Foreign affairs and Official Development Assistance

Budget Review 2016–17 Index

Dr Geoff Wade and Dr Cameron Hill

The pronounced domestic focus of the 2016–17 Budget was reflected in a relatively unchanged profile for the Department of Foreign Affairs and Trade (DFAT). The departmental appropriation of $1.4 billion represents a slight increase (2 per cent) relative to the 2015–16 estimate. Staff levels are slated to rise from 5,700 to 5,760 (an increase of 1 per cent).[1]

DFAT’s strategic direction statement offers little in the way of change. As in 2015–16, the ‘Indo-Pacific’ region remains the core focus of Australia’s diplomacy.[2]According to DFAT, the continued engagement of the United States (US)—Australia’s principal ally—‘provides major security and economic benefits to the region’.[3] Links with Japan, China and the Republic of Korea (in that order) are to be further strengthened. Indonesia, India and Singapore form the next tier of relations, followed by the Pacific states and ASEAN. Relations with the countries of Europe and the Middle East are noted only after attention is given to regional engagements such as the East Asia Summit, New Colombo Plan, the Indian Ocean Rim Association and the ‘MIKTA’ grouping.[4]

Emphasis continues to be placed on ‘economic diplomacy’, including the Trans-Pacific Partnership and the three bilateral Free Trade Agreements (China, Japan and Korea) which recently came into force. The pursuit of another major trade agreement, the Regional Comprehensive Economic Partnership—which includes nine out of Australia’s top 12 trade partners—continues.[5]

The prominence assigned to gender equality and women’s empowerment within DFAT’s strategic statement, and its Women in Leadership strategy, reflect recent innovations within the department.[6]

Australia’s diplomatic footprint is being expanded slightly. An Austrade office in Tehran will be re-opened to take advantage of the changes in Iran’s external economic relations.[7]An enhanced diplomatic presence in China is also slated as part of the economic diplomacy agenda.[8] Given that Australian consulates already exist in Shanghai, Chengdu and Guangzhou, the new consulate could well be in Wuhan or Shenyang, major economic centres where the US already has consulates.[9] The opening of a consulate in Lae in PNG is being resourced by redirecting funding originally intended for a consulate at Buka, in Bougainville.[10] The 2015 spat over the proposed Bougainville consulate appears resolved.[11]

The trade and tourism side of DFAT is pursuing new bilateral trade agreements with India and Indonesia, aiming to triple air service gateway capacity between Australia and China by the end of 2016, and to improve local tourism facilities. It has also installed investment attraction specialists in North America.[12] ‘Landing pads’ for Australian tech start-ups in overseas markets have been funded in Berlin and Singapore, in tandem with similar efforts in San Francisco, Tel Aviv and Shanghai.[13]

On the consular front, DFAT will ‘remove consular assistance for dual nationals and permanent residents in the countries of which they are citizens’.[14]

With the implementation of a scheduled $224 million cut (around 7.5 per cent in real terms), Australia’s $3.8 billion Official Development Assistance (ODA) budget for 2016–17 is a record breaker on several fronts.[15] According to the Australian National University’s (ANU) Development Policy Centre, never before has the aid budget been cut four times in a row.[16] The cumulative 30 per cent reduction in aid over this period is another record.[17] Australia’s aid generosity, measured in terms of ODA as a proportion of Gross National Income (GNI), will also hit a new low of 0.23 per cent, ‘well below the global average—a touch over 0.3 per cent—something we used to try to at least match’.[18] Despite rising global ODA, Australia’s development assistance is projected to fall to 0.21 per cent of GNI by 2019–20.[19]

Aid and community groups had urged the government not to proceed with the scheduled cut.[20] Despite these calls, the geographic allocations contained in a new budget summary document, known as the ‘orange book’, reinforce those set in 2015­–16, when almost $1 billion was cut from annual aid. In terms of specific allocations:

  • total estimated ODA to PNG and the Pacific increases slightly, rising from $1.119 billion in 2015–16 to $1.138 billion in 2016–17 and
  • total estimated ODA to South East and East Asia (down from $909.5 million to $887.7 million), South and West Asia ($310.4 million to $282.8 million), Africa and the Middle East ($185.8 million to $184.9 million) and Latin America and the Caribbean ($13.4 million to $11.0 million) has largely stabilised in the wake of very large cuts in 2015–16.[21]

With these changes now embedded and little apparent scope for growth in country programs (see below), Australia’s ability to leverage aid to influence development debates and outcomes is likely to be limited to its immediate neighbours for the foreseeable future. Any ambition to influence the agenda across the wider ‘Indo-Pacific’ will be heavily constrained by Australia’s diminished aid footprint.

Perhaps unsurprisingly, it is also clear that considerations of national interest and proximity, rather than performance, continue to dominate the geographic allocations.[22] In the 2014­–15 ‘Performance of Australian Aid’ report, the PNG and Pacific region was identified as the worst performing in terms of the proportion of program objectives (43 per cent) designated as ‘at risk’.[23] In PNG, six out of eight country program objectives were designated ‘at risk’ and less than half of the program’s performance benchmarks were fully achieved.[24]

Global programs have borne the brunt of this year’s cuts, decreasing from $334 million to an estimated $199 million as a result of delayed payments to some international organisations. The need to honour these commitments in future years is likely to limit any future growth in country programs.[25] Other pending decisions, such as whether future contributions to the China-led Asian Infrastructure Investment Bank will come from the existing ODA budget, may also constrain future country program options.[26]

No out-year cuts were announced in the 2016­–17 Budget and aid will increase in line with inflation over the forward estimates.[27] This returns some predictability after unprecedented funding reductions. Nevertheless, the Opposition has accused the Government of having ‘trashed Australia’s reputation as a good global citizen’.[28] It has pledged increases in humanitarian and non-government programs, as well as legislation to improve transparency and accountability, should it be elected in 2016.[29] Labor has not re-committed to the 0.5 per cent ODA/GNI target adopted by the Rudd and Gillard governments. The World Vision Chief Executive, Tim Costello, stated ‘this latest round of cuts puts lives and futures at risk as well as regional and global security and prosperity; it’s both unwise and unworthy of our nation’.[30]



[1].     Australian Government, Portfolio budget statements 2016–17: budget related paper no. 1.9: Foreign Affairs and Trade Portfolio, 2016, pp. 20–1.

[2].     G Wade, ‘Foreign affairs overview’, Budget review 2015–16, Research paper series, 2014–15, Parliamentary Library, Canberra, 2015.

[3].     Australian Government, Portfolio budget statements 2016–17: budget related paper no. 1.9: Foreign Affairs and Trade Portfolio, op. cit., p. 13

[4].     Mexico, Indonesia, Republic of Korea, Turkey and Australia.       

[5].     Department of Foreign Affairs and Trade (DFAT), ‘Regional Comprehensive Economic Partnership’, DFAT website.

[6].     DFAT, DFAT launches women in leadership strategy, media release, 23 November 2015; DFAT, Gender equality and women’s empowerment strategy, 29 February 2016.

[7].     Australian Government, Budget measures: budget paper no. 2: 2016–17, 2016, p. 97.

[8].     J Bishop (Minister for Foreign Affairs), 2016 Foreign Affairs budget, media release, 3 May 2016.

[9].     US Department of State, China: US consulates, Department of State website.

[10].  Australian Government, Budget measures: budget paper no. 2: 2016–17, op. cit.

[11].  See, for example, K Aubusson, ‘PNG imposes ban on Australians travelling to Bougainville’, Sydney Morning Herald, 18 May 2015.

[12].  S Ciobo (Minister for Trade and Investment), Free Trade Agreements and tourism to drive economic growth and jobs, media release, 3 May 2016.

[13].  S Ciobo (Minister for Trade and Investment) and C Pyne (Minister for Industry, Innovation and Science), Innovators to land in Berlin, joint media release, 27 April 2016.

[14].  Australian Government, Budget measures: budget paper no. 2: 2016–17, 2016, op. cit., p. 98.         

[15].  DFAT, Australian aid budget summary, 2016–17, 2016, p. v.; M Dornan, ‘            Continuity with change: country allocations in the 2016-17 budget’, DevPolicy, blog, Development Policy Centre, ANU, 4 May 2016.

[16]. S Howes, ‘Scaled down. The last of the aid cuts?’, DevPolicy, blog, Development Policy Centre, ANU, 4 May 2016. 

[17].  Ibid.  

[18].  Ibid.   

[19].  R Davies and A Betteridge, ‘The rise of global aid in 2015, and the fall of Australia’, DevPolicy, blog, Development Policy Centre, ANU, 15 April 2016; Development Policy Centre, Australian aid tracker, website.   

[20].  Australian Council for International Development (ACFID), ACFID submission to the 2016-17 federal Budget, February 2016.  

[21].  DFAT, Australian aid budget summary, op. cit., pp. 7–8.   

[22].  The Government has stated previously that ‘performance will be a key criteria [sic] used to determine future budget allocations’. See: DFAT, Making performance count: enhancing the accountability and effectiveness of Australian aid, June 2014, p. 16.

[23].  DFAT, Performance of Australian aid 2014–15, February 2016, p. 24.         

[24].  Ibid., p. 28.          

[25].  S Howes, op. cit.           

[26].  R Davies, ‘Under pressure: calls on Australia’s 2016 aid budget’, DevPolicy, blog, Development Policy Centre, ANU, 3 March 2016.

[27].  Australian Government, Portfolio budget statements 2016–17: budget related paper no. 1.9: Foreign Affairs and Trade Portfolio, op. cit., p. 28.  

[28].  T Plibersek (Shadow Minister for Foreign Affairs and International Development) and M Thistlethwaite (Shadow Parliamentary Secretary for Foreign Affairs and Immigration), Liberals' budget: cuts aid, consular help—passport fees up, joint media release, 4 May 2016.      

[29].  Ibid.

[30].  World Vision, Tim Costello calls for an end to aid cuts madness, media release, 3 May 2016.  

 

All online articles accessed May 2016. 

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