Australian Financial Review -

The opposition has accused Prime Minister Kevin Rudd of making "sneaky and underhanded" cuts to the Department of Foreign Affairs and Austrade after the government buried asurprise $105 million budget cut in its mid-year economic statement.

The cuts come after the govern- ment moved to boost the depart- ment's budget by almost $200 mil- lion in the May budget in recog- nition that Australia's diplomatic efforts were being hamstrung by a lack of resources.

Prime Minister Kevin Rudd then abandoned a four-year, $120 mil- lion program of cuts, boosting spending to $5.29 billion in financial year 2010.

But the government's mid-year economic and financial statement confirms it will now slash the budget by $105 million over four years. The cuts will be made by axing seven diplomat positions from some of the larger overseas missions, scaling back the cost of accommodation upgrades at some missions (includ- ing an upgrade of the consulate- general office in Lima, Peru) and addressing the number of Austrade offices within Australia. DFAT's Overseas Property Office, which manages buildings of the overseas missions will also be targeted.

The opposition criticised the cuts saying they were buried in the financial report and were not men- tioned at a Senate Estimates hearing a week earlier.

"This is a sneaky and under- handed announcement," Liberal senator Russell Trood said. "Despite the Prime Minister's claim Australian diplomacy can be the best in the world ... our foreign service is stretched to breaking point.

"The cuts reflect the determi- nation of the Prime Minister to centralise foreign-policy decision- making and further marginalise DFAT [and] impose severe pressures on a department already struggling to do its work effectively."

The Lowy Institute earlier issued a report saying DFAT was underfunded and short-staffed and not serving either the country's foreign policy or business interests.

Foreign Affairs officials had also complained the department had been sidelined in formulating policy by a foreign affairs-oriented Prime Minister who relied on his own counsel, anetwork of external experts and his own department.

A spokesman for DFAT and Austrade said the two would be required to "deliver additional sav- ings to assist the [government's] implementation of its fiscal strat- egy".

"The total of these savings for DFAT is $88.3 million over four years from 2009-10." The planned savings are to come from "rationalising the provision of diplomatic services and scaling back accommodation plans and overseas posts and reducing the costs of the overseas property office", the spokesman said.

By John Kerin