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Budget harms our 'aid predictability'


Annmaree O’Keeffe

15 May 2012 12:33

Much has already been said and shouted in the wake of the Government's budget announcement last week that it was reneging on its promise to increase Australia's foreign aid budget to 0.5% of Australia's gross national income by 2015-2016.

But an important aid document also released by the Government on budget night has received much less attention. It's the aid program's four-year implementation plan (ironically, for the period up to 2015-16). The Comprehensive Aid Policy Framework is designed to give a four-year view of how much aid should go where and to whom. And it takes into account all Government aid spending, not just AusAID's.

The framework is important. It starts to put some flesh on the aid transparency charter signed by the Government last November by providing an indication of future aid allocations for Australia's main aid recipients. The geographic distribution of the aid both in next year's budget and by 2015-2016 reinforces the priority standing of the Pacific and East Asia, with each of these regions scheduled to receive 37% and 56% more aid respectively from Australia by 2015-2016.

The document aims to give predictability and clarity on how the Government intends to spend the still increasing aid budget. That's to be applauded. Funding predictability is one of the most important platforms for building an effective aid program because it's not just Australian resources at stake.

It's not well understood that much of Australia's aid is provided bilaterally. That means aid programs are, in AusAID's own words, 'planned and implemented jointly with the partner government'. An example of how this works is PNG, where around 90% of the aid allocated is channeled through PNG government bodies in line with PNG's development priorities. Major Australian-funded development programs, such as supporting the PNG Government to improve its health services or increase the number of children attending school, are multi-year, complex activities not dissimilar to any major government investment in Australia. They require extensive planning and funding predictability.

In other words, bilateral aid isn't charity. It's not something that can be postponed with a couple of months' notice without some impact on the recipient government's own ledgers.

So it's for sound reasons that Australia has long been a leading proponent of funding predictability to bolster the effectiveness of aid. The most recent example was just six months ago, when Australia's then Foreign Minister, Kevin Rudd, signed Australia up to the Busan Partnership for Effective Development Co-operation. That declaration, endorsed by 159 countries, makes clear that predictability is a core principle underpinning aid effectiveness.

Yet just six months after signing onto this commitment, Rudd's successor, Bob Carr, found himself in a very awkward situation on budget night. While he was releasing the welcome Comprehensive Aid Policy Framework, his colleague, Treasurer Wayne Swan, was undermining the good aid principles it represented by reneging on Australia's aid commitment.

And the consequences? Apart from giving aid partners less than two months' notice about major changes to the flow of Australia's funding over the next five years, it must be making the broader international community reflect on just how reliable Australia is when it comes to the international commitments it signs onto.

Photo by Flickr user dibytes.