Saturday 21 Jul 2018 | 18:03 | SYDNEY
Saturday 21 Jul 2018 | 18:03 | SYDNEY

Aid budget confusion


Jenny Hayward-Jones


This post is part of the Australian budget debate thread. To read other posts in this debate, click here.

12 May 2010 11:01

This post is part of the Australian budget debate thread. To read other posts in this debate, click here.

The Rudd Government has announced an increase to international development assistance for the next financial year from $3,818 million in 2009-10 to $4,349 million in 2010-11.

It's a decent increase in challenging times which the government says is consistent with its commitment to scale up ODA to 0.5 per cent of GNI by 2015-16.

Foreign Minister Stephen Smith’s media release says Australia’s ODI/GNI ratio is forecast to increase to 0.33 per cent over the 2010-11 financial year. Last year, however, Mr Smith’s media release on the aid budget said the ODI/GNI ratio was forecast to increase to 0.34 per cent in the 2009-10 financial year.

A ratio that appears to be going backwards would seem to indicate that the Rudd government is not as committed as it claims to manage the scale up of Australian aid. 

The Australian's Jennifer Hewitt argues the government has made a budget saving of $207 million by not increasing aid as much as it could have, the ABC's Sean Dorney also draws attention to apparent inconsistencies in the government’s commitments while The Age’s Tim Colebatch says $1.1 billion will be cut from forward estimates of the aid budget over the next four years.

But the government has a rather complicated explanation for this apparent backtracking on page three of the AusAID budget. Australia has implemented new international accounting standards to calculate GNI, which increases GNI by around four per cent. GNI has also increased due to economic growth. The government has decided it will not apply its promised ODA/GNI targets to the higher GNI.

Last year’s ODA/GNI ratio was not the forecast 0.34 per cent but in fact 0.31 per cent, which validates Mr Smith’s statement that Australia’s commitment to aid increased. But the small increase puts more pressure on future budgets if Australia is to meet the 0.5 per cent target in 2015-16.

The lesson I have drawn here is that if you want a good news story on Australia’s aid commitments, it’s not worth comparing this year’s budget with last year’s budget or indeed looking at forward estimates.

Photo by Flickr user origamidon's photostream, used under a Creative Commons licence.