Budget Review 2020–21 Index
Dr Angela Clare
Australia’s Official Development Assistance (ODA) will remain
billion in 2020–21, down $44 million from last year and in line with the
on aid funding expected to remain in place until 2022–23.
The Government also announced a one-off
supplement of $304.7 million for the COVID-19 response in the Pacific and
Timor Leste over the next two years, and is providing a further
$23.2 million for vaccine access and health security in the Pacific and
Southeast Asia over three years (Budget
Related Paper 1.6: Foreign Affairs and Trade Portfolio, p. 19).
These measures effectively increase Australia’s total aid expenditure to $4.211 billion in 2020–21, but for reasons
not entirely clear they will
not be counted as ODA. Long-time aid
observer, Australian National University academic Stephen Howes, has suggested
that the Government is ‘trying to keep the
increase in aid hidden ... to continue to be seen to be tough on aid’, or
that it ‘does not want to be seen to be providing a permanent boost to aid’. He
also noted that this is ‘the first budgeted aid
increase under the Coalition since their election to office in 2013’.
The 2020–21 ODA budget of $4 billion represents a one per
cent fall in nominal terms on last year’s budget estimate of $4.044 billion. ODA
as a proportion of Gross National Income (GNI) is up slightly from 2019–20 at
0.22 per cent, due to Australia’s lower GNI
this year (Figure 1). Australia remains below the Organisation
for Economic Co-operation and Development (OECD) country average of 0.30 per
cent, and among the least generous donors.
Figure 1: Australia’s ODA to GNI
ratio, 1972–73 to 2020–21
Source: Australian Council for
International Development, 2020–21 development budget: facts and figures
Australia’s spending on ODA as a proportion of government
its downward trajectory, falling from 1.32 per cent in 2012–13 (and a high
of 2.43 per cent in 1971–72) to 0.62 per cent in 2020–21. Stephen Howes has
also noted that the
ratio of defence-to-aid spending hit a record high in 2020.
Australia’s aid to the Pacific continues to increase in line
with its Pacific
Step-up, offset by further cuts to South and West Asia, Africa and the
Middle East. Aid to Southeast Asia has remained steady. Table 1 below shows
Australian aid flows by region since 2018–19, while Figure 2 shows trends in
regional allocations since 2010–11.
Table 1: total Australian ODA, 2018–19 to 2020–21, ($
million), by region
|PNG and the Pacific
|Global and other ODA(c)
|| 1 187.4
|Southeast and East Asia
|Middle East and Africa
|South and West Asia
|Latin America & the Caribbean
|| 4 379.1
(a) Department of Foreign
Affairs and Trade, Australia’s
international development assistance: statistical summary 2018–19,
(b) Department of Foreign Affairs and Trade, Australian
aid budget summary, 2020–21.
(c) Includes regional and global programs that cannot be
disaggregated to a lower geographical level.
Figure 2: Australian bilateral aid flows by region, 2010–11
to 2020–21 (constant 2020 $AU)
Source: ANU, Australian Aid Tracker: Destinations
The Pacific remains Australia’s foreign policy priority,
with ODA to the region increasing by $50 million over last year to total $1.44
billion—Australia’s highest ever aid spend in the region. Australian
development assistance will extend the Pacific Step-up’s support for
economies, regional stability and security to ‘support the delivery of critical
health and education services, budget support and job creation, including
through skills training and transformational and climate resilient
Details of how the $304.7 million COVID-19 Response Package
will be allocated are not yet available, but the Department of Foreign Affairs
and Trade (DFAT) has advised that of the aid funds repurposed for the
COVID-19 response in the Pacific, $100 million has been
earmarked for budget support. Pacific Island countries will also benefit
from the Government’s commitment
to procure and deliver COVID-19 vaccines for the region through the COVAX
Advance Market Commitment.
While funding to PNG and the Solomon Islands—the largest
recipients of Australia’s aid in the Pacific—has dropped slightly on last year’s
estimates, most other countries have seen increased funding: Vanuatu receives a
14 per cent increase (an extra $9.5 million), Tonga 32 per cent ($8.5 million),
Samoa 16 per cent ($5.2 million), and Tuvalu, a 44 per cent increase
(an extra $4.1 million). Regional programs have increased by 14 per cent ($48
million), to total $384.5 million.
The Government’s flagship Pacific Step-up initiative, the $2
billion Australian Infrastructure Financing
Facility for the Pacific (AIFFP) has approved three projects so far, with
only one releasing
funding details: the AIFFP is contributing $1.5 million to an undersea
telecommunications cable study in Timor Leste. Other projects approved for
funding are the Solomon Islands Tina River Hydropower project and the PNG
Markham Valley Solar Farm project. A further five projects have been endorsed
by the AIFFP Board.
Pacific Training Coalition will receive $38.8 million to support work
readiness and skills development in Pacific Islanders—including for employment
in Australia—with ‘a focus on workers that have lost jobs due to the pandemic’.
Southeast and East Asia
ODA to the region remains virtually unchanged, although some
bilateral programs have seen modest increases on last year: Timor Leste
receives an extra $4.5 million, Myanmar $7 million, and Laos $2.1 million.
Measures to note include a $60
million package of initiatives to ASEAN countries to strengthen health
security and the region’s COVID-19 response, economic integration, digital
connectivity, and support for the most vulnerable people and communities.
South and West Asia
Overall aid to the region has been cut by 27 per cent, with three
countries seeing the largest falls: Afghanistan drops from $82 million to $54
million, Bangladesh $70 to $56 million, and Pakistan from $32 to $11
million. Australia no longer provides bilateral aid to Pakistan—a move that has
criticised by commentators—but continues to fund regional and humanitarian
programs in the country.
The Middle East and Africa
Aid to Sub-Saharan Africa drops by 48 per cent to $61.4
million, while aid to the Middle East and North Africa falls by 61 per cent,
from $80.9 million to $31.6 million. These cuts come on top of a 23
per cent reduction in Australia’s aid to the Middle East and Africa in last
Humanitarian and emergency
At $475.7 million in 2020–21 the Government has moved closer
to its target of $500 million for humanitarian programs, announced in the 2017
Foreign Policy White Paper. The Humanitarian Emergency and COVID-19
Response Fund (previously DFAT’s emergency response fund) has increased by 25
per cent, but the International Committee of the Red Cross, the World Food
Programme and the United Nation’s Relief and Works Agency for Palestine
Refugees in the Near East (UNRWA) have all seen cuts. The Government is reported
to be maintaining
its response to the Rohingya crisis.
Global and regional programs
Gender equality initiatives and regional health, water and
sanitation programs in the Pacific and Southeast Asia have been boosted, while
spending on other sectors, including infrastructure and rural development and climate-related
programs has been cut. Community engagement programs have also seen falls
(noting that some scholarships and volunteer
programs have been unable
to proceed due to travel restrictions), with CBM Australia—the leading
disability-inclusive international development agency—reporting that aid
funding for people with disabilities has been cut.
Global investments to note include Australia’s $80 million
pledge to Gavi’s COVAX Facility,
a global coordinating mechanism to support the equitable distribution of a
COVID-19 vaccine, once one is available.
Australia’s 2020–23 contribution to the World Bank’s International Development Association
down by 26 per cent from its 2017–20 pledge, and 46 per cent lower than its
2011–14 contribution. Australia is now the 18th largest donor under IDA19,
compared to its position as the 12th largest under IDA18.
COVID-19 and the aid program
With the impacts of COVID-19 felt most acutely
by the poorest and most vulnerable, development agencies have estimated that up to half
a billion people may be pushed into poverty.
In May the Australian Government acknowledged
the pandemic’s threat to global development with the release of its
development response to COVID-19, Partnerships
for Recovery. The policy refocused
the aid program on minimising the pandemic’s impact in the region, with particular
focus on helping governments in the Pacific and Southeast Asia deliver
essential medical and social services, strengthening health systems, and providing
economic recovery measures, including emergency budget support.
The Australian Council for International Development (ACFID)
Australia’s Partnerships for Recovery strategy, but criticised the
lack of additional funding for its delivery, calling on the Government to do
more to address health and livelihoods in the Asia-Pacific and the growing humanitarian
crisis around the globe.
The 2020–21 Budget’s additional $304.7 million COVID-19
response package for the Pacific and Timor Leste has been welcomed as a
much-needed addition to Australia’s support. But aid groups remain disappointed
that it failed to prevent further cuts to countries
and programs with high needs, such as South and West Asia, Africa, and the
World Food Programme.
In its budget
response, ACFID argued that ‘reductions in South and West Asia belies the
Government’s intentions to be an Indo-Pacific partner-of-choice’.
Aid groups were also disappointed that the additional funds do
not represent a permanent increase to the aid budget, with Oxfam, for example, contending
that the Budget ‘falls
well short’ of what is needed.
Labor’s Shadow Minister for International Development, Pat
Conroy, argued that although
the Opposition is supportive of the Pacific Step-up, ‘it shouldn’t be at
the expense of assistance to other key strategic partners’, such as Indonesia,
to which, he says, the Government has cut aid by 50 per cent.
considerations—most prominently, countering China’s growing influence in
the region—play an important role in Australia’s development assistance to the
Pacific. Recent Lowy Institute analysis identified a ‘surge’
in foreign aid to the Pacific in 2018, ‘as geopolitical competition in the
region began ramping up’. Its analysis shows that expenditure on health has remained
‘subdued’ despite the health challenges the region routinely faces, possibly due
to competition from the ‘more “strategically significant” sectors of governance
While few disagree with the need to fund development priorities
in the Pacific, such as the ‘glaring
gaps’ in domestic health
services, some analysts question
the merit of Australia’s ongoing aid increases to the region. The ANU’s Stephen Howes has
It makes no sense to take $28 million from a country like
Afghanistan whose people are really suffering and give it to relatively stable
and comparatively prosperous countries such as Samoa and Tonga. But, while the
share of Australian aid going to the Pacific seems destined to continue to
increase, it is something of a victory to at least see the government concede
that the Pacific Step-up cannot be executed without an increase in total aid.
Fears that COVID-19 will accelerate
the trend towards a more ‘Hobbesian’, less cooperative world have prompted calls
for wealthy countries to do more. The Economist observes that
whereas governments in rich countries have spent
over 10 per cent of GDP on pandemic recovery, the poorest nations
have spent less than one per cent. Safety-nets in low-income countries are ‘cobweb-thin’,
with governments handing out ‘only $4 extra per person on social programmes—in
total, not per day’. The OECD contends that hard-won development gains are
being lost, ‘putting even further strain on developing countries to
Aid flows have already been hit by the pandemic, with
traditional OECD donors in 2020 reported
to have cut aid by a third from last year: the UK’s aid commitments are
estimated to be down by nearly 50 per cent, while in June delays to US
humanitarian assistance were described as ‘devastating’.
OECD acknowledges that while ODA is not ‘a replacement for strong domestic
public financial management’, it can be crucial in times of crisis. ODA can
play a stabilising role and be ‘a transformative
force’ to guide sustainable recoveries in developing countries. Compared to
private finance, official development flows are:
... more easily shaped by political leadership, decisions and
co-ordinated action that prioritise an inclusive global recovery. Greater
transparency of grants and official lending to developing countries from other
providers can also make a big difference for the recovery. At present,
developing countries do not have a complete picture of all sources of financing
for development, which can also undermine debt sustainability and macroeconomic
In particular, the OECD argues, official support can play ‘a key role in building health and social
protection systems in developing countries, which are critical to countries’
ability to respond to the COVID-19 crisis and are central to resilience and
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