Dr Ravi Tomar
Background
As noted in the Library’s Budget Review 2014–15, in
January 2014, Foreign Minister Julie Bishop announced that from 2014–15 the $5
billion aid budget would grow annually in line with the Consumer Price Index.[1]
In keeping with that announcement, Australia’s Official
Development Assistance (ODA) budget for 2014–15 was estimated to be $5,031.9
million.
The commitment to keep growth in the aid budget tied to the
CPI did not last very long. The Mid–Year Economic and Fiscal Outlook 2014–15
(MYEFO) released on 15 December 2014 stated that the Government would save
$3.7 billion over three years from 2015–16: $1,000.0 million in 2015–16, $1,350.0
million in 2016–17 and $1,377.0 million in 2017–18.[2]
In other words ODA would now be capped at around $4 billion
and would decline in real terms in coming years, reaching an all-time ODA/GNI
ratio low of 0.22 per cent in 2016–17.[3] If current budget forecasts
are any guide, the ODA budget is in for a sustained period of decline in real
terms.
ODA budget 2015–16
On 12 May 2015, the Government announced that the 2015–16
ODA budget was estimated to be $4,051.7 million.[4]
One aspect of the 2015–16 aid budget is the lack of overall detail.
The statement found within the Department of Foreign Affairs and Trade (DFAT) website
on the webpages for countries that have suffered budget cuts offers an
indication as to why:
The website will be updated to reflect priorities
following discussions with our partners. These priorities will be detailed
further in new Aid Investment Plans which will be finalised by no later than
30 September 2015.
Another change in the information on the
2015–16 aid budget is that unlike previous years, where the data for the coming
year was compared with the estimated outcome of the current year, the
comparison now is with the budget estimate for 2014–15. However, estimated
outcome is a better measure of actual expenditure.
Some of the more significant changes to the 2015–16 aid budget
are outlined in the table below.
Table 1: Fluctuations in
ODA funding 2014–15 to 2015–16
|
2014–15 Budget Estimate $m
|
2015–16 Budget Estimate $m
|
% change
|
|
Papua New Guinea
|
502.1
|
477.3
|
-4.9
|
|
Indonesia
|
542.5
|
323.0
|
-40.5
|
|
Cambodia
|
52.4
|
52.4
|
0.0
|
|
Burma
|
70.1
|
42.1
|
-39.9
|
|
Afghanistan
|
130.9
|
78.5
|
-40.0
|
|
Sub-Saharan Africa
|
106.0
|
31.8
|
-70.0
|
|
United Nations Development
Fund
|
21.2
|
12.7
|
-40.1
|
|
United Nations Children’s
Fund
|
35.0
|
21.0
|
-40.0
|
|
United Nations Population
Fund
|
15.4
|
9.2
|
-40.3
|
|
United Nations Program on
HIV and AIDS
|
7.5
|
4.5
|
-40.0
|
|
World Health Organization
|
20.6
|
12.4
|
-39.8
|
|
Australian Volunteers
Program
|
56.6
|
39.6
|
-30.0
|
-
PNG’s total allocation in 2015–16 goes up to $553.6 million after
including expenditure by DFAT regional and global programs and by other
government departments (OGDs) and agencies.
-
Indonesia’s allocation in 2015–16 rises to $366.4 million if
expenditure by OGDs is included.
-
Although Cambodia’s allocation in 2015–16 remains unchanged at
$52.4 million, it will receive an additional $10 million ‘in line
with Australia and Cambodia’s agreement on refugee resettlement’. Total outlay
for Cambodia (including expenditure by OGDs) will be $79.1 million.
-
The Gender Equality Fund to strengthen women’s
economic empowerment is a new initiative with funding of $50.0 million.
Reactions to the aid budget
Since the 20 per cent cut in the 2015–16 aid budget and the delinking
of it to the CPI was announced in the MYEFO, the issue has been commented on
and discussed extensively, most notably by the Development Policy Centre.[5]
Gerry Hueston, chairman of Plan
International Australia (and former president of BP Australia) commented:
The scale of these changes is unprecedented—and if business
investors had been asked to cop changes of this magnitude they would simply
have packed up and gone home. How can anyone plan for the future when the key
determinants of that future are constantly chopped and changed by Government
whim with no regard given to promises made?[6]
Overall, as the Australian Council for International
Development (the peak body of Australian International NGOs) observed in its
2015–16 Federal Budget Analysis:
Almost $1 billion was cut from 2015–16, representing a 20%
cut for the year. The budget also confirms $2.7 billion of additional cuts in
2016–17 and 2017–18. By 2016–17, total Australian Overseas Development
Assistance (ODA) as a share of Gross National Income (GNI) will fall to 0.22%.
This is the lowest ever level since records began.[7]
Economist Matthew Morris drew an interesting analogy in the
context of the recent UK elections. Noting that the UK has legislated a target
of an ODA/GNI ratio of 0.7 per cent with bipartisan support, he commented:
In short, expect business as usual on UK
aid. But it is sobering to note that the party which best reflects
Australian aid policy is the far-right UKIP. It wants UK aid to be
cut to 0.2% of GNI. Australia’s aid-to-GNI ratio? 0.22% in 2016–17.[8]
[1].
R Tomar and W Bruere, ‘Official
Development Assistance–the future of Australian aid’, Budget review 2013–14,
Research paper series, Parliamentary Library, Canberra, 2013.
[2].
J Hockey (Treasurer) and M Cormann (Minister for Finance), Mid–year
economic and fiscal outlook 2014–15, p. 164.
[3].
S Howes and J Pryke, ‘Biggest aid cuts ever produce our least generous aid budget ever’, Devpolicy Blog, weblog, 15 December 2014.
[4].
The budget figures in this article have been taken from the following website
(including country
pages) unless otherwise sourced: Department of Foreign Affairs and Trade, ‘Budget
highlights 2015–16’, website.
[5].
Development Policy Centre, Devpolicy
Blog, weblog.
[6].
G Hueston, ‘Australia:
one of the richest countries, but also one of the meanest’, The Sydney
Morning Herald, 12 May 2015.
[7].
Australian Council for International Development (ACFID), ‘Federal
Budget analysis 2015–16’, ACFID website, 14 May 2015.
[8].
M Morris, ‘UK elections and aid
(and Australia’s UKIP aid policy)’, Devpolicy Blog, weblog,
8 May 2015.
All online articles accessed May 2015.
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