Friday 10 Apr 2020 | 01:10 | SYDNEY
Friday 10 Apr 2020 | 01:10 | SYDNEY

Foreign aid: What it for?

10 July 2009 15:53

Peter McCawley is a Visiting Fellow at the Indonesia Project, ANU, and former Dean of the ADB Institute, Tokyo.

Graeme Dobell is right in judging that the Rudd Government faces a challenge in considering how to balance conflicting pressures within the Australian aid program. Ultimately, the dilemmas hinge on objectives. The truth is that all national aid programs in OECD countries face difficulties in reconciling lofty (nominal) humanitarian objectives with the practical (real) goals that aid programs are usually expected to achieve. 

The confusion over objectives is illustrated by the sharply contrasting approaches adopted by the two most recent independent reviews of Australia's aid program. 

In 1984, the Jackson Review of the Australian aid program confronted this matter of objectives directly (disclosure: I was a member of the Jackson Committee). The Committee took the arguably unromantic view that 'Australians generally agree that the overall aims of foreign aid are to achieve humanitarian, strategic and commercial goals. Australian aid policy has, therefore, not one but several mandates...'

In 1997, the Simons Committee of review of the aid program took an entirely different approach. Flying in the face of political reality, it argued that multiple objectives were undesirable and that there should be 'a single and unambiguous objective' for the aid program: poverty reduction through sustainable development. The Simons Committee was so enamoured of this approach that it even gave its final report the title of 'One Clear Objective'. 

The government of the day welcomed this recommendation and immediately proceeded to ignore it. 

But there are few better examples of the way the three main objectives of aid (humanitarian, diplomatic, commercial) are blended than in the decision of the Howard Government to announce a new program of $A 1 billion assistance to Indonesia in the immediate wake of the tsunami which hit Indonesia on Boxing Day, 2004. 

At the time, the perception was encouraged that the $1 billion aid program was a generous response to the disaster that had struck Indonesia. For some years afterwards, Australian Government ministers, op-ed writers and numerous NGO representatives frequently spoke of the 'generosity' of the Australian humanitarian response to the tsunami. 

There was some truth in this view, but only some. Very useful comments on the details of the $1 billion program were set out in a Research Note from the federal Parliamentary Library in March 2005. The most superficial examination of the Australian Government's decision indicated that important foreign policy considerations lay behind the announcement. 

Indeed, there was no indication in the Australian Government's announcement of what share of the package would be devoted to tsunami assistance activities. The Research Note went so far as to note that 'It is quite possible that most of the grant aid and loan component will be spent on projects outside Aceh...' 

Significant Australian commercial objectives were included in setting the conditions for use of the $1 billion. It was initially announced that all contracts would be awarded 'exclusively' to Australian and New Zealand companies. Although arrangements were later amended to allow Indonesian companies to bid for work, the pressure to tie much of the aid expenditure to Australian firms was considerable. 

There is, surely, nothing wrong with having multiple goals for the Australian aid program. Many government programs the world over have multiple goals and aid programs are no exception.  

But as Graeme Dobell points out, Australia's new aid supremo will, as former aid supremos have done, need to tread warily in balancing off the range of humanitarian, foreign policy, commercial and even security-related pressures which now bear down upon the Australian aid program.

Photo by Flickr user YT, used under a Creative Commons license.