Wednesday 06 Oct 2021 | 16:53 | SYDNEY
Wednesday 06 Oct 2021 | 16:53 | SYDNEY

Australia inflated aid agenda


Hugh White

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

16 April 2012 11:44

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

Annmaree's anxieties about the aid budget are well-founded. If the fiscal squeeze is to be as hard as everyone says, there seems little chance that aid will be spared. Of course, no one is talking about spending less on aid — only about slowing the rate of growth. Aid spending has doubled since 2005, and has been set to double again by 2015, so the rate of growth could be halved and it would still be very high. At the risk of playing Uncle Scrooge, let me suggest that slowing the growth of aid would be no bad thing.

The most immediate reason is that it is so hard to avoid wasting a lot of money when the amounts available are growing so fast. This is no discredit to AusAID, which is one of the world's better aid agencies. Their work is not just about signing cheques: they have to work with other countries and local communities to develop cost-effective projects that deliver real results. That takes a long time, so the faster money has to be spent, the more will be wasted. That does nothing to help the needy.

But there are two deeper reasons to pause and take stock. The first is to try to get clearer what the aid program is supposed to achieve. Last year the Government's Aid Effectiveness Review roundly declared that the aim of our program was the elimination of poverty. But the closer one looks the less plausible that becomes.

I argued last year that poverty is eliminated by economic growth, and aid does little or nothing to support that. Nor can it do much to change the distribution of wealth in a society. The best it can do – and what is does best – is alleviate the consequences of poverty for those who have not yet escaped it. If that's right, let's admit it and design the program accordingly. But the aid community seems reluctant to really debate this central question.

It reminds me of Defence, where even more billions are spent without any clear objectives. That's no doubt why debate in both areas focuses on inputs — spending as a percentage of GDP — rather than on outputs. In fact, I've long thought that the aid and defence communities have much more in common than either would like to admit...but that's a different story.

My second reason to pause and think more carefully about aid has to do with what it says about us and our attitudes to Asia. I'd beg to differ with those who see aid as central to Australia's response to the Asian Century. I think that misunderstands what the Asian Century is all about, and what it means for the way we relate to it. Over the next few decades, for the first time in Australia's history, our Asian neighbours will cease being poor and weak and become wealthy and strong. This is not a distant prospect.

China we know about already. Indonesia is a more striking case. It has already overtaken Australia's GDP in PPP terms. But a Citi report last year paints a remarkable picture. By 2040, on reasonably modest growth projections, Indonesia will have the fourth-largest economy in the world. Of course, it might not happen, but don't bet on that. And 30 years is quite soon – within the professional career-spans of people already working in Government.

One of the most notable failures of Australian foreign policy today is our complete failure to lay the foundations for the sort of relationship we will need with Indonesia when it is great power. But I'd take a lot of persuading that aid had a big role to play. Treating Indonesia as a charity case simply shows how little we understand, or how hard we find it to accept, that Asia is changing.

Photo by Flickr user Australian Civil-Military Centre.