Inter Press Service: 1 October 1999
EAST TIMOR: AUSTRALIA COUNTS THE COST OF MILITARY INVOLVEMENT
East Timor is fast becoming extremely expensive for Australia, leader of a multinational force tasked to restore order in the ravaged territory. Australians have been told to brace themselves for higher interest rates, welfare cuts or the loss of tax breaks as the government allots at least 2 billion Australian dollars a year for its military commitment to the territory.
By SONNY INBARAJ in Darwin
EAST TIMOR is fast becoming extremely expensive for Australia, leader of a multinational force tasked to restore order in the ravaged territory.
Australians have been told to brace themselves for higher
interest rates, welfare cuts or the loss of tax breaks as the
government allots at least 2.0 billion Australian dollars (1.3
billion U.S. dollars) a year for its military commitment in the
territory.
Prime Minister John Howard told Parliament this week his original
estimate of 500 million Australian dollars (325 million U.S.
dollars) to send 2,000 troops to East Timor for six months would
obviously rise if the deployment continued longer.
But already there are 3,000 Australian troops on the ground and
the Defence Department is ready to commit 4,500 for at least a
year.
Australian Treasurer Peter Costello used his annual visit to
Washington for the IMF-World Bank Meeting to encourage
international support for Australia's effort to rebuild East Timor
as an independent country. But he warned Australians that
rebuilding East Timor would take its toll on national finances.
''Well, there'll be significant new costs and this means that
we're going to have to be tight on expenditures in other areas.
We're going to ensure that the Australian troops in East Timor do
not lack for resources -- do not lack at all,'' he told the
Australian Broadcasting Corporation.
Since last week, 2,500 soldiers, most of them Australian, were on
the ground in East Timor joined by British Gurkha, Portuguese, New
Zealand, Thai and French troops. A further 5,000 troops are
planned to be deployed within the coming weeks.
The main staging ground for the International Forces for East
Timor (Interfet) is Darwin, the northern Australian city about 500
km from East Timor.
On Sept 15, the UN Security Council endorsed ''all necessary
measures'' to halt the orgy of killing and destruction in the
former Portuguese colony by pro-Jakarta and anti-independence
militias after the East Timorese people voted for independence in
the Aug 30 UN-supervised ballot.
The UN's Food and Agriculture Organisation has estimated that at
least 7,000 people died in the violence and that between 300,000
and 400,000 of the territory's 850,000 people fled their homes or
were forced into neighbouring West Timor by the Indonesia-
controlled militias.
Leading economist Chris Richardson estimates that the full
deployment of the Australian force to East Timor will cause
Canberra at least 2.0 billion Australian dollars a year.
''Today we're spending 11 billion Australian dollars a year on
defence. If we moved up to the average of the two decades after
Vietnam, we'd be spending an extra two or 2.5 billion Australian
dollars. Now that's a lot money,'' he said.
Richardson saw only three options for the government and said
they would all be hard to swallow.
''Firstly we can take it out of the surplus. We're lucky enough
that we're running one at the moment. But that's not costless.
It's not the sort of money out of petty cash,'' he said.
''If we have a good surplus, that's partly what gives us a low
interest rate. If we dig into that we can't be sure that interest
rate stays low in Australia.''
But Treasurer Costello said the increased defence spending won't
eat into his 5.0 billion Australian budget surplus and a round of
belt-tightening seems to be his preferred option.
''The key to the Australian economy has been a budget in surplus.
Having worked so hard to get the budget in surplus, it's our
intention to keep it there. We have to be quite tight in the
budgetary process to ensure that we have sufficient resources for
East Timor,'' he told the ABC.
The second option, Richardson said, was looking at other cuts,
namely social spending. ''Equally if we cut into other spending,
that means anything from hospitals to schools and they're
difficult decisions to take,'' he said.
Finally, said Richardson, it will smaller tax cuts. ''Given the
increasing cost of national security in Australia, the government
can't afford to give tax breaks to business. And these things are
going to hurt the average Australian.''
There are proposals to lower Australia's business tax rate to a
flat 30 per cent to make the country attractive as an investment
destination. A low business tax regime and capital gains tax
relief are in the pipeline as the government considers tax reform
measures.
Richardson said the government would have no choice but to
identify welfare as a prime target.
''The government can cut but when you're talking 2.0 billion
dollars for Timor and more again to raise defense spending, that's
a lot of money -- that's more than the fat in the system. This
obviously means cuts in the big ticket items -- of which social
security dominates,'' he said.
Realising the potential political backlash in spending cuts on
health and education or reduction in promised tax breaks, the
government on Thursday announced it was considering selling
billions of dollars of prime defence land throughout Australia to
pay its East Timor bill.
'The Age' reported, in a front page story, that the government
believes up to 16 billion Australian dollars of military
properties could be sold outright or on leaseback arrangements,
dramatically reducing the need for Canberra to dig into its budget
surplus to fund the East Timor deployment.
The Defence Department has traditionally resisted pressure to
sell large tracts of its land and buildings, but Finance
officials, according to 'The Age', are arguing that it must accede
under present circumstances if it is to receive a funding boost.
(END/IPS/ap-ip-if/si/ral/99)