Australian Government, 2009‑10 Budget

Statement 1: Budget Overview

Continuing to deliver the reform agenda

Notwithstanding the difficult economic conditions, the Government remains committed to progressing its reform agenda. This includes improving defence funding, strengthening national security, investing in international diplomacy and overseas development assistance, climate change mitigation, continuing the COAG reform agenda, closing the gap for Indigenous Australians, and reforming the migration program.

Securing Australia

The Government has delivered a Defence White Paper to secure Australia's defence needs in the decades ahead. In addition, the Government has provided funding for a range of national security measures.


This Budget provides greater funding certainty for Defence by maintaining average real growth in underlying defence funding of 3 per cent per year until 2017‑18 and introducing new indexation arrangements to reduce volatility. The new funding model will provide an additional $11.6 billion to 2018‑19 and an additional $146.1 billion for the life of the White Paper until 2029‑30 relative to funding projections at the time of the UEFO. The new funding model will provide Defence with $308 billion over the next decade. These decisions, along with a program of savings and reinvestments worth $20 billion over the next 10 years, allow for the expanded acquisition of next‑generation capabilities, such as combat aircraft, armoured vehicles and submarines.

The 2009‑10 Budget provides $1.7 billion to support military operations, including:

  • $1.4 billion for an increased Australian Defence Force presence in Afghanistan;
  • $224 million to continue stabilisation efforts in East Timor; and
  • $29 million to maintain an Australian Defence Force presence in the Solomon Islands.
National security

The Government is boosting Australia's border security with $1.3 billion being committed in this Budget to enhance national security and border protection and combat people smuggling. Key initiatives include:

  • a whole‑of‑government strategy to combat people smuggling and strengthen border security, including through strengthened cooperation in source and transit countries, totalling $289 million including funding announced in the UEFO;
  • increased surveillance capacity, including $365 million to continue patrols by vessels in Australia's waters, deploy the Southern Ocean Patrol Vessel into our northern waters for 80 days per year and increase aerial surveillance by more than 2,000 hours for two years; and
  • $685 million in other initiatives to strengthen our national security framework, including funding for aviation security, counter‑terrorism, foreign policy, enhanced security cooperation in our region and e‑security.

Investing in global stability and prosperity

In the midst of a global recession, it is crucial that the Government works to enhance global and regional stability and prosperity. Australia does this through strengthening our bilateral relationships and our active involvement in regional and global forums such as G‑20, the East Asia Summit and APEC.

This Budget provides the Department of Foreign Affairs and Trade with around $460 million over four years to do this and to advance and protect the interests of Australia and Australians. These funds will ensure that DFAT will be able to increase security at our diplomatic missions abroad and advance national security through diplomacy and by protecting Australians overseas.

Within this funding, the Government will provide $110 million to boost engagement with countries and regions of growing significance to Australia's national interests.

The funding also includes $164 million for the construction of new chanceries in Jakarta and Bangkok and a feasibility study for a new chancery in Kabul.

Overseas development assistance

The Government remains committed to its target of a ratio of Official Development Assistance to Gross National Income of 0.5 per cent by 2015‑16. Australia's increasing aid expenditure will assist developing countries, particularly those in our region, to respond to the global recession and to achieve progress towards the Millennium Development Goals.

In response to the global recession and specifically its impact on those most vulnerable in developing countries, funding for development assistance will increase by $152.9 million in 2009‑10 to around $3.8 billion. This represents an increase of nearly $650 million over 2007‑08 levels.

The Asian Development Bank estimates that the impact of the global recession is 100 million more people will be living in extreme poverty in 2010 in developing Asia alone. The Government is assisting developing countries to deal with the challenges posed by the global recession. Initiatives include:

  • US$197.6 million for a general capital increase for the Asian Development Bank, to allow the bank to respond to the global recession in an effective and timely manner;
  • $464 million for food security and rural development projects in Asia, the Pacific and Africa;
  • $336 million to continue and expand current performance‑linked aid activities, including through the Pacific Partnerships for Development; and
  • $454 million for improving economically important infrastructure in developing countries, including transport, electrical and telecommunications infrastructure.

Climate change

There is a clear need to persist with the climate change policy agenda, even in the current economic circumstances. The Government is committed to tackling climate change and positioning Australia to prosper in a carbon constrained world. That is why the Government remains committed to introducing the Carbon Pollution Reduction Scheme legislation this year.

Passage of the legislation will provide business with more certainty over the introduction of the carbon price, and provide a framework for structural adjustment and future investment decisions, including as our economy recovers.

The Government recognises the significant strain that the economic crisis is currently placing on households and businesses, and is determined to get the balance of the Scheme right. To help support jobs and assist business in managing the impacts of the global recession, the Government will delay the commencement of the Carbon Pollution Reduction Scheme by one year and apply a fixed carbon price of $10 per tonne of carbon pollution in 2011‑12. The Government will also apply a Global Recession Buffer for emissions‑intensive trade‑exposed (EITE) activities and allocate up to $200 million to the Climate Change Action Fund in 2009‑10 to support businesses and community organisations that do not receive EITE assistance to reduce carbon pollution through energy efficiency improvements before the Scheme commences.

From the revenue it raises from the Scheme, the Government will implement a range of measures to assist households, business, workers, regions and communities to prepare for the Scheme and associated impacts of a carbon price. Combined, the new Clean Energy Initiative, the Energy Efficient Homes program, and the Carbon Pollution Reduction Scheme assistance measures will result in the Government more than meeting its commitment to use every cent it receives from the sale of Australian emissions units to help households and businesses adjust and move Australia to a low‑pollution economy.

Continuing the COAG reform agenda

Through COAG, the Government is implementing an ambitious reform agenda which aims to boost productivity, workforce participation and geographic mobility and deliver better services for the community.

As a part of the reform agenda, COAG agreed to a new federal financial framework, which represents the most significant reform of Australia's federal relations in decades. The framework provides a robust foundation for collaboration on policy development and service delivery, and facilitates the implementation of economic and social reform in areas of national importance.

The framework commenced on 1 January 2009 and involves a significant rationalisation of the number of payments made to the States, while increasing the overall quantum of payments. The framework provides clearer specification of roles and responsibilities of each level of government so that the appropriate government is accountable to the community. It also provides incentives for reform, through National Partnership reform payments, and more transparent reporting of outcomes to drive better service delivery and reforms.

Underpinning these reforms is a $15.2 billion funding package that will provide an additional $6.3 billion through new National Specific Purpose Payment (SPP) funding to the States and an additional $8.8 billion funded through new National Partnerships, between 2008‑09 and 2012‑13. The package includes five new National SPPs to support the States' delivery of services in the key areas of health, schools, skills and workforce development, disability services and affordable housing.

The new framework has been critical in ensuring that all Australian governments work together to tackle the global recession and respond to these economic challenges with immediate and concerted action. The States have been important partners in implementing the Nation Building and Jobs Plan, the Compact with Young Australians to increase young people's engagement with education and training pathways, and the guarantee over state borrowing to underpin their infrastructure investment programs.

Closing the Gap in Indigenous disadvantage

Last year, COAG agreed to six key targets to close the gap in Indigenous disadvantage. The Government remains committed to achieving these targets.

In this Budget, the Australian Government has added to its COAG initiatives by providing for a range of other strategic reforms and expenditures. The Government will invest an additional $807 million to continue its support for the safety of women and children and strengthen communities in the Northern Territory; an additional $202 million to reform both the Community Development Employment Projects (CDEP) program and the Indigenous Employment Program (IEP) to ensure that more Indigenous Australians have the skills needed to get and keep real jobs; and $50 million to accelerate Native Title claim resolutions.

Over the past 12 months, through COAG, the Australian Government and the States and Territories have committed a total of $4.6 billion through National Partnerships to close the gap in Indigenous disadvantage. This investment has been across a variety of areas including remote Indigenous housing ($1.9 billion over 10 years); Indigenous health ($1.6 billion over four years); and Indigenous early childhood development ($564 million over six years).


Immigration delivers a range of economic, social and cultural benefits to Australia. The 2008‑09 Migration Program was increased to answer medium‑term labour shortages. In light of the changed economic circumstances, the Government capped the skill stream at 115,000 in March 2009. The number of places in the skill stream has been reduced by a total of 25,400 for the coming year. With an increase in the family stream of 3,800, the Migration Program in 2009‑10 will be 168,700.

The Government is also implementing a number of reforms to Australia's Migration Program to ensure it is more tightly targeted to our skill needs during a period of weak labour demand. To this end, migrants with critical skills are being given priority; English language standards for temporary and permanent entrants are being increased; skills assessment will be introduced for high‑risk 457 visa applicants; and the balance of the Skilled Migration Stream has been shifted towards employer‑sponsored places and business skills entrants. The introduction of market salary levels for subclass 457 visa entrants from September 2009 and other changes will ensure the subclass 457 visa program continues to provide industry with needed skills while not undermining local training and employment opportunities.

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