foreign affairs

Budget Review 2008-09 Contents

Budget 2008 09: foreign affairs

Official Development Assistance

Dr Ravi Tomar
Foreign Affairs, Defence and Security Section

According to the Budget Statement Australia s Official Development Assistance (ODA) budget for 2008 09 is $3.66 billion, $488.1 million more than the 2007 08 expected outcome of $3.17 billion.[1] This represents an increase of 8.4 per cent over the expected outcome for 2007 08.

To put this increase in context, two points need to be considered. Firstly, the 2008 09 Budget includes the final tranche of debt relief for Iraq, estimated at $238.2 million, scheduled to be recognised during the year. This reduces the actual outlay for 2008 09 to $3.42 billion or a 7.3 per cent increase over the previous year. Secondly, the Budget Statement 2007 08 had already indicated an expected outlay of $3.5 billion for 2008 09.

In other words, while there has been an increase in the aid budget for 2008 09, most of this increase had already been included in the forward estimates last year. However, as the Budget Paper No. 2, 2008 09 indicates:

The 2008 09 Budget provides $1.3 billion of new initiatives over four years. It is expected that the ratios of Australia s ODA to GNI will be 0.35 per cent in 2009 10 (a year earlier than originally targeted), 0.37 per cent in 2010 11, and 0.38 per cent in 2011 12. These ratios correspond to amounts of $4.2 billion, $4.6 billion and $5.0 billion in 2009 10,
2010 11 and 2011 12 respectively. [2]

In keeping with the government s ODA policy priorities, the 2008 09 Budget Statement by ministers Smith and McMullan also indicates a shift in focus:

Consistent with the Government s intention to increase the focus of the development assistance program on practical development outcomes, including faster progress towards the Millennium Development Goals, funding will be substantially increased for health, education, water supply and sanitation and basic infrastructure Environmental issues are a particular priority, with a major multiyear budget initiative to address adaptation to climate change. The 2008 09 Budget also provides an opportunity to re-invigorate our relationship with multilateral development institutions, through a major four year core funding partnership with effective UN agencies. Increased support will also be provided for countries in transition from conflict, in particular Afghanistan and Iraq, and in support of new Pacific Partnerships for Development.[3]

New AusAID funded initiatives announced in the budget include:[4]

• $300 million over three years, with $8 million in 2008 09, to improve access to clean water and effective sanitation.
• $150 million over three years, with $35 million in 2008 09, to meet high priority climate adaptation needs in vulnerable countries in our region. The primary geographic focus will be Australia s neighbouring countries.
• $54 million over four years, including $6.5 million in 2008 09, to protect customary land rights and reduce the potential for land-related conflict in Pacific countries.
• $107 million over four years, with $6 million in 2008 09, to strengthen public sector administration in Pacific countries.
• $127 million over four years, including $5.5 million in 2008 09, to improve basic infrastructure facilities in Pacific countries.

As part of Australia s ODA, the Attorney-General s Department has announced a new Pacific Police Development Program involving an expenditure of $5.1 million over four years. Some $2.5 million over two years will be spent on capital expenditure related to the Timor-Leste Police Development Program.

New initiatives by the Australian Federal Police include:

• $47 million over two years (including capital funding of $9 million) to deploy up to 12 officers to Afghanistan to assist the Afghan National Police with counter narcotics and police reform.
• $13.7 million over three years, including $5.8 million in 2008 09, to support international efforts to develop a more effective Iraqi Police Service. Some 240 Iraqi Police personnel will receive training in Australia over the next three years under this program.
• expenditure of $51.2 million over two years, including $16.5 million in 2008 09, on the Timor-Leste Police Development Program.
• expenditure of $75 million over four years, including $13.3 million in 2008 09, on the Pacific Police Development Program.

The Department of Immigration and Citizenship will provide an additional $10 million in 2008 09 to assist displaced Iraqis in the Middle East. The funding will be administered through the UN High Commissioner for Refugees and Care Australia.

An additional 500 visa places exclusively for Iraqis, including locally engaged employees, will be provided in 2008 09 under the Humanitarian Migration Program.

Conclusion

There is little new money over the outlay already indicated in the forward estimates for 2008 09. Some new initiatives will be funded using existing resources of AusAID. A number of projects have been given a sectoral focus to align them closer to the Millennium Development Goals, and progress towards them will be used as an indicator of Australia s contribution towards poverty alleviation in developing countries.

Department of Foreign Affairs and Trade (DFAT) budget

Nina Markovic
Foreign Affairs, Defence and Security Section

The federal government has allocated $821.935 million to DFAT in 2008 09, which represents a decrease of $5.9 million of the estimated actual budget for 2007 08.[5] The changes in this year s budget in comparison with the previous 2007 08 Budget; the estimated actual budget for 2007 08; and the forward estimates for 2008 09 are represented in the following table:

Table 1: comparison of DFAT Budget between 2007 08 and 2008 09

Source: Table compiled by author

The Department of Foreign Affairs and Trade (DFAT) has $67.1 million more in total resources for 2008 09 than in the 2007 08 Budget.[10] This includes additional appropriation funding of $20.7 million (excluding capital funding) in 2008 09.[11] As shown in Table 1, the federal government has provided DFAT with $83 million more in administered appropriations than the Howard Government did in the 2007 08 Budget.

The federal government said it will provide a further $12 million in 2008 09 to DFAT, pending the outcomes of a departmental review.[12] The federal government funding for DFAT is at its lowest level in relation to the country s gross domestic product (GDP) since
1999 2000, amounting to 0.067 per cent of Australia s GDP in 2008 09.

According to the forward estimates, DFAT s funding is set to decrease for the 2009 10 and 2010 11 financial years. It will then increase again in 2011 12 prior to the launch of the post-2012 global agreement on climate change, and Australia s expected final round of bidding for the non-permanent place on the United Nations Security Council in 2013 14.

New portfolio and agency measures

The portfolio of Foreign Affairs and Trade now has three Parliamentary Secretaries with responsibilities for Trade, Pacific Island Affairs and International Development Assistance. The position of Parliamentary Secretary to the Minister of Foreign Affairs has been abolished.

The responsibility for development and coordination of international climate change policy and negotiations was transferred from DFAT to the Department of Climate Change (within the Prime Minister and Cabinet portfolio), resulting in the reallocation of $0.364 million in the forward estimates from the 2007 08 Budget.[13] Moreover, the Australian Trade Commission (Austrade) took over the function of investment promotion and responsibility for delivery of the Global Opportunities Program from the Department of Innovation, Industry, Science and Research (DIISR), resulting in the transfer of $11 million to Austrade from DIISR in 2008 09.[14]

New budget measures for DFAT

Outcome One

• $25.6 million in additional funding over two years for the continuation and expansion of Australia s diplomatic presence in Afghanistan, $6.9 million of which is capital funding for the purchase of security and communications equipment and office fit-out.[15] This brings the government s total contribution to $39.3 million.[16]
• the 2008 09 Budget increased DFAT s departmental resources for the provision of consular and passport services by $14.806 million, or 6.5 per cent above the 2007 08 estimated actual.[17]
• increase in passport fees.

Outcome Three

• provision of $61 million over three years towards Australia s participation in the Shanghai World Expo 2010 of urban living and innovation. About $20.3 million has been allocated by the government towards the construction and operation of the Australian pavilion and the management of associated programs during Australia s six-month participation. The government is also seeking a minimum of $22 million from the private sector for this measure.

Outcome Four

• total resources for this outcome increased by $15.8 million to the total of $376.9 million and four additional staff in comparison with the estimated actual for 2007 08.[18]

DFAT Budget documents also indicate that:

• Australia will step up its diplomatic efforts towards obtaining a non-permanent seat at the United Nations Security Council in 2013 14.[19]
• payments to international organisations will increase by $44.5 million to a total of $258.9 million from the estimated actual for 2007 08 in the new financial year.[20] This is partially to support the government s longer-term objective of enhancing the Asia-Pacific Economic Cooperation (APEC) forum and the APEC Secretariat.[21]
• Australia will adopt a new whole-of-government strategy towards the Pacific Island countries, including preparations for negotiating a comprehensive Free Trade Agreement (FTA) with these countries.[22]

In light of these developments, which fall under Outcome One, and in the face of an apparent decline in both domestic and overseas diplomatic positions to support this outcome, it is imperative for the future of Australia s international diplomacy that DFAT is well-resourced and prepared to deal with the emerging challenges.

DFAT staffing numbers

The average number of staff for DFAT as a whole has increased by 17 staff. However, 20 overseas positions have been abolished and the abolition of an additional five overseas positions is under consideration. One position was also culled from the Australia China Free Trade Agreement negotiations, as part of an overall decrease in federal government funding for this measure.[23]

Staffing levels for Outcome Two increased by 82 more than the estimated actual number for 2007 08.[24] This will probably assist the Department in:

• managing the pressures associated with increasing numbers of passport applications[25]
• meeting the growing demands of consular casework[26]
• accommodating DFAT s major projects under Outcome Two in 2008 09, such as the establishment of temporary consular offices in remote locations in case of an emergency
• putting contingency arrangements in place for the 2008 Olympics in Beijing.

Increase in passport fees

In line with a 2005 decision by the Howard Government to index the cost of passports according to the Consumer Price Index, passport fees have increased by $8, with effect from 1 July 2008.[27] A standard adult passport will now cost $208 and passports for children and seniors will cost $104, up from $100.

Australia s soft power weakened?

The $24 million funding for the Australia on the World Stage program a Howard Government measure has been discontinued in 2008 09.[28] This move has the potential to weaken Australia s ability to promote its diverse cultural exports and artists overseas. Priority has instead been given to the World Expo in Shangai 2010. This measure has been continued from the previous budget with an initial seven-fold increase of $10 million in the government s appropriation funding for 2008 09.[29]

The Australia Network of television services, which focuses on the Asia-Pacific region, is also a measure that has been continued from the previous budget, receiving $18.8 million in 2008 09. However, in terms of soft diplomacy more funding for Australia s public diplomacy in the Middle East our major theatre of military operations might have been more beneficial for the advancement of Australia s global image and protection of the country s vital national interests abroad. As an actively engaged middle power with global interests, Australia should perhaps be investing more in public and cultural diplomacy.

[1]. Unless otherwise indicated, all information is derived from Australia s International Development Assistance Program 2008 09, Statement by The Hon. Stephen Smith, Minister for Foreign Affairs and The Hon. Bob McMullan, Parliamentary Secretary for International Development Assistance, 13 May 2008.

[2]. Australian Government, Part 2: Expense Measures , Budget Paper No. 2: Budget Measures 2008 09, Commonwealth of Australia, Canberra, 2008, p. 186.

[3]. Australia s International Development Assistance Program 2008 09, op. cit., p. 9.

[4]. Further information on these initiatives is available in Australian Government, Budget Paper No. 2, op. cit., pp. 186 199.

[5]. Australian Government, Portfolio Budget Statements 2008 09, Budget Related Paper No. 1.9, Foreign Affairs and Trade Portfolio, Commonwealth of Australia, Canberra, 2008, p. 49.

[6]. ibid., pp. 7 and 49.

[7]. Australian Government, Portfolio Budget Statements 2007 08, Budget Related Paper No. 1.11, Foreign Affairs and Trade Portfolio, Commonwealth of Australia, Canberra, 2007, pp. 23 and 59.

[8]. Australian Government, Portfolio Budget Statements 2008 09, op. cit., p. 49.

[9]. Australian Government, Portfolio Budget Statements 2007 08, op. cit., p. 59.

[10]. Australian Government, Portfolio Budget Statements 2008 09, op. cit., p. 7 and Australian Government, Portfolio Budget Statements 2007 08, op. cit., p. 23. The provision of an equity/capital injection of $35.6 million to the department under Appropriation Bill No.2 does not seem to appear in the 2008 09 Budget, but it seems that this money will appear in the estimates for future years.

[11]. Australian Government, Portfolio Budget Statements 2008 09, op. cit., p. 47.

[12]. ibid., p. 22.

[13]. Australian Government, Portfolio Budget Statements 2007 08, op. cit., p. 35.

[14]. Australian Government, Portfolio Budget Statements 2008 09, op. cit., p. 73.

[15]. Australian Government, Part 2: Expense Measures , Budget Paper No. 2: Budget Measures 2008 09, Commonwealth of Australia, 2008, p. 199.

[16]. ibid.

[17]. This calculation is based on the figures presented in Australian Government, Portfolio Budget Statements 2008 09, op. cit., p. 34.

[18]. ibid., p. 42.

[19]. ibid., pp. 15 and 26.

[20]. ibid., p. 25.

[21]. Australian Government, Additional Estimates Statements 2007 08, op. cit., pp. 12 and 18.

[22]. Australian Government, Portfolio Budget Statements 2008 09, op. cit., pp. 16 and 28.

[23]. Australian Government, Additional Estimates Statements 2007 08, op. cit., p. 15.

[24]. Australian Government, Portfolio Budget Statements 2008 09, op. cit., p. 34.

[25]. ibid., p. 17.

[26]. ibid., p. 33.

[27]. Australian Passports Act 2005, Indexing of passports , available at: http://www.austlii.edu.au/au/legis/cth/num_act/apfa2005397/s6.html [Accessed in May 2008].

[28]. Australian Government, Additional Estimates Statements 2007 08, op. cit., p. 15.

[29]. Australian Government, Portfolio Budget Statements 2008 09, op. cit., p. 38.