In terms of revenue changes for the 2008-09 budget, here’s a ranking of how some of the key policy changes weigh in:

Means test baby bonus: $50 million

Removal of condensate oil excise exemption of North West Shelf: $564 million

Alco-pops tax hike: $640 million

Increased Reserve Bank dividend: $814 million

We’re been deluged with alcopops coverage, but why isn’t a completely irresponsible raid on the Reserve Bank being debated?

Fairfax’s Ross Gittins produced a hard-hitting column today labelling the spending cuts as “pathetic”, the claimed savings as “misleading” and also pointing out how important the Reserve Bank raid was to the figures.

It was in stark contrast with Alan Kohler’s gushing praise on The 7.30 Report last Tuesday night.

I think it’s a bit of an old-fashioned razor gang budget….all the new things in this Budgets are cuts. It’s largely, I think Lindsay Tanner’s Budget more than Wayne Swan’s Budget, because they have delivered all of the spending promises they made, plus another $2 billion in cuts, that’s $5.3 billion of spending promises offset by $7.3 billion in cuts. Which, I think, will surprise a lot of people that they went so far in their cutting. I think it’s going to be well received in the markets… it’s a remarkable job.

The government’s budget sales team has been subjected to some sustained questioning in recent days, most notably Wayne Swan’s 20 minutes on Meet The Press yesterday and Lindsay Tanner’s KGB interrogation with Alan Kohler, Stephen Bartholomeusz and Robert Gottliebsen on Business Spectator.

Both were interesting interviews but it is disappointing that no-one has yet asked whether our Reserve Bank has enough capital to cope with the global liquidity crisis when the Rudd Government was clearly desperate to come up with as big a surplus figure as possible.

Here’s a simple question for Brendan Nelson to ask Kevin Rudd in question time:

Given that Australia’s central bank has less foreign reserves than the likes of Iran, Libya, the Philippines, Peru, Denmark, Malaysia, Poland, Argentina, Mexico, Thailand, Romania and Indonesia, was it prudent to extract an additional $814 million from the Reserve Bank in 2008-09 at a time of unprecedented central bank intervention in our global financial system?

Whilst the RBA raid was reckless, the government deserves credit for ending the excise holiday on the North West Shelf. This was a brilliant move that improves both the budget surplus and our current account position given that 90% of the project is foreign-owned and the likes of Exxon, BP, Shell, Mutsui, Mitsubishi and Chevron are all making a fortune.

Woodside CEO Don Voelte, a hot-tempered Nebraskan, should stop moaning. Woodside shares soared another 4% to a record $65.77 in morning trade and Voelte has made more than $50 million from his move Down Under.

Check out this expanded list on foreign ownership of Australia’s resource projects.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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