Official Development Assistance: Australia's aid program

Dr Ravi Tomar, Foreign Affairs, Defence and Security Section

Key issue
Australia’s Official Development Assistance (ODA) has increased consistently in real terms during the past few years. This trend may not continue.

Australia’s ODA has witnessed a consistent increase over the past six years, increasing from 0.28% of Gross National Income (GNI) in 2007–08 to an estimated 0.37% in 2013–14. The graph below illustrates this trend.

Figure 1: ODA growth 2007–08 to 2013–14

Source: Parliamentary Library

The budgeted outlay on Australia’s International Development Assistance Program 2013–14 is estimated at $5.7 billion at current prices, an ODA/GNI ratio of 0.37%. The 2013–14 Budget’s statement on aid noted that ‘the Government expects to increase Australian aid to around 0.39 per cent in 2014–15, 0.41 per cent in 2015–16 and 0.45 per cent in 2016–17’.

The Department of Immigration and Citizenship (DIAC) will manage the largest amount of Other Government Departments (OGD) expenditure—$436.2 million in 2013–14. This includes up to $375.0 million for ‘costs associated with the sustenance of asylum seekers on residence determinations or bridging visas class E during their first 12 months in Australia’.

On 17 December 2012, Foreign Minister Bob Carr announced that the Government would report up to $375 million of its aid budget as support for asylum seekers waiting to have their claims heard in Australia. In effect this meant that $375.1 million would be diverted to DIAC from the overall aid budget for 2012–13.

Additional aid to PNG

On 18 July 2013, the prime ministers of Australia and PNG signed a ‘Joint understanding between Australia and Papua New Guinea on further bilateral cooperation on health, education and law and order’.

The Australian Government’s Economic Statement in August 2013 included details of this additional ODA to PNG, which amounts to $420 million over four years:

health ($207 million over four years)
education ($62 million over four years)
justice ($19 million over four years)
transport ($0.8 million over four years) and
law and order ($132 million).

The August 2013 Economic Statement

The August 2013 Economic Statement announced that the ODA growth would be slowed, but the target of 0.5% of GNI by 2017–18 would still be met. The measure was ‘expected to decrease payments by $879 million over the four years to 2016–17’ but the aid budget would ‘increase by around 26% over this period’.

Coalition policy

On 5 September 2013, the Coalition released its policy on foreign affairs that included foreign aid. While the Coalition remains committed to the 0.5% of GNI target, the policy states that ‘it is not possible to commit to a date’, and that growth in ODA will be restricted ‘to increases in the consumer price index over the forward estimates’. This amounts to a $4.5 billion reduction in Australia’s planned aid budget in the forward estimates, including an immediate cut of $656 million.

According to analysis by Stephen Howes from the Development Policy Centre at the Australian National University:

… adjusting for inflation, aid in 2015–16 will be $5.6 billion (in 2011–12 prices) which is back to its 2012–13 level. As a percentage of GNI, aid will decline from .35% of GNI in 2012–13 to .32% of GNI in 2016-17, its lowest level since 2000-01. This makes it hard to take seriously any statement that the Coalition is still committed to 0.5% ... The cuts also imply $656 million being taken from the aid budget this current year.

The Coalition’s policy also emphasises that it will ‘review the priorities within the existing foreign aid budget to consolidate our aid efforts on the Asia Pacific-Indian Ocean region and to focus on the quality and rigorous administration of that effort’. It should be pointed out that the existing top five bilateral recipients of Australian aid in 2013–14 are all from the Asia-Pacific region, to which 86% of Australian aid is currently provided.

Non-government organisation (NGO) reactions to the Coalition’s policy

NGO reactions to the Coalition’s policy announcement on aid have been unanimous and predictably negative.

The Australia Council for International Development, Australia’s peak body for not-for-profit overseas aid and humanitarian agencies, expressed ‘shock and distress’ at the Coalition’s proposed cut to the ODA budget.

Criticising both major political parties, Oxfam Australia’s Chief Executive, Helen Szoke, said:

The aid budget is Australia's commitment to the world's poor and vulnerable, and is not an ATM for political parties in search of cash to prop up their bottom line.

World Vision Australia’s Chief Executive Officer, Tim Costello, described the Coalition’s decision as ‘a tragedy for the world’s poorest people’ and ‘truly devastating’.

UNICEF Australia’s Chief Executive Officer, Norman Gillespie, said the ‘costings are at the expense of children’s lives’.

In its Social Justice Statement 2013–14, the Australian Catholic Bishops Conference called on Australia to do more to alleviate poverty in the region.

Referring to Australia’s seat on the United Nations Security Council and Australia’s hosting of the G20 Summit in 2014, the Chairman of the Australian Catholic Social Justice Council, Christopher Saunders, stated:

Our nation has a historic opportunity to be a force for peace and generosity. The government’s proposal to cut $4.5 billion from the forward estimates for foreign aid represents a serious departure from Australia’s commitment.

New administrative arrangements

On 18 September 2013, Prime Minister Abbott announced that he intended to integrate the Australian Agency for International Development (AusAID) into the Department of Foreign Affairs and Trade, thus ‘enabling the aid and diplomatic arms of Australia’s international policy agenda to be more closely aligned’.

This move attracted more criticism than it did support. As Annmaree O’Keeffe, Lowy Institute Fellow and former AusAID Deputy Director-General, observed:

… the temptation to use AusAID as a diplomatic ATM will be greater than ever. And the cost won’t be registered against the Foreign Affairs budget or DFAT's reputation but against the effectiveness of the development program and the contribution it has made as one of Australia’s most potent soft power tools.