The Australian Film Commission sent out a press release on Friday celebrating the selection of two Australian films in Berlin’s International Forum of New Cinema. It is the first time that an Australian film has been selected in the prestigious forum since 2002.

But if the Federal Government felt like using the success to advance diplomatic and international cultural awareness throughout Germany or Europe they would be hamstrung by a naïve decision made last week.

The Federal Government announced that they would eliminate Australia on the World Stage and the fund set up within the Australian International Cultural Council. Established by Alexander Downer as part of the Department of Foreign Affairs and Trade, it was allocated $20 million over a four year period. Its central focus, amongst other things, was to “showcase Australian arts and our other cultural assets to the world”.

For a Government under a new Mandarin-speaking Prime Minister, the irony is not lost. As former Cultural Counsellor to Beijing, Carillo Gantner told the Sydney Morning Herald last year that “the Chinese say, ‘Culture first, business second.’”

The second irony is that for most of the arts industry, the election of a Labor Government was marked with a huge sigh of relief. At Peter Garrett’s election night party at the Randwick Labor Club, the arts industry were out in force, with Sydney Theatre Company power couple Cate Blanchett and Andrew Upton leading the charge.

But news this week that the very first thing the new Federal Labor Government has done is to remove all the funding from the international fund paints a clear picture of how culture will be viewed by this new administration.

The question has to be asked – why are Rudd and Foreign Minister Smith eliminating something that would seem a natural fit? And what do they plan to replace it with – if anything? No details have been forthcoming.

Alexander Downer told The Australian on Tuesday, “Australia on the World Stage was never the matter of the remotest controversy. I believe they [the ALP] are philistines and they have no understanding and no desire to understand the importance of promoting culture internationally.”

In fact, Prime Minister Rudd through this latest move is starting to appear more like the NSW Premier, Morris Iemma, than a proud mandarin of Australian culture. (NSW took close to $20 million from its arts budget last year and is now positioned behind every state and territory except the ACT on per capita arts spending).

By eliminating the Australia on the World Stage program, the Federal Labor Government is ignoring key recommendations from many of their traditionally loyal constituents.

A Senate Standing Committee held last year took submissions from major cultural institutions including the Australia Council for the Arts, Australian Film Commission, National Gallery of Victoria, the ABC, Australian Major Performing Arts Group and AsiaLink to make recommendations on building Australia’s image through public diplomacy.

One of the Committee’s findings was that “to ensure that Australia’s public diplomacy efforts are not overshadowed in the highly contested international space, Australia must ensure that it takes advantage of opportunities to capitalise on the positive outcomes from its many public diplomacy activities”.

Removing the Australia on the World Stage fund shows that little or no interest is given by the new government to capitalise on cultural successes such as that happening in Berlin during February and it should come as no surprise to a now complacent arts industry.

Neither the Department of Foreign Affairs and Trade nor the Arts Ministry returned Crikey’s phone calls.

Nicholas Pickard is blogging the Sydney Festival for the Daily Telegraph.