration for 2019 was seeking big cuts to the budget of agencies such as the National Oceanographic and Atmospheric Administration (NOAA). Climate research would be cut by c.40% and coastal resilience grants would be eliminated. Then I noticed something odd and apparently very different from Australia: through the House of Representatives Appropriations Committee there were several funding levels increased over the FY 2019 President’s budget request. In other words, the Executive budget cannot just be approved or cut, it can be added to for specific agencies, programs, projects, offices and even initiatives.

Digging a little deeper into the US budget papers for NOAA, there is evidence that Congress was listening to the ocean community. For instance, for the sanctuaries and marine protected areas program, the House rejected the Trump Administration cuts and instead increased funding by $3m compared to current funding. And in the case of coastal zone management grants, the House rejected the Administration’s proposal to eliminate CZM funding (can you imagine!) and instead maintained current funding. This goes on and on by item. I am very heartened by the way a Republican-dominated Congress can think through the implication of radical cuts and restore at least some funds to agencies under financial pressure.

There are many differences between nations on how budgets are planned, submitted, reviewed and finalised. In many cases it is useful to understand the process and to examine the consequences for areas of interest, in my case NRM in general and coastal in particular. This applies at both national and state levels. Under the new coastal reforms in NSW it will also be relevant to the way local councils use their Integrated Planning and Reporting frameworks in developing and implementing Coastal Management Programs.

It is fascinating to see that our friends across the ditch are heading towards the world’s first “Wellbeing budget” in 2019. Instead of using GDP as the prime indicator, New Zealand’s next budget will be assessed against a range of factors that reflect health and well-being of people, environment and society. It will be interesting to see how these categories, related as they are to the broader public good such as the environment, will be treated in this new framework. Will it offer a model for others to follow?

 

Bruce Thom

Words by Prof Bruce Thom. Please respect the author’s thoughts and reference appropriately: (c) ACS, 2018, posted 30 May 2018, for correspondence about this blog post please email austcoastsoc@gmail.com 

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