Wednesday 06 Oct 2021 | 11:15 | SYDNEY
Wednesday 06 Oct 2021 | 11:15 | SYDNEY

Commercial objectives in foreign aid


Stephen Grenville

6 February 2012 09:31

'There you are, sir. Will that be cash or credit?' (Photo by Flickr user Royal Australian Navy.)

For some, the international aid program should be a matter of pure altruism, driven solely by the development objectives of poor countries. Commercial objectives, furthering the interests of Australian business, would be a serious distortion of the proper purpose of aid. For others, the commercial motivation is an uncomfortable truth which might be used to justify an increased budget allocation but should never be acknowledged in public.

The Jubilee Australia submission to the Independent Review on Aid Effectiveness represents an example of the purely altruistic view, critical of the very idea that the aid program should dirty its hands with commercial objectives, refuting the commercial motivation of other submissions and reminding us all of the unlamented demise of the Development Import Finance Facility (DIFF) soft-loan program.

Kevin Rudd shows some delicate footwork around these vexed issues. The Minister acknowledges that we give aid in our own national interest (pure altruism rejected) but quickly goes on to specify the form of national interest he has in mind:

Australia's aid program is an integral part of our broader foreign and security policy objectives. These are to:

  • maintain our national security;
  • build our national prosperity; and
  • act as a good international citizen in building a stable and just international rules-based order.

Within this framework, the fundamental purpose of Australian aid is to help people overcome poverty. This also serves Australia's national interests by promoting stability and prosperity in our region and beyond.

Just in case you thought we were too focused on our own interests, the Minister goes on to say: 'We want to be judged not by how much we spend, but what results we produce – the number of lives we save, the number of children we educate, the number of people we lift out of poverty.'

The Independent Aid Review baulked at the national interest objective:

One problem with the objective of the program as it is presently stated is that it is unclear and ambiguous in relation to how the national interest should figure in the program. In the first place, Australia's interests are served by a world of prosperity and opportunity, rather than one plagued by poverty. Thus its first recommendation is: The objective of the Australian aid program should be cast as follows: The fundamental objective of Australian aid is to help people overcome poverty.

No sign of any commercial objectives here. But it creeps in later, in recommendation 22: 'The power of business should be harnessed and business innovation should be encouraged, including through an annual consultative forum.'

The detail promises a bit more than just consultation, but not much: the program should 'work through partnerships' and might 'assist Australian businesses which are seeking corporate social responsibility and/or inclusive business opportunities in developing countries.'

How will this debate fit with the Henry Review of the Asian Century? Australian business (and particularly Australian investment) generally finds Asia a bit daunting and the home turf is pretty comfortable. There is, however, a huge body of business experience, talent, specialised knowledge and technology which could be the basis of much deeper ties with Asia, but this needs some encouragement.

Just to give one example, there is now a widespread recognition that developing Asia needs to make a big push to improve infrastructure. Australia has a lot of expertise here, not just in building, but in financing and project planning. This won't do much directly for poverty, nor gender equality, child health or any of the narrowly focused Christmas tree of development objectives. But it will promote the same generalised economic growth that has done far more than all the international assistance programs to lift hundreds of millions of Chinese and Indians out of poverty.

The US doesn't share our reluctance to identify overlap between development objectives and commercial benefit. Secretary of State Hillary Clinton, in a document unashamedly titled 'The First Quadrennial Diplomacy and Development Review', puts the development objective this way:

It's ultimately about delivering results for the American people—protecting our interests and projecting our leadership in the 21st century...We will provide the strategic framework and oversight on the ground to ensure that America's civilian power is deployed as effectively as possible.