Foreign affairs Official Development Assistance (ODA)

Budget Review 2009-10 Index

Budget 2009 10: Foreign affairs

Official Development Assistance (ODA)

Dr Ravi Tomar

According to the Budget Statement Australia’s Official Development Assistance (ODA) budget for 2009–10 is $3818.8 million, $29.2 million more than the 2008–09 expected outcome of $3789.6 million.[1] This represents a 2 per cent increase over the expected outcome for 2008–09. The ODA/Gross National Income (GNI) ratio will increase from 0.33 per cent in 2008–09 to 0.34 percent in 2009–10.

The statement recognises the global effects of recession:

The past year has seen a dramatic change in the prospects of developing countries due to the effects of the global recession. Declines in foreign direct investment, export revenue, remittances, tourism and other adverse impacts of the recession will reduce economic growth and, in turn, may unravel progress towards the Millennium Development Goals (MDGs)…

The impacts on growth will vary across the developing world but overall will have an enormous human cost. Poverty reduction gains will be substantially lower as a result of the recession.[2]

There is also an acknowledgement of its effect on the Australian economy:

Economic circumstances require some small adjustment to previous plans for scaling up ODA in the near term. Despite this, the Government expects to increase Australia’s ODA levels to equivalent to 0.35 per cent of GNI in 2010-11, 0.37 per cent of GNI in 2011-12, and 0.40 per cent of GNI in 2012-13. Increased Australian aid will be directed first to achieve faster progress towards the internationally agreed MDGs.[3]

This contrasts with the projected increases forecast in the Budget Paper No. 2, 2008–09 in which the amounts were provided:

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.[4]

There is also a reiteration of the government’s commitment to increase Australia’s ODA to 0.5 percent of GNI by 2015–16.

Sectoral allocation of the AusAID administered ODA budget and new initiatives in these sectors are as follows:

  • expenditure on rural development is expected to be $230 million in 2009–10, approximately six percent of total ODA
    • a new initiative costing $464.2 million over four years to strengthen the ability of certain countries in Africa and the Asia-Pacific region to address food insecurity.
  • expenditure on infrastructure and water and sanitation will be $560 million in 2009–10, approximately 15 per cent of total ODA
    • a new initiative costing $454 million over four years to improve infrastructure in East Asia and PNG.
  • outlay in the education sector will be some $690 million, approximately 18 percent of total ODA.
  • expenditure for the health and HIV sector will be over $595 million, approximately 16 per cent of ODA
    • the government will cancel up to $75 million in debt owed by Indonesia provided the latter invests $37.5 million in the Global Fund to Fight AIDS, Tuberculosis and Malaria for tuberculosis programs.
  • expenditure in the governance sector will be about $820 million, some 22 percent of total ODA
    • a new initiative costing $138.6 million over four years to ‘improve the effectiveness of government and accountability to citizens’ in East Timor and the Pacific
    • after a two-year trial, it is proposed to invest $336.1 million over four years ‘to enable the inclusion of significant performance-linked aid elements within the new Pacific Partnerships for Development’ and the expansion of existing arrangements in Asia.
  • expenditure in the environment and climate change sector in 2009–10 will be some $170 million, about five per cent of total ODA.

In terms of the geographical distribution of ODA, Africa has seen a large increase in allocation by AusAID—a total outlay of $163.9 million for 2009–10, up from $116.4 million in 2008–09. In addition, the Attorney-General’s Department ‘will provide $17.3 million over four years to assist African countries to develop effective law and justice frameworks’.

Another budget initiative will boost Australia’s non-military ODA to Afghanistan and Pakistan to over $500 million over four years.

Given that the overall increase in the ODA budget from 2008–09 is just 2 per cent, the projected increase in the aid budget as foreshadowed in Budget Paper No. 2, 2008­–09 has effectively been put on hold in 2009–10.

[1].    Unless otherwise indicated, all information is derived from the statement by The Hon. Stephen Smith, Minister for Foreign Affairs and The Hon. Bob McMullan, Parliamentary Secretary for International Development Assistance, Australian Government, Budget statements 2009–10: Australia’s International Development Assistance Program: a good international citizen, Commonwealth of Australia, Canberra, 12 May 2009,

[2].    Statement, p. 11.

[3].    Statement, p. 16.

[4].    Australian Government, ‘Part 2: Expense measures’, Budget measures: budget paper no. 2: 2008–09, Commonwealth of Australia, Canberra, 2008, p. 186.

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