Julie Bishop to oversee largest ever cuts in Australian aid: report

Foreign Minister Julie Bishop is set to preside over by far the largest overseas aid cuts as a proportion of the nation's income of any foreign minister in Australian history, a new report has found.

The report by the left-leaning think tank The Australia Institute has charted the rise and fall in Australia's foreign aid program since it was introduced by the Whitlam government in 1974.

If the aid cuts projected in the most recent federal budget go ahead, Ms Bishop will oversee a massive 33 per cent drop in spending, which is nearly double that of the next most parsimonious minister Bill Hayden, who in the 1980s managed a drop of 17 per cent under the Labor Hawke government.

"When it comes to foreign aid, Australia is not generous – irrespective of whether this is considered against historical or world standards," the report by the institute's senior economist Matt Grudnoff and researcher Dan Gilchrist said.

Since coming to power, the Coalition under Tony Abbott earmarked $11 billion in aid cuts between 2014 and 2018. Ms Bishop reportedly fought the cuts internally but Mr Abbott and former Treasurer Joe Hockey made them a central plank in their budget repair efforts.

Aid cuts tend to be popular with the Australian public but the report noted a 2011 finding by the Lowy Institute that Australians tend to think their government spends far more on foreign aid than it actually does.

By the 2016-17 financial year, aid as a proportion of gross national income will fall to 0.22 per cent, which is the least generous level since the aid program began and a fraction of the 0.7 per cent committed to by the former Howard government under the 2000 Millennium Development Goals.

It also means that Australia, despite being the eighth largest economy in the OECD, will be the 19th most generous OECD donor.

The report said that with Ms Bishop remaining foreign minister under the new leadership of Malcolm Turnbull, "she has the opportunity to boost our aid budget and avoid being remembered as Australia's stingiest foreign minister".

The Australia Institute report concluded that former Labor foreign minister Stephen Smith oversaw the largest aid increase of 16 per cent followed by Liberal Tony Street in the early 1980s who hiked aid by 8 per cent.

Kevin Rudd as foreign minister increased aid by 5 per cent, but Bob Carr cut it by 3 per cent.

Further back, Labor's Gareth Evans cut by 8 per cent and Liberal Alexander Downer cut by 10 per cent.

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Turnbull Raps China on Island Building

Australia’s new leader criticized China’s building of artificial islands in the South China Sea, as his government sought to reassure Washington over his country’s tight alliance with the U.S.

Prime Minister Malcolm Turnbull, in his first foreign policy statements since ousting his predecessor Tony Abbott last week, said China’s construction of artificial islands around reefs in the disputed Spratly Islands was counterproductive because it raised concerns in Asia over Beijing’s territorial intentions.

“The pushing the envelope in the South China Sea has had the consequence of exactly the reverse consequence of what China would seek to achieve,” Mr. Turnbull told Australian television. He said the actions have pushed smaller Asian countries closer to the U.S. due to their security concerns.

A Chinese Ministry of Foreign Affairs spokesman said Beijing was working to resolve disputes over the South China Sea through “negotiation and consultation” with other countries and said Beijing hoped Australia would “stick to its commitment of not taking sides on issues concerning sovereign disputes.”

In the past, Chinese officials have rejected criticism of the land reclamation work on the grounds that China has sovereign rights in the area.

Mr. Turnbull spoke days before the White House is expected to press Chinese President Xi Jinping over the islands during his visit to Washington, and as Australia sets long-term plans to boost its military.

Foreign policy experts believe Mr. Turnbull, 60, a wealthy former businessman with close personal and business ties to China, could steer a more Asia-centric government than the British-born Mr. Abbott. Such a stance could improve ties with Beijing and put more distance between Australia and Washington on security and foreign policy, these people say.

“Turnbull’s starting point is the magnitude of the shift in the distribution of wealth and power occurring with the rise of Asia, led by China, which he sees as the great geopolitical transformation of our time,” Australian National University security analyst Hugh White wrote in a blog.

Mr. Turnbull’s Monday night comments, appearing to be aimed at countering speculation he could prioritize ties with Asia over Washington, were punctuated by his new Defense Minister Marise Payne on Tuesday. She said Australia supported the U.S. rebalancing of forces to the Asia region, which includes plans to rotate more American troops, aircraft and warships through Australia. She also signaled Australia would continue airstrikes in support of U.S.-led efforts to counter Islamic State militants in Syria and Iraq, saying the threat of IS shouldn’t be underestimated.

Her first priority as defense chief, Ms. Payne said, would be to meet with her U.S. counterpart Ash Carter and Secretary of State John Kerry in Washington. She and Mr. Turnbull also met on Monday with John Berry, Washington’s ambassador to Australia.

“That I hope reinforces for anyone who may have had an alternative view, that that is a key meeting for this government and for Prime Minister Turnbull, a key indication of where we intend to take [relations],” said Ms. Payne, who was appointed by Mr. Turnbull over the weekend during a cabinet shuffle.

Ms. Payne, 51 years old, takes over as Australia’s first female defense minister ahead of the release of a major long-term strategy blueprint in November that will outline a 20-year, A$270 billion ($194 billion) plan to boost the military. That includes A$89 billion for new frigates and offshore combat vessels and a A$20 billion fleet of eight submarines.

Mr. Turnbull is likely to lean toward part-construction in Australia after the departing defense minister said last week that as much as 80% could be built domestically. The leadership switch may have boosted the chances of German and French companies bidding for the project over a Japanese rival favored by Mr. Abbott, senior defense officials believe.

The French submarine—built by DCNS and the largest competing design—is favored by many cabinet members after aggressive German lobbying and Japanese reluctance to compete with French offers of building at least 70% of the fleet in Australia, helping protect vulnerable shipbuilding jobs, one senior official said.

Ms. Payne said she would also prioritize a visit to neighboring Indonesia, but had no early plans to visit China to soothe any worries there about a new Australian government study to be released over regional security risks. A previous one, in 2009, raised hackles in Beijing by highlighting the regional instability posed by China’s rise.

Mr. Turnbull said Chinese South China Sea policy belied its ambitions to assert more leadership in the Asia region.

“You would think what China would seek to achieve is to create a sufficient feeling of trust and confidence among its neighbors that they no longer felt the need to have the U.S. fleet and a strong U.S. presence in the western Pacific,” he said.

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A smuggler’s boat bound for Australia became stranded yesterday morning in heavy seas

A SMUGGLER’S boat bound for Australia carrying 24 people became stranded yesterday morning in heavy seas off the south coast of Java after running into engine trouble.

The boat, crewed by three Indonesians from Makassar, was believed to be carrying 14 Bangladeshis and seven Indians, who were all rescued by local fishermen and taken to the nearby town of Cidaun.

News Corp understands the boat was underway when the engine failed in large waves, stranding the passengers at sea and leading them to call local fishermen to save them.

It is believed there were no deaths.

Cidaun is the same location from where an overloaded boat carrying Sri Lankans and Iranians set sail in July 2013, shortly after then prime minister Kevin Rudd announced that anyone who came by boat would never be settled in Australia but would instead go to Manus Island or Nauru.

That boat, carrying up to 200 people, broke up in heavy seas. The actual death count was never known, but it was believed to be around 30.

Only one boat is believed to have got close to the Australian mainland after Tony Abbott took power in late 2013.

That was a group of Vietnamese, who in July last year slipped the Border Force net and sailed close to Dampier, in northwest WA, where they were intercepted and reportedly sent back to Vietnam.

Prime Minister Malcolm Turnbull has warned asylum seekers they “will never come to Australia” on illegal boats despite voicing concerns about those in offshore detention centres.

Immigration Minister, Peter Dutton, confirmed last month that Australian maritime forces had intercepted and turned back 20 boats since the Coalition took power, including putting some in lifeboats.

It is not known whether the latest boat set sail in response to the change of leadership, or if they had been conned by smugglers that Australia had changed its policies after it agreed to take 12,000 Syrian refugees.

It is just as likely they were determined to come regardless of the political circumstances in Australia.

Though the boats have for two years failed to make landfall, and passengers know that if they do they will be sent to Manus or Nauru, they have never stopped trying.

Mr Turnbull says it is “absolutely clear” there’ll be no Australian resettlement of asylum seekers in centres on Manus Island and Nauru, while conceding the government’s policy is harsh. “But it has worked,” he told ABC radio yesterday.

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W.A.: Government potatoes twice as dear

But cosy little racket set to end

Western Australia’s potato regulator has taken aim at the state’s largest grower, using its annual report to single him out as one of the challenges facing the industry.

The Potato Marketing Corporation (PMC), a second world war-era vegetable regulator, is engaged in legal dispute with Tony Galati, the industrious potato grower who also owns the Spudshed chain of grocery stores, and who infamously gave away 200 tonnes of potatoes at those stores in January because the regulator would not let him sell more than his allocated quota.

In its 2014-15 annual report, tabled in WA parliament on Wednesday, the PMC singled Galati out for criticism, listing him alongside the weather and consumer demand for tricky-to-grow yellow-fleshed potatoes as reasons for a more difficult growing season.

“Overall the 2014-15 season was challenging from a number of perspectives including weather causing quality issues, and a substantial oversupply, largely by one grower, negatively influencing returns and distorting markets,” the report said.

Galati is not named in the report, but reference is made to the legal dispute.

“The significant oversupply during this growing year was overwhelmingly the result of the actions of one large integrated grower,” the report states.

“Several attempts have been made to resolve this issue with the grower, but without success such that legal action is pending.”

The PMC launched legal action in April, accusing Galati of breaching a 2013 agreement to grow only an agreed upon number of potatoes. The two parties had until Wednesday to come to terms, or lawyers for the PMC would lodge a writ with the supreme court.

Galati reportedly told the West Australian on Wednesday that he was attempting to resolve the legal dispute, but was willing to go to jail for contempt if the court ordered him to stop growing or harvesting potatoes.

WA is the only Australian jurisdiction to maintain a regulated potato market, a mechanism that has ensured farmers make twice as much per tonne as their eastern states colleagues.

Galati has been butting heads with the system for 20 years. In April he achieved a key victory: the WA premier, Colin Barnett, announced that the regulator would be abolished after the 2017 state election.

Barnett made the announcement after the former treasurer, Joe Hockey, said at the Council of Australian Governments meeting that in order for WA to receive $500m in infrastructure funding to make up for a fall in GST allocation, it would have to look at abolishing economic “anomalies” like the PMC.

But the bulk of WA’s 78 registered potato growers say they would be happy for the industry to continue as it has for the past 70 years, unchanged from when they inherited their farms from their fathers.

Dean Ryan is one such farmer. His family have been growing potatoes at Pemberton, in the state’s south-west, since 1957. He’s also the president of the Potato Growers Association, a body that has stood firmly with the PMC and against Galati’s free enterprise.

“There are only so many spuds that the market can take in WA,” Ryan told Guardian Australia. “So if everyone grows what they are allocated, then the market is served, there’s no waste, and we are not ploughing spuds in.”

That’s what happened in summer, when the market was oversupplied and farmers couldn’t sell their whole quota. It costs $20,000 to grow a hectare of potatoes and the family farms that make up most of WA’s potato growers aren’t geared to afford the loss.

“Particularly the small guys that I talk with, they are suffering. They can’t stand another year of it,” Ryan said.  “We have grown all these potatoes for the market but because it’s oversupplied, what do we do with them?”

Storing surplus potatoes by leaving them in the ground, common practice in cooler climates, won’t work in WA, Ryan said, particularly as growers were often trying to store them over summer. “You try and store the in the summertime – they just cook in the ground,” he said.

The exacting standards of supermarket chains don’t allow for slightly weathered tubers.  “If you can’t see your reflection in the skin finish, they don’t really want them,” he said. “As soon as you start storing them, it deteriorates.”

Tony Galati and the Potato Marketing Corporation have been contacted for comment.

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