Wednesday 18 Jul 2018 | 20:45 | SYDNEY
Wednesday 18 Jul 2018 | 20:45 | SYDNEY

Foreign aid: A budget is not a strategy

12 May 2011 15:55

Annmaree O'Keeffe is a Lowy Institute research fellow. She has served as Australian Ambassador for HIV/AIDS and Deputy Director General of AusAID.

The Gillard Government has been applauded for sticking by its commitment on aid in Tuesday night's budget. In keeping with its election promise to shepherd Australia's foreign aid budget to 0.5% of Australia's national income by 2015, the aid budget increased by almost $487 million, bringing the total to more than $4.8 billion. This is expected to take the ratio from 0.33% of national income to 0.35%. 

All commendable stuff, as a number of NGOs have remarked. The outcome has been variously described as 'sensible and affordable''a good news story' and 'a real commitment to poverty reduction'. Given some of the budget challenges facing the Government, this steady course is all the more remarkable.

However, the course which this latest aid budget continues to chart is still waiting for its map. The review of the aid program commissioned by the Government last November has been completed. The next step will be the Government's response which, according to Foreign Minister Rudd, is expected sometime in the middle of the year. In other words, the strategy underpinning the significant increase in the aid program by 2015 will only become a reality almost four years after this aid commitment became policy.

In the meantime, the winners and losers in this year's aid budget make for curious reading. While Asia and the Pacific still receive the lion's share for long-standing and arguably very sound humanitarian and national interest reasons, there are some surprising winners found elsewhere. While the Pacific's increase is just under 7% of what it received in last year's budget, South and West Asia is up by 29% and Africa by 45%. Latin America stands out with an increase of 67%.

There are some even more surprising losers. The increase in aid to East Asia is close to 16% over last year's budget estimate. Again, this is a sensible and welcome move given the extent of poverty throughout the region and its real strategic interest to Australia. However, two of the world's poorest countries, Burma and Laos, are facing either a cut, in the case of Burma, or for Laos, a minuscule increase.

There are some domestic surprises too. The dedicated allocation for Australian NGOs has increased by 40%. Looking over this and the previous year's budget, it seems Australian NGOs have been doing very well, having almost doubled their allocation in two years. In the absence of an overarching strategy guiding Australia's aid budget, it would be good to have this substantial increase backed by a solid policy consideration.

The other big domestic surprise is AusAID's own administrative budget. While there is no doubt the organisation needs to have the staff and infrastructure to manage an effective aid program, its own departmental allocation has increased by more than 34% over last year's budget estimate. This represents 14% of this year's overall aid budget increase. Again, probably all justifiable, but as we wait for direction from the Government on its objectives and aims for the aid program, it has a cart and horse flavour to it.

Photo by Flickr user Great Beyond.