Beneath the deeply domestic dimensions of any annual budget lies Canberra’s view of the world.

The fiscal flashlight of spending and saving (and now subsidising) naturally catches the eye of every Australian taxpayer. Those taxpayers are also voters who will judge the Albanese Labor government in a federal election in the next 12 months. Can’t get more domestic than that.

Skip by the headlines about electricity bills and cost of living to find the discussion of international power. In banner-speak, the budget documents issued on 14 May peer at the world and declare: ‘Growth slow, risks grow’.

The budget speech by Treasurer Jim Chalmers describes an economic outlook framed by ‘fraught and fragile global conditions’, as inflation lingers in North America and growth slows in China.

Treasury gives a detailed view in its economic outlook statement, forecasting that global growth will ‘remain subdued over the next few years and is expected to record the longest stretch of below‑average growth since the early 1990s’.

Under the heading ‘Key risks to the international outlook’, Treasury judges: ‘Heightened geopolitical tensions in the Middle East have added to the risks associated with Russia’s invasion of Ukraine. A further escalation in geopolitical tensions could add to energy costs, disrupt international trade, and slow global growth. The outlook for the Chinese economy, including the property sector, also remains uncertain.’

The strategic direction statement from the Department of Foreign Affairs and Trade sees an international environment that’s ‘challenging and complex’. The department’s list of priorities for the 2024–25 financial year mixes organisational boilerplate (good diplomacy, good aid) with an explicit Indo-Pacific purpose: ‘enhancing Australia’s standing across the Indo-Pacific through targeted public diplomacy’, and ‘strengthening the number and diversity of Australian university undergraduates with Indo-Pacific capability’.

The banner-speak from the three portfolio ministers—responsible for foreign affairs, trade and aid—is of ‘a time of great global uncertainty’, driving a promise of more cash to reverse Australia’s ‘long-term reduction in diplomatic resources’.

The Defence Department’s strategic direction statement crams a fundamental shift in military thinking into two pages, distilling the National Defence Strategy released on 17 April.

The government has scrapped the old ‘balanced force’ model for the Australian Defence Force. The balanced force demanded lots of capabilities, to keep options open. The force could be adjusted to respond to whatever needs, contingencies or dangers appeared on the horizon. An unbalanced future has arrived, and the balanced force is judged unfit for purpose.

The ADF must become ‘an integrated, focused force designed to address Australia’s most significant strategic risks’.  The new government guidance to Defence is capitalised as ‘a Strategy of Denial’, calling for an ADF that can:

—defend Australia and our immediate region;

—deter through denial any adversary’s attempt to project power against Australia through our northern approaches;

—protect Australia’s economic connection to our region and the world;

—contribute with our partners to the collective security of the Indo-Pacific region; and

—contribute with our partners to the maintenance of the global rules-based order.

A Strategy of Denial is appropriate for a nation that’s been through the stages of grieving for the disintegration of the liberal international order (denial, anger, bargaining, depression and acceptance).

Parts of the budget respond to globalisation in reverse, what The Economist calls ‘the great regression’ to subsidy wars, sanctions and splintering capital flows. The magazine’s cover and main editorial proclaim ‘the new economic order’ as fragmentation and decay have imposed a stealth tax on the global economy’. The three big scourges identified in its survey are the proliferation of punitive economic measures, the sudden vogue for industrial policy, and the decay of global institutions, particularly the World Trade Organisation.

Australia knows all about economic punishment, having faced down and beaten five years of trade coercion from China.

The return of industry policy is a signature element of this budget, again with plenty of capitalisation: a Future Made in Australia with a $22.7 billion price tag. The pitch is investing to make Australia ‘a renewable energy superpower, value‑add to our resources and strengthen economic security’.

A government getting ready to face the voters (17 May 2025 is the latest possible poll date) talks up the positives for jobs and the economy.

As economists smash and kick at the government for getting back into the protectionist game of picking business winners, much of Labor’s response points to security and the fragile nature of the global system. For a glorious example of the smash and kick, see a sharp piece by the distinguished economist Saul Eslake, arguing that the best way to gain acceptance for bad policy is to wrap it in a ‘security blanket’. Ouch!

A Future Made in Australia is a broader version of Defence’s demand for ‘sovereign industrial capability’, a vision much in vogue in 2020 as the Covid-19 pandemic added another dimension to the need for a robust and resilient industrial base.

Among its many jobs the 2024 Australian budget must serve as an election budget. Labor may well bring down another, early one in March next year before going to the polls in May. This was the timetable Scott Morrison used in 2022, and that March effort didn’t stick because voters knew what was coming in May.

Read Tuesday’s budget, then, as offering plenty of goodies to the taxpayers. But beyond the fiscal flashlight, the voters can glimpse messages about a fraught world.

Australia grasps at answers both old and new. Canberra’s adjustment is to what wonks, economists and Western politicians lament as ‘the unravelling of the “international rules-based order”.’