Dr Cameron Hill
Overview: trends, comparisons and
responses
Australia’s Official Development Assistance (ODA) budget will
increase in line with inflation in 2017–18 and 2018–19. However, the Government
has decided to freeze ODA at $4.0 billion in 2019–20 and 2020–21.[1]
These two consecutive freezes—worth an estimated $303 million in savings over
the forward estimates—represent the fifth and sixth cuts, in real terms, to aid
funding since 2013–14.[2] In cumulative terms, the ODA
budget has been cut (or is projected to be cut) by almost one third (32.8 per
cent) since the Gillard Government’s 2013–14 Budget, which represented a high
point for aid funding.[3] The Government has
indicated that the aid program is unlikely to rise in real terms until the
budget returns to surplus.[4]
The freezes accelerate Australia’s diminishing aid generosity:
ODA as a proportion of Gross National Income (GNI) will fall to 0.22 per cent
in 2017–18 and to an unprecedented low of 0.20 per cent in
2020–21 (see Figure 1).[5]
Figure 1: Australian ODA/GNI ratio,
1965 to 2021
Source: Development Policy Centre, Australian aid tracker:
trends
Aid is projected to continue to decline as a proportion of (increased)
government outlays, falling to a new recorded low of 0.77 per cent of
government expenditure in 2020–21.[6]
These cuts are also expected to see Australia fall further
down the ladder of developed country donors and well below the current Organisation
for Economic Co-operation and Development ODA/GNI average of 0.32 per cent.[7]
In 2016, Australia ranked 17th out of 29 OECD bilateral donors for aid generosity,
and is projected to fall to 21st in the coming years.[8] Australia is currently
the world’s 13th largest economy.[9]
Although global ODA increased in 2016, Australia is not
alone in cutting aid. The Trump administration has mooted cutting US development
assistance programs by almost one-third, with some of the largest cuts slated
for Australia’s region.[10] In contrast, the UK Conservative
Government has committed to maintaining ODA/GNI at its current level of 0.7 per
cent if re-elected in June 2017.[11]
Allocations for countries and regional programs will remain
largely unchanged in 2017–18 (see Table 1). A nominal $84 million increase
in ODA will be directed to increases in humanitarian assistance, the Middle
East and global health programs.[12] In the Pacific, ODA will
be redirected from the Department of Foreign Affairs and Trade to the
Australian Federal Police to help fund policing programs in PNG and the Solomon
Islands.[13]
Table 1: estimated total Australian
ODA by region (AUD million)
| |
2016–17 Budget |
2016–17 outcome |
2017–18 Budget |
| Pacific
(including PNG) |
1 138.4 |
1 126.4 |
1 097.8 |
| Southeast
and East Asia |
887.7 |
892.9 |
883.0 |
| South
and West Asia |
282.8 |
292.0 |
283.9 |
| Africa
and the Middle East |
184.9 |
263.5 |
253.6 |
| Latin
America and the Caribbean |
11.0 |
11.4 |
5.9 |
| ODA
not attributed to regions/countries |
1 322.9 |
1 241.6 |
1 388.1 |
Source: DFAT, Australian
aid budget summary, 2017–18, 9 May 2017.
Non-government organisations and the Opposition have
criticised the latest cuts. The Australian Council for International
Development has stated that the aid budget ‘does not add up to a vision of what
role we want to play in the world’.[14] The Labor Opposition has
described the cuts as ‘at odds with the generous spirit of the Australian
people’ but has not re-committed to its previous 0.5 per cent ODA/GNI target.[15]
Looking ahead: aid, development and
Australia’s international engagement
Beyond the Budget, the Government’s forthcoming foreign
policy white paper, the first since 2003, will consider the role of aid and
development in advancing Australia’s interests and values.[16]
The Prime Minister has also promised a new whole-of-government ‘Pacific
strategy’, the first of its kind.[17] Given Australia’s position
as the leading donor in the Pacific, development issues should feature
prominently.
In 2018, Australia will host a joint summit with the ten leaders
of the Association of Southeast Asian Nations (ASEAN).[18]
Australia’s aid to the developing ASEAN states will total almost $800 million
in 2017–18. In addition to security and trade ties, the role of development
cooperation in advancing our relationship with this important regional grouping
will likely be a focus.
Finally, a scheduled 2018 OECD ‘peer review’ of Australia’s
aid program—the first since the abolition of AusAID in 2013 and the implementation
of successive budget cuts—will be an opportunity to assess overall policy
coherence and development effectiveness following a period of significant upheaval
in aid programming and administration.[19]
[1].
Australian Government, Portfolio
budget statements 2017–18: budget related paper no.1.9: Foreign Affairs and
Trade Portfolio, p. 20; J Bishop (Minister for Foreign Affairs), 2017
foreign affairs budget, media release, 9 May 2017.
[2].
S Howes, ‘A small
target budget with a sting in the tail’, DevPolicy, Development
Policy Centre blog, 9 May 2017.
[3].
Ibid. While actual aid expenditure was higher in 2012–13, the 2013–14
Budget further increased ODA. This increase was subsequently cut in the 2013–14
MYEFO.
[4].
F Hunter, ‘Julie
Bishop says foreign aid will stay in freezer until budget reaches surplus’,
The Sydney Morning Herald, online, 12 May 2017.
[5].
Development Policy Centre, Australian aid tracker:
trends, Development Policy Centre website. Recorded data for ODA goes
back to 1962.
[6].
Ibid.
[7].
Organisation for Economic Co-operation and Development (OECD), Development
aid rises again in 2016 but flows to poorest countries dip, media
release, 11 April 2017.
[8].
Development Policy Centre, Australian aid tracker:
comparisons, Development Policy Centre website; ‘Julie Bishop says
foreign aid will stay in freezer until budget reaches surplus’, op. cit.
[9].
World Bank, Data: GDP
ranking, World Bank website.
[10].
C Hill, ‘A
different kind of ‘pivot’: the Trump administration’s proposed aid cuts and
Australia’s region’, FlagPost, Parliamentary Library blog, 8 May 2017.
[11].
G Parker, ‘Theresa
May says Tories will keep 0.7% overseas aid target’, Financial Times,
online, 22 April 2017.
[12].
Department of Foreign Affairs and Trade, Australian
aid budget summary, 2017–18, 9 May 2017, pp. 10–11.
[13].
C Barker, ‘Law
enforcement overview’, Budget review 2017–18, Research paper series,
2016–17, Parliamentary Library, Canberra, 2017.
[14].
Australian Council for International Development, Aid
budget bounces along the bottom, media release, 9 May 2017.
[15].
P Wong (Shadow Minister for Foreign Affairs) and C Moore (Shadow Minister
for International Development and the Pacific), Aid
funding plunges to new low as Bishop rolled again, media release, 8 May
2017.
[16].
C Hill, ‘Australian
foreign policy in 2017: a year of delivery?’, FlagPost, Parliamentary
Library blog, 28 March 2017.
[17].
M Turnbull (Prime Minister), Remarks
at Pacific island Forum—Micronesia, transcript, 9 September 2016.
[18].
M Turnbull (Prime Minister), ASEAN-Australia
special summit 2018, media release, 23 February 2017.
[19].
OECD, Australia—DAC
peer review of development co-operation, OECD website.
All online articles accessed May 2017.
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