Posts Tagged‘budget’

Are You Sure You Want This Surplus, Australia?

If you’re of voting age then you’re likely aware of the rhetoric that surrounds our two major political parties. Typically Labor is cast as a party that favours spending with the Liberals being more conservative (and usually “more responsible”). These stereotypes aren’t without merit however as the previous incarnations of both governments ran very close to those lines although the global circumstances in which both of them existed were radically different. Indeed the reason why Australia was one of the few developed countries to avoid a recession during the Global Financial Crisis and the follow Eurozone Crisis was due to the stimulus programs they engaged. However Australians, for one reason or another, seem to prefer our government run a surplus whenever possible and last night’s budget is setting them up for just that.

Australian Budget 2014-15

Hockey and Abbott had been priming us for bad news since talk of the budget first started circulating, noting that we’d all have to pay our fair share in order to correct the “budget emergency”. The line items in the budget show pretty much everyone losing out (with a few notable exceptions including high income earners, private sector business and mining) so the rumors were well founded. You’d be hard pressed to find any regular Australian that was happy with the budget but the consensus from the wider press seems to be that it’s economically sound and will eventually lead us to surplus. As you can probably guess I’m not a fan of it myself as it feels like getting to a surplus, mostly through cutting expenditure, is only being done for the sake of having a surplus.

Australia’s budget isn’t like your home budget where running a deficit for a couple years would likely see you sink into financial ruin. As long as a government is able to make repayments on its debt and is sensible about deficit spending it’s typically not an issue. Indeed when compared to the rest of the world Australia’s debt to GDP ratio is extremely low, well below that of many other countries (including Germany) that are considered fiscally responsible. Thus the talk of a “budget emergency” is built upon a base of incorrect assumptions, ones which have resulted in a budget that hits everyone and hits those hardest who are least able to afford it.

In all honesty it seems like a long term play, one that the current government can take some political pain on now so that when the next election rolls around they can point to the budget and say “Look at this magnificent surplus”. Sure the current projections don’t have that happening for 4 years but this is the first budget of 3 and there’s the real possibility that the next budget will be in the same vein. That is what worries me as whilst running a surplus sounds good the cuts made to get to it are likely to be far more destructive than the small amount of debt required to maintain them.

It will be interesting to see how this plays out with the wider public as this was what the majority of Australians wanted but I’m sure many of them did not expect it to come and slap them in the face like this. The true test will be to see if the political pain is only short term as I believe that’s what the Liberal’s current strategy is betting upon. Abbott is already having a tough enough time as it is with people quickly realising he’s great in opposition but not so in power. Still the Australian public seems to have a short memory and a shiny surplus in 3 years might be enough to convince everyone of the Liberal’s economic credentials (and not the lack thereof).

iPhone 5S/C: Apple’s Weird Product Segmentation.

I haven’t been an iPhone user for many years now, my iPhone 3GS sitting disused in the drawer beside me ever since it was replaced, mostly because the alternatives presented by other companies have, in my opinion, outclassed them for a long time. This is not to say that I think everything else should replace their phone with a Xperia Z, that particular phone  is definitely not for everyone, as I realise that the iPhone fills a need for many people. Indeed it’s the phone I usually recommend to my less technically inclined friends and family members because I know that they have a support system tailored towards them (meaning they’ll bug me less). So whilst today’s announcement of the new models won’t have me opening up my wallet anytime soon it is something I feel I need to be aware of, if only for the small thrill I get for being critical of an Apple product.

iPhone 5C 5SSo as many had speculated Apple announced 2 new iPhones today: the iPhone 5C which is essentially the entry level model and the iPhone 5S which is the top of the line one with all the latest and greatest features. The most interesting different between the two is the radical difference in design with the 5C looking more like a kids toy with its pastel style colours and the 5S looking distinctly more adult with it’s muted tones of silver, grey and gold. As expected the 5C is the cheaper of the two with the base model starting from AUD$739 and the 5S AUD$869 with the prices ramping up steadily depending on how much storage you want.

The 5C is interesting because everyone was expecting a budget iPhone to come out and Apple’s response is clearly not what most people had in mind. Sure it’s the cheapest model of the lot (bar the Phone 4S) but should you want to upgrade the storage you’re already paying the same amount as the entry level 5S. The difference in features as well are also pretty minimal with the exceptions being an A6 vs A7 processor, slightly bulkier dimensions, new fandangled fingerprint home button and a slightly better camera. Of course those slight differences are usually enough to push any potential iPhone buyer to the higher end model so the question then becomes: who is the 5C marketed towards?

It’s certainly not at the low end of the market, as most people were expecting, even though it looks the part with its all plastic finish (which we haven’t seen since I last used an iPhone). It might appeal to those who like those particular colours although realistically I can’t see that being much of a draw card considering you can buy any colour case for $10 these days. Indeed even when you factor in the typical on contract price for a new iPhone (~$200) the difference between an entry level 5C and 5S is so small that most would likely dole out the extra cash just to have the better version, especially considering how visually different they  are.

Another thing running against the 5C is that the 5S shares the same dimensions as the original iPhone 5 allowing you to use all your old cases and accessories with it. I know this won’t be a dealbreaker for many but it seems obvious that the 5S is aimed at people coming from the iPhone 5 whereas the 5C doesn’t appear to have any particular market in mind that necessitates its differences. If this was Apple’s attempt to try and claw back some of the market that Android has been happily dominating then I can help but feel it’s completely misguided. Then again I lost my desire for Apple products years ago so I might be missing out on what the appeal of a gimped, not-really-budget Apple handset might be.

The iPhone 5S does look like a decent phone sporting most of the features you’d expect from a current generation smart phone. NFC is still missing which, if I’m honest, isn’t as big of a deal as I used to make it out to be as I’ve now got a NFC phone and I can’t use it for jack so I don’t count it as downer anymore. As always though the price of a comparable Android handset to what you get from Apple is a big sore point with the top of the line model topping out at an incredible AUD$1129. I know Apple is a premium brand but when the price difference between the high and low end is $260 and the only difference is storage you really have to ask if its worth it, especially when comparable Android phones will have the same level of features and will be cheaper (my 16GB Xperia Z was $768 for reference).

I will be really interested to see how the 5C pans out as many are billing it as the “budget” iPhone that everyone was after when in truth it’s anything but that. The 5S is your typical product refresh cycle from Apple, bringing in a few new cool things but nothing particularly revolutionary. Of course you should consider everything I’ve said through the eyes of a long time Android user and lover as whilst I’ve owned an iPhone before it’s been so long between drinks that I can barely remember the experience anymore. Still I’m sure at least the 5S will do well in the marketplace as all the flagship Apple phones do.



The Sound Economics of Australia’s Education System.

Australia has one of the best education systems available as evidence by our top 10 rankings for literacy, science and mathematics as well as our overall education index of 0.993, tying us for first place with countries like Denmark and Finland. While our system isn’t exactly unique in its implementation I do believe schemes like HECS/HELP are one of the main reasons that the majority of Australians now pursue tertiary education and whilst this might bring about other issues (like a lack of people in trades) it’s clear that benefits far outweigh the costs. Indeed as someone who couldn’t have afforded university without the help of the government and now has a great career to show for it I’m something of a testament to that idea.

Recently however there’s been some criticism of the HECS-HELP system, mostly focused on the amount of student debt owing to the government and the sizeable chunk of that which is never expected to be repaid:

The Grattan Institute’s annual Mapping Australian Higher Education report finds that students and former students have accumulated HECS-HELP debts of $26.3 billion.

This is about an extra $10 billion owing, in real terms, than in 2007.

The interest bill on the income-contingent loan scheme, formerly known as HECS, is nearly $600 million a year, the institute estimates.

And it says HELP debt not expected to be repaid rose to $6.2 billion in 2012.

The report makes for some intriguing reading and does indeed state that there’s a good 25% or so of the current student debt that’s likely to never be repaid. The reasons behind it though are interesting as whilst some would have you think that it’s due to students skipping out on their debts in way or another (ala Liberal MP Steve Ciobo) it’s in fact primarily due to students either dying or moving overseas. Now there’s not a whole lot we can do about the former (except maybe investing more in the health care sector) but the latter is a problem that’s been around for decades and I’ve yet to see a solution proposed, either from the government or the private sector.

Australian graduates, especially in some sectors, suffer from a distinct lack of choice when it comes to finally finding a career once they’re done with their university studies. Whilst I might have managed to make a decent career without looking too far you have to appreciate the fact that my degree isn’t in IT, it’s in engineering, and such is the case for many graduates who try to find something in their chosen path. Usually they can get close but the chances of landing an opportunity directly in their field of study are usually pretty slim and that leads them to look overseas. I myself did exactly that not too long after I graduated and was pretty staggered at the number of opportunities available abroad that I was more than qualified for.

HELP Debt outstanding 1989 to 2011

Another point that the report makes is that student debt is seemingly sky rocketing when compared decades prior. The graph above demonstrates that quite clearly but it doesn’t give you any indication as to why this is happening. For starters Australia’s population has increased by about 5.8 million in since 1989 or about 35%. At the same time participation in tertiary education has well over doubled in this time with the vast majority having some form of tertiary qualification and  27% of all Australians now carrying a bachelor’s degree or higher. Essentially there’s been a major cultural shift over the past 2 decades towards pursuing an education through universities rather than other avenues and this is what is responsible for the increase we’ve seen. This isn’t exactly an issue considering our GDP has quadrupled in the same time frame and whilst I won’t say there’s a causative link there I’d say you’d be hard pressed to uncouple higher education rates from improved GDP figures.

Realistically the issue of unpaid student debts isn’t much of an issue for the Australian government considering the wide reaching benefits that our high quality and freely available education system gives us. We still need to do something about our best and brightest moving overseas to greener pastures but it’s clear that the economic benefits of free education for anyone who wants it vastly outweighs the cost of providing it. Even if we were to erase all student debt in one year it would still be only a few percent of the total budget, something that could be easily done should there be any burning need for it to happen. There isn’t of course since the cost of servicing that debt is so low (comparatively) and there are much better things to spend that money on.

Budget 2012-2013: We’ve Got a Surplus…And?

Ah it’s budget time in Australia and like all the budgets before it everyone was hanging their hopes that X program would get some funding or Y scheme would see the changes that were so “desperately needed”. I always wonder why certain interest groups get so upset when their particular interest isn’t catered to, I mean if the government has made any announcements or commitments to them then you can hardly be disappointed that they didn’t come through. For the most part though there’s usually one or two stand out issues that everyone was waiting to see what the government would say on them and this year the question was whether or not Wayne Swan could deliver a surplus he promised all those years ago.

From what I’ve read there’s nothing particularly shocking or controversial about the budget, it’s all fairly routine stuff. There are some interesting points though like the government’s plan to cut 1.2% of the public service force with a third of that coming from the Australian Tax Office. It’s a small decrease but most years see the public service swell rather than diminish. With that small of a cut I believe that for the most part it will simply be attrition that will see those numbers decline rather than people getting fired, although for the organisations facing a bigger cut like the ATO I’m wondering just where the cuts will be made (especially considering they’re getting an additional $378 million in funding).

There’s also some major cash injection the low to middle class battlers of Australia. For starters there’s a tripling of the tax free threshold from $6,000 to $18,000 a good boost for those low income earners. People on welfare payments will also receive a bi-annual boost that’s due to begin in March next year further helping the unemployed and no/low income earners. Families have also seen a boost in the form of the SchoolKid bonus and an increase to the Family Tax Benefit A. These moves have been labelled as a vote buying maneuver and I tend to agree with that point of view as I’ve been told in the past that many Australian middle class households effectively pay little to no tax, but I’ve struggled to find any evidence supporting this viewpoint.

The big question that everyone was asking before the budget was released was whether or not the Labor government could make good on its promise of returning the budget to surplus in this fiscal year. With the current budget projections we’re looking at a surplus of $2.5 billion by the middle of next year. It’s a rather slim surplus, something on the order of fractions of a percent of total GDP but it’s there none the less. It’s a rather big deal as Swan will be the first Labor treasurer to deliver a surplus since Paul Keating back in the 1989/1990 budget. Personally I don’t really get what the hoopla is all about as whilst its nice to a have a surplus it’s not exactly a bad thing when a government runs a debt.

I’m your kind of standard Keynesian kind of guy when it comes to economic policies. Running a deficit isn’t a bad thing so long as the government is doing so for a reason and has the capability to pay off portions of it once the need for the deficit has alleviated. The current eurozone crisis is an example of how deficit spending can go woefully wrong but Australia isn’t as poorly managed fiscally and the debt we’ve been running wasn’t really that large and we were more than capable of paying it back. Hell take a look at Japan who’s debt is over 220% of its GDP but do you hear any about them having debt issues like Spain, Greece and Italy? Not in the slightest and that’s the reason why a deficit isn’t necessarily a bad thing.

I do agree with the idea though that we should run a deficit during the tough times (like the Global Financial Crisis for instance) and should look to remediating it when times are good but I personally don’t think that we should have a surplus for surplus’ sake. Whilst there’s no pressing need right now for the government to spending gobs of cash and thus a surplus is warranted I get the feeling that they’re just doing it so they can say “Hey look we’re in surplus” rather than taking a long term view of where Australia’s financials are heading.

As for me personally? Eh, nothing amazing in the budget for a young-ish married man who’s got a good paying job. All the talk of them scrapping things like negative gearing and what not did have me worried for a little while but realistically I can’t see any government going after that particular tax break unless something is really dire. Returning to surplus will appease some of the more fiscally conservative voters and the splashes for families will help Labor build their approval rating, something that they’re desperately in need of right now. Everything else isn’t really that exciting, but that could just be me becoming cynical in my late 20s 😉

Obama’s Space Plan: A Paradigm Shift for Nasa.

I mentioned in passing recently that NASA’s future had been in question over the past few months. With the Shuttle program shutting down and their replacement scheduled to be rolled out in 2015 (and 2018 was looking like a far more realistic date) they were going to lose all capability for putting people into space. Additionally they’d sacrificed a whole lot of their core scientific activities just to try and meet the 2015 deadline with the Ares line of rockets. All of this was the result of an overly ambitious target set by Bush that lacked the additional funding to achieve such goals. Obama’s plans for NASA are not what you would expect initially, but diving deeper reveals why these changes need to occur.

A summary of the new objectives for NASA are listed here, with discussion running rampant everywhere:

  • Research and development to support future heavy-lift rocket systems that will increase the capability of future exploration architectures with significantly lower operations costs than current systems – potentially taking us farther and faster into space.
  • A vigorous new technology development and test program that aims to increase the capabilities and reduce the cost of future exploration activities. NASA, working with industry, will build, fly, and test in orbit key technologies such as automated, autonomous rendezvous and docking, closed-loop life support systems, in-orbit propellant transfer, and advanced in-space propulsion so that our future human and robotic exploration missions are both highly capable and affordable.
  • A steady stream of precursor robotic exploration missions to scout locations and demonstrate technologies to increase the safety and capability of future human missions and provide scientific dividends.

At a high level the objectives seek to achieve a few things. The first was doing away with the lofty goals set by the former president Bush. To be honest I initially found this heart breaking as I felt this was one of the core reasons NASA existed. However without the appropriate funding for such actions (I’m talking Apollo era spending of around 5% of GDP, not the paltry 0.5% they get now) realistically it would have been far more detrimental to continue down this path than to cut our losses and refocus on the more important things. Whilst this might keep human boots off other terristerial bodies for another decade or two the missions that eventually go there won’t be flag planting missions, they’ll be permanent settlements. If we are ever going to establish ourselves throughout our solar system such sustainable missions are the way to go. It’s tough medicine to swallow, but it’s for our own good.

The new vision for NASA explicitly kills the constellation plan and with it the Ares series of rockets. I’ve lambasted the Ares I-X in the past for being an absolute waste of time but I still supported the Ares-V, mostly due to its paper capabilities. This is the in for alternative ideas like DIRECT which have had some traction in the past but were pushed aside due to the investment in Ares. I’m glad that Obama decided to include a heavy lift capability in the new plans for NASA as its one of those things that still isn’t commercially viable. Once NASA has the capability though I’m sure demand for it will start to materialize, but for now everything else is handled quite aptly by the current choices such as the DELTA IV Heavy.

Probably the best news to come out of this is an extra $6 billion for NASA over the next 5 years to support the refocus on these new objectives. Probably the most exciting part about the extra funding is that a whopping $500 million to buy services from private launch companies to ferry astronauts to the International Space Station. Up until now there wasn’t an official word on whether or not NASA could do that as they’d committed to buying seats on Russian craft at $50 million dollars each. Considering that a Falcon 9 from SpaceX plus one of their Dragon capsules costs about $100 million and can deliver 7 astronauts (over 3 times the payload) to the ISS you can see why I’m excited about this sort of thing. It also helps drive down the cost of such launch vehicles meaning that, whilst its still out of the range of the everyman, the cost may one day enter the realms of say a trip on SpaceShipTwo. It’s a while off I admit, but having NASA buying kit from these guys is a guaranteed way to make space more accessible to everyone.

Additionally there’s also a substaintial amount of funds dedicated to some heavy duty science. This include things like new satellites, observatories, robotic missions to other planets and channeling funds into research that will help further our efforts in space. One of the big ideas nestled in amongst this is the development of orbital propellant stations (think petrol pumps in space), which are going to become a necessity if we seriously want to go anywhere with people on board. This is one of the problems that faces many space missions as you have to carry all your fuel up with you, driving down usable payload and needlessly wasting fuel. With orbital refueling stations we can design simpler, more efficient and capable craft that will take us to the farthest reaches of the solar system.

Still reactions are mixed over the new proposed NASA vision and budget. The bill still has to pass congress and this could prove to be a major sticking point for it. As with any bill that has passed through there concessions will be made, hot air will flow and it could quite easily end up looking nothing like it is now. With jobs on the chopping block because of this (cancelling Constellation will see a fair few people move on) you can expect certain congress members to fight it in order to win the support of their constituents. It will be a hard point to fight to, with America’s unemployment in the double digits. I’m hoping that the American congress’ short term view doesn’t skew this proposal too much, as it’s exactly what NASA needs.

So after rejecting it initially (and putting off this blog post for 2 days because of it) I’ve come to appreciate the changes that Obama has made. Sure we lose the vision of pioneering our way through space but it’s a cost we have to pay if we want to have any kind of sustainable presence outside our atmosphere. We’ll soon know what opposition this bill faces and I can only hope, for NASA and America’s sake, that it passes through unscathed.

Financial Ruin, It’s Your Fault.

I don’t consider myself a genius when it comes to financial situations, more of a technician. You see the great thing about financial matters is that nearly all of them are neatly modelled by equations which fall under the typical engineer’s umbrella of expertise. For the most part however grasping the simple rules that govern your finances seems to elude most people and as such they get themselves into all manner of crazy financial situations. In the last few weeks I’ve come across two articles based around people I’d expect to have some financial sense about them but for one reason or another they’ve managed to push themselves to the brink of ruin:

SILVER SPRING, Md. — Paul Joegriner hasn’t worked since March 2008, when he was laid off from his $200,000-a-year job as chief executive officer of a small bank. But you wouldn’t know it by appearances.

His wife, Marzena, shuttles their two young children to private school every morning. The family recently vacationed in Virginia Beach, Va., and likes to dine on Porterhouse steaks. Since losing his job, Mr. Joegriner, 44 years old, has had several offers. He’s turned each down in hopes of landing a position comparable to what he held before.
When Severance Falls Short

The family’s lifestyle over the past year and a half has been propped up by a $200,000 severance package and another $100,000 in savings — funds the family has burned through rapidly. By Mr. Joegriner’s own calculations, the family will be out of money in six months if he doesn’t find work.

Or more infuriatingly, actively deluding themselves:

If there was anybody who should have avoided the mortgage catastrophe, it was I. As an economics reporter for The New York Times, I have been the paper’s chief eyes and ears on the Federal Reserve for the past six years. I watched Alan Greenspan and his successor, Ben S. Bernanke, at close range. I wrote several early-warning articles in 2004 about the spike in go-go mortgages. Before that, I had a hand in covering the Asian financial crisis of 1997, the Russia meltdown in 1998 and the dot-com collapse in 2000. I know a lot about the curveballs that the economy can throw at us.

But in 2004, I joined millions of otherwise-sane Americans in what we now know was a catastrophic binge on overpriced real estate and reckless mortgages. Nobody duped or hypnotized me. Like so many others — borrowers, lenders and the Wall Street dealmakers behind them — I just thought I could beat the odds. We all had our reasons. The brokers and dealmakers were scoring huge commissions. Ordinary homebuyers were stretching to get into first houses, or bigger houses, or better neighborhoods. Some were greedy, some were desperate and some were deceived.

It’s unfortunate that I see this exact same behaviour in so many people who then pine about how they can’t afford something or how life would be better if they were earning a lot more money. Truth is that unless you change your outlook on your expenditures as your income increases so will your spending and you’ll end up right back where you started. So while I can appreciate that some people’s financial situation may have been made harder by the global financial crisis I’ll go out on a limb here and say that the majority of them could have avoided any hardship had they taken a more keen interest in their finances.

Now probably the most important lessons I learnt about finances was from my parents. We weren’t poor by any stretch of the imagination, but we weren’t that well off either. Once I was older and my interests shifted to the more expensive world of computer hardware my parents decided that they couldn’t fuel my addiction any longer. I can still remember the words clearly: “We’re not letting you spend any more of our money”. So I asked, how can I get the things I want? 2 months later I was employed at Dick Smith Electronics and everything I wanted had to come out of my own pocket.

The problem with us Gen-Y folk is that we’re not used to waiting for the things we want. Subsequently the majority of us have racked up extremely expensive debt on depreciating lifestyle items. This then violates one of the rules of avoiding financial ruin: don’t spend more than you earn. Even with the GFC still working some of its magic on the credit market financial institutions are more than happy to extend you ludicrous amounts of credit on a whim. You may think this is just hyperbole but when I can apply for a credit card online and get instantly approved for a $15,000 limit (there was no verification of my income after the fact either) I know that there are still people out there who are taking the first steps to financial ruin. The easiest way to think of it is if you can’t afford it without having credit, you probably can’t afford it at all.

The other all too common trap people fall into is the one of keeping up appearances or keeping up with the Joneses. I used to lament the fact that I hadn’t travelled overseas as much as some of my friends or that I was still driving a 20 year old car but had I attempted to emulate their behaviour I’d be in serious financial trouble. It’s even harder for us Gen-Ys to resist the temptation to keep up with the latest trends as that’s what we’ve become accustomed to. This is then exaserbated by the fact that many of us would not have had a proper job until our early 20s instead relying on our parent’s income. Once that link is severed many will find it hard to keep up their lifestyle and turn to easy credit to bridge the gap.

I know every piece on financial planning ends up in the same conclusion and you’ll forgive me for driving this point home: do a budget. If you lay out all your income and expenses in front of you it becomes really clear how much is going where. If that’s too hard (I.E. you can’t figure out where all the cash is going) get a expenditure diary and whenever you buy something or pay a bill write it down in there. You’ll soon see all those little things that add up and can easily identify where some sacrifices can be made. Every little bit will help, and the sooner you do it the more likely you are to avoid running yourself into the grave financially.

Delicious Pie.

I’m what you could call an Internet grazer. Throughout most of the day I’ll have my RSS reader open and I’ll usually take a 5 minute break every hour or two to muse over the latest articles that come my way. I usually find quite a lot of interesting info this way and yesterday was no exception. What I came across were two very interesting pie charts that describe the current economic situation in America. The first one shows the personal expenditure breakdown of your average American citizen:


The largest section here now comes as no surprise considering that sub-prime home loans were what began the crisis in the first place. What really got me where the runners up of transportation, food and insurance. Adding all of the top 4 up you get around 75% of your average Americans money being spent on just being able to have a roof over their heads and get to work everyday. This really puts the whole crisis into perspective since the people who were getting these loans simply had no fat in their budget to trim when the interest rates rocketed up to their non-honeymoon levels. Granted these people were probably offered loans they would never be able to normally afford in the first place but it still highlights the issues that lead up to the collapse in the sub-prime market.

The next yummy pie chart I came across was this one outlining the previous expenditures of the American government vs the bailout:


This highlights another key issue that hits pretty close to home with one of my major interests. Whilst the enormity of the bailout can not be underestimated when put into perspective like this you can see how many view the bailout as being wasted money. Probably one of the most glaring points in this chart (for me at least) is the comparison between the Iraq war, NASA and the initial quest to land a man on the moon.

Since the end of the space race NASA has been an easy target for budget cuts for politicians looking to cut back on government spending. Whilst I understand that expenditure on a space program can hardly be justified at the dizzying heights that were seen during the Apollo era the continued focus of cutting back on NASA spending only serves to damage America’s reputation as a leader in space. Ironically they may have set themselves up for another race with China, since they have refused their requests to work with them on the International Space Station. I can only hope that China gets their Tiangong 1 station up as scheduled since having another permanent space presence (without international co-operation) would definitely put America on the backseat as leaders of the space community.

What do you take away from these delicious pie charts? 🙂

Australian Space Science Program.

In the midst of all the budget brouhaha we’d be forgiven for missing some of the finer implementation details. One thing that I managed to glaze over was the fact that this year’s budget has plans in it for Australia to establish its own space science program:

An Innovation and Higher Education System for the 21st Century — Australian Space Science Program

Expense ($m)
Department of Innovation, Industry, Science and Research6.412.914.115.1

The Government will provide $48.6 million over four years to support the establishment of the Australian Space Science Program.

Funding of $40.0 million over four years will be available for the establishment of the Australian Space Research Program, which will support space research, innovation and skills development.

Funding of $8.6 million over four years will help establish a Space Policy Unit in the Department of Innovation, Industry, Science and Research to coordinate Australia’s national and international civil space activities, including partnerships with international space agencies.

It’s an interesting proposal. Australia as a nation doesn’t have the capital to implement a fully fledged space program of the likes of Russia and the USA (despite our resource rich country) but we do have quite a lot of people who are skilled in the area of aeronautics, and this program will be aimed at keeping those people in Australia. Currently if you want to do any serious space research you’ll usually be looking overseas to further your career, unless you’re expertise lies in Astronomy. This is a problem Australia faces not only in the area of aeronautics and quite a lot of the budget looks at stopping the brain drain that we’ve been suffering for quite a long time.

As a first step to a real space program this is probably the best move I could hope for. The establishment of the Space Policy Unit will mean that Australia will finally have a set of regulations in place for conducting activities in the aeronautical field. What this means, hopefully, is that private space companies will look to Australia as a place where they can establish their businesses. We already have a vast amount of local resources available to supply such companies and a large amount of unused landmass that could be dedicated to private launch facilities. Whilst this is probably a pipe dream for the next 10 years or so it does give that foot in the door needed to spur further interest along for the future.

So what can we expect from this program? Well I’d probably put my money down onto experiments that have been designed in Australia being flown on other countries satellites and space stations as well as improved funding for current projects. $40 million over 4 years really isn’t enough to even launch a single satellite by itself (I’m including the rocket cost in there, I know you can get things like cubesat for micro experiments) but it is more then enough to design a few space capable experiments that could be mounted on a probe or satellite. The extra funding will help out with Australia’s space presence overall, but its effects will be hard to judge until its actually implemented.

So there you have it, Australia is taking the first step towards space. About. Bloody. Time.

The Little Budget that Could.

It’s that time of the year again, and the full federal budget is now out and about for all of us Australians to take a gander at. My previous blog post about the speculation seems to have hit on some of the right points, namely the increase in the pension and hit to superannuation contributions but it seems the higher taxes for the rich have fallen by the wayside (although they might be on the table in the future) along with the increased defence spending. Here’s some of the major initiatives that the government has intended to include in the current budget:

  • $3.4 billion for roads
  • $4.6 billion for metro rail
  • $389 million for ports and freight infrastructure
  • $4.5 billion for the Clean Energy Initiative, which includes $1.0 billion of existing funding
  • $2.6 billion in projects focused on universities and research from the Education Investment Fund
  • $3.2 billion in projects focused on hospitals and health infrastructure from the Health and Hospitals Fund
  • Partnering with the private sector to build the $43 billion National Broadband Network
  • A pension increase of $32.49 per week for singles and $10.14 per week combined for couples on the full rate
  • A crucial boost of $2.7 billion in funding for tertiary education, research and innovation
  • $1.5 billion for the Jobs and Training Compact, providing education and services to support young people, retrenched workers and local communities
  • A 50 per cent Small Business Tax Break for eligible assets
  • Extending the First Home Owners Boost for an extra 6 months
  • Honouring our promise of tax cuts

What I’m impressed with are the initiatives dedicated to infrastructure spending. This is something that will not only benefit Australia at large but will also build a solid foundation of sustainable jobs which will grow when the economy recovers. This also lends itself well to the boost provided to tertiary education as these people are going to want somewhere to work once they’ve graduated. The extension to the first home owner’s grant was a small surprise and it will help to keep the housing market afloat until the end of the year. Phasing it out instead of dropping it will make sure the market doesn’t suffer too much when the bonus finally comes to an end, as any more shocks to the market aren’t going to help our current situation.

Straight after the budget the criticisms started to flow thick and fast. ABC’s 7:30 Report last night had interviews with both Wayne Swan and Joe Hockey, although Hockey’s criticisms of the budget feel a little….weak:

KERRY O’BRIEN: Have we seen a global crisis like this?

JOE HOCKEY: Well, can I tell you, the RBA, the Reserve Bank said last week it will not be as deep as 1990. They said that last week. And yet this Government has spent more money than any government in modern Australian history – 29 per cent of GDP. It is the biggest spending government in modern history, the biggest debt in modern history. One million people unemployed. Nothing to show for all the money they’ve spent.

KERRY O’BRIEN: So what would you be doing? What should’ve happened in this Budget to reduce debt?

JOE HOCKEY: Well the starting point is don’t deliver the cash splashes.

KERRY O’BRIEN: No, that’s gone.

JOE HOCKEY: Well, no, no, no.

KERRY O’BRIEN: What would you be doing in this Budget now, what should’ve happened in this Budget now to reduce debt?

JOE HOCKEY: Well, grow the pie. You’ve got to grow the pie.


JOE HOCKEY: Well, the first thing is you’ve got to focus on small business. That’s what we’ve always talked about. Malcolm Turnbull has already laid out a number of detailed policies to try and get small business to grow.

JOE HOCKEY: Well, let’s go back to the assumptions, right, that you’ve put into that question. The fact of the matter is that the Reserve Bank and the IMF say it’s going to be a slow recovery. But the RBA, the Reserve Bank said it’s not going to be as deep and severe as 1990. The starting point for the Rudd Government was they inherited a Budget surplus, they inherited four per cent unemployment, which is now going to eight per cent. They inherited zero Government debt, in fact there was money put in the bank. They’ve spent all the proceeds of the mineral boom and they’re now mortgaging the next boom.

KERRY O’BRIEN: OK, but very briefly, you’re happy to quote the Reserve Bank when it suits you, but …

JOE HOCKEY: Well, no, the Reserve Bank was right.

KERRY O’BRIEN: Well then do you also accept that the Reserve Bank governor is right when he says that the debt levels are modest?

JOE HOCKEY: Well, I don’t know if he’s seen these Budget numbers. But I tell you what, I wouldn’t consider them modest when it’s $9,000 for every man, every woman and every child in Australia, with an annual interest bill of $500 for every person. I don’t consider that modest.

I’m going to have to agree with my father (whom I was watching the report with last night) and say that Joe Hockey is just a trouble maker. He’s lashing out at the budget in order to try and score some easy political points. Additionally he ridicules the government for selectively quoting the RBA when it suits them and then proceeds to do the same thing. Whilst I know this budget isn’t perfect it’s a great start to keep this nation afloat whilst creating a sound basis for our economy to boom again when the time is right. The middle section I quoted shows that Hockey has little to no idea on how to approach this situation and had he been in charge of the budget I’m sure we’d be closer to the budget I predicted last week; something lacking direction and lining the coffers of the loudest lobbyists.

Swan didn’t get off easy either. Kerry did point out that some of his initiatives, namely the raising of the pension age and large deficit, were created without a lot of knowledge of the situation we’re in. Whilst the predictions made are probably the best that can be done with the information that we have it does seem a bit reckless to start basing policy on them. Many of their policies have times that are set a bit far off in the future which is a deliberate political ploy in order to make sure they get elected back into office. This will be the budget that will stick in people’s minds come the next election, and I’m sure the Rudd government knows that.

Overall I’m pleased with the budget. The money is getting spent in the right places and whilst we might be running a deficit, we’re still in a good position to weather this recession and come out ready for the good times ahead.

I’m just going to have to tune out Hockey and the other detractors for a couple weeks. 🙂