Tuesday 05 Jul 2022 | 08:34 | SYDNEY
Tuesday 05 Jul 2022 | 08:34 | SYDNEY

Pacific the loser from aid budget?


Jenny Hayward-Jones


17 May 2010 09:31

CORRECTION (posted 21/5/10) Aid to pacific increases: I incorrectly surmised from the overall aid flows of the aid budget that aid to the Pacific had decreased. Australia's aid to the Pacific in fact increased if you use the more reliable country program figures in table 15, on page 66. Good news for the region, which remains the top priority for Australia's aid program.

Whether or not the aid budget increased as a percentage of GNI, one aspect of the budget is clear – the Pacific Island region, long the biggest recipient of Australian largesse, took a cut this year.

The biggest loser was regional funding. For a year in which Australia holds the chair of the Pacific Islands Forum, the Pacific could have expected some generous support from Australia for regional programs.  But the budget reported an under-spend for the last financial year (only $133 million out of an allocation of $222.5 million was spent) and a reduced allocation of $152 million for next year.

Country and regional programs for PNG and the Pacific still absorb 25 per cent of the entire aid budget and PNG is the largest single recipient of Australian bilateral or country program aid. Country program funding on the whole increased so the actual cut for PNG and the Pacific was not huge — $5.5 million overall – but in the context of a bigger aid budget, it is disappointing that the Pacific region did not benefit from an increase.

Parliamentary Secretary for International Development Assistance Bob McMullan has said it was likely the Pacific region would receive proportionately less from the Australian aid program as up-scaling continues. I can understand his reasoning. Many Pacific Island countries lack the capacity to absorb more aid and spending more money in small island countries may not automatically improve development.

But there is a more fundamental point here. The budget document acknowledges that the Pacific Islands region 'as a whole is significantly off-track to meet the Millennium Development Goals.'

Australia is by far the largest donor in the region. If the Government is serious about helping developing countries 'reduce poverty and progress towards the UN Millennium Development Goals' and enhancing 'Australia's reputation as a good international citizen' as Stephen Smith promises in his foreword to the aid budget, surely it needs to demonstrate Australian aid is making a real impact on MDG progress in our own region. 

Achieving progress in meeting the MDGs is of course not just a function of Australian aid. Pacific Island governments, multilateral and other country donors, the private sector and communities themselves all have a role to play. Aid is only a small proportion of PNG's national budget, for example, so it is perhaps unreasonable to expect that it should be more effective in helping PNG meet the MDGs. 

Making aid more effective in the region would perhaps bear more fruit than scaling up aid rapidly. But reducing aid while most countries in the region are struggling to improve their delivery of basic services risks sending a mixed message about Australia's commitment to leadership in the Pacific.

There are many positive aspects to Australia's aid program in the region. The Pacific Partnerships for Development and the Cairns Compact on Strengthening Development Coordination in the Pacific are examples of Australia's interest in improving the impact of aid.

Some other positive news is that AusAID will review the use of technical advisers in the aid program. The high proportion of the aid program absorbed by technical advisers in the Pacific and particularly in PNG, Solomon Islands and Vanuatu has long been a point of contention with partner governments. These efforts all have the potential to improve the quality of Australian aid in the region, which may compensate for the lack of a budgetary increase.