Wednesday 19 Sep 2018 | 04:42 | SYDNEY
Wednesday 19 Sep 2018 | 04:42 | SYDNEY

How 'generous' is foreign aid?

22 October 2008 09:38

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

References are often made in western media reports to the 'generous' amounts of foreign aid provided by rich nations. Australian ministers from both main political parties are also fond of mentioning the 'generous' foreign aid program that Australia provides. The latest mention of generous aid programs came in The New York Times just a day or so ago when it reported that a total of $240 million has now been pledged by a consortium of Western donors (including Australia) to give assistance following the disastrous Cyclone Nargis last May.

The NYT talks of 'showering aid' into the Irrawaddy Delta 'on a scale that this country has perhaps never seen.' There are concerns that the 'intensive effort in the delta' has led to inequalities in the supply of aid because other very poor parts of Myanmar are not getting any aid. This is all very odd. In fact, on any sensible comparison, US$240 million (which has apparently taken over four months to rustle up) is a very small amount of money. 

By way of comparison, something over US$14 billion was pledged by the international community following the Asian Tsunami in December 2004, and perhaps $80 billion was budgeted in the US following Hurricane Katrina in 2007. 

The NYT notes that $US 240 million is equivalent to around US$100 for every person who survived Cyclone Nargis. This amount is tiny compared to the plethora of sizable (should one say 'generous'?) subsidies provided within rich countries for all sorts of purposes. In Canberra, for example, the local ACTION bus service received a subsidy (that is, 'aid') of approximately A$64 million last financial year. That works out to over $180 per person for every citizen of the Australianj Capital Territory (most of whom never use the service). And that's just for the poorly-patronised bus service. Total subsidies provided by the ACT Government to ACT citizens are much greater than the US$100 per capita provided to disaster survivors in the Irrawaddy delta.