Tuesday 17 Jul 2018 | 00:16 | SYDNEY
Tuesday 17 Jul 2018 | 00:16 | SYDNEY

Are the knives out for the aid budget?


Annmaree O’Keeffe

This post is part of the Australia's aid budget 2012 debate thread. To read other posts in this debate, click here.

5 April 2012 12:35

This post is part of the Australia's aid budget 2012 debate thread. To read other posts in this debate, click here.

Will the Gillard Government stick by its commitment to increase the aid budget to 0.5% of Australia's gross national income by 2015/2016? That's the question being asked as rumours and leaks gather momentum in the lead-up to Budget night on 10 May.

In an interview with the 7.30 Report's Chris Ullman last night, World Vision Australia CEO Tim Costello prosecuted the case for maintaining the commitment, reminding everyone that the bulk of the world's poor lives in the Asia Pacific. He argued that Australians want their government to tackle global poverty.

However, news coming out of the OECD on the same day shows that aid budgets across the developed world are under increasing pressure; globally, aid to developing countries fell by nearly 3% in 2011. Exceptions were Australia, New Zealand, Korea, Switzerland, Germany, Italy and Sweden, where aid budgets continued to rise. The US, Canada and (surprisingly) the UK registered falls, the biggest being Canada with a drop of more than 5%. The Canadian Government decided to cut its aid budget by another 7% in the budget brought down last month.

This drop in global aid comes after more than a decade of steady increases. In fact, the OECD reports that net official development assistance rose by 63% between 2000 and 2010, the year it reached its peak. Although Australia didn't join this international push to substantially increase its aid budget until half way through the decade, it has subsequently been a strong and consistent supporter of more and better aid to address global poverty.

The dilemma now is whether Australia, given other budgetary pressures, can afford to continue increasing its allocation to aid and so meet the 0.5% commitment by 2015. In dollar terms, this would mean close to doubling this year's allocation of $4.8 billion to something around $8 to $9 billion in four years. 

However, perhaps the question should be: can Australia afford not to increase its aid budget? Just a quick look at a map shows you that Australia, along with New Zealand, sits in a region where all our neighbours are developing countries. Three-quarters of the world's extreme poor are living in this region. And this is despite the enormous advances in reducing poverty in Asia since the 1980s.

While addressing global poverty is worthwhile in humanitarian terms, it's not the only reason Australia does it. There is a very tangible national interest at stake, underscored by the well-documented linkages between development and political stability. In other words, development supports the conditions essential for maintaining stability and diminishing the likelihood for dissent and conflict. Again, looking at the map, you can see why Australia would want stable and prosperous neighbours.

So if the government does decide to weaken its aid commitment, it will also be weakening one of the most significant soft power tools it has to address the fundamental threat to regional stability.

The 2011 Lowy Institute poll found that on average, Australians wanted 12% of the federal budget spent on foreign aid. Even with the recent increases, aid only represents around 1% of the budget. It would seem that there is popular support for a bigger aid budget. 

But what do you think? Is Australia's aid effectively addressing its dual role of addressing poverty and supporting Australia’s national interest? And if so, should the commitment to reach 0.5% of our national income by 2015/2016 be kept? Send your comments here: blogeditor@lowyinstitute.org .