Official Development Assistance: a commitment delayed

Budget Review 2012–13 Index

Dr Ravi Tomar

According to the Aid Budget Statement 2012–13, Australia’s Official Development Assistance (ODA) budget for 2012–13 is $5153.0 million, which is $288.9 million more than the estimated outcome for 2011–12.[1]  This represents a four per cent increase in real terms over the estimated outcome for 2011–12.  It is estimated that Australia’s ODA will remain at about 0.35 per cent of Gross National Income (GNI), reflecting a revision of the commitment of an ODA/GNI ratio of 0.38 per cent in 2012–13 included in the Aid Budget Statement 2011–12.

The Government has delayed its commitment to achieve an ODA/GNI ratio of 0.5 per cent by 2015–16.[2]  According to a media release by the Minister for Foreign Affairs, Bob Carr:

In a tight fiscal environment, the Government has decided to defer the achievement of providing 0.5 per cent of GNI to official development assistance by one year.

Funding for ODA will continue to grow each year; it will, however, grow at a slightly slower rate so that 0.5 per cent of GNI is achieved in 2016–17.[3]

The Aid Budget Statement 2012–13 states:

The Government has committed to increase Australia’s ODA/GNI ratio to 0.5 per cent by 2016–17. To reach this target, the Government expects to increase Australian aid to around 0.37 per cent of GNI in 2013–14, 0.41 per cent in 2014–15 and 0.45 per cent in 2015–16.

The likelihood of the Government achieving these targets has been questioned by Professor Stephen Howes, Director of the Development Policy Centre at the Australian National University. Writing in the Development Policy Blog he maintains:

Even with a year’s delay, it will be a steep climb to get to 0.5, requiring, on average, increases of about $1 billion for each of the next four years from 2013–14 to 2016–17. The aid program has never had an annual increase of anything close to $1 billion. The biggest increase was $626 million in 2008–09, the second biggest $500 million in 2005–06. Even with looser fiscal constraints, it will not be easy to sustain support for a single $1 billion increase, let alone for four such increases consecutively. Yet this is what it will take to get to 0.5% under the new timetable. Are we serious about 0.5%? Not if this or recent past budgets is a guide...

In summary, I come away from the budget not that convinced that we will get to 0.5%, but reassured that aid effectiveness should improve. Perhaps lifting effectiveness will help generate more support for more aid.[4]

The Government has also developed a new Comprehensive Aid Policy Framework (CAPF) which provides a roadmap for where and how much Australian aid will be spent in different regions over the next four years.[5] 

Aid allocations

Indonesia remains the largest recipient of Australian ODA ($578.4 million) followed by PNG ($491.7 million).

Afghanistan is now the fourth largest recipient of ODA in 2012–13 ($201.7 million) compared to $20.7 million it received in 2005–06.[6]  However, the outlay also reflects the high cost of delivering aid to Afghanistan.

Aid to Burma is set to increase substantially, with an estimated $63.8 million in 2012–13 compared to an estimated outcome of $48.8 million in 2011–12.  Fiji also is set to receive an increase in ODA, with $55.6 million this year compared to $45.3 million in 2011–12.

Australia’s bilateral assistance to China and India will conclude by 2012–13 and 2013–14 respectively.

New initiatives include Australia joining the African Development Bank Group ($9.3 million over four years) and rejoining the International Fund for Agricultural Development ($126.4 million over four years).[7]

Outlay on ODA-eligible expenditure by Other Government Departments (OGDs) is estimated at $505.9 million. The Australian Federal Police remains the largest source of this expenditure ($175.5 million) followed by the Australian Centre for International Agricultural Research ($100 million) and the Department of Immigration and Citizenship ($51.4 million).

Evaluation and Review

From 2012–13, the Minister for Foreign Affairs will report on the aid program in an Annual Review of Aid Effectiveness. This report will replace the Annual Review of Development Effectiveness.

The Government has also established an Independent Evaluation Committee (comprising three external members and one senior AusAID representative) to provide independent evaluation advice to the Development Effectiveness Steering Committee (DESC).[8]  This committee will also oversee the work of AusAID’s Office of Development Effectiveness which in turn will increase the number of evaluations that it undertakes.

Reactions to the aid budget

Australian Non–Government Organisations (NGOs) have expressed their disappointment over the decision to defer the target of ODA/GNI ratio of 0.5 per cent by a year, to 2016–17.

The Australian Council for International Development (ACFID), the peak organisation for aid NGOs, said that the ‘budget represents a core promise broken by the Gillard Government’.[9]

CARE Australia maintained that the ‘aid budget announcement is a double disappointment for the millions of poor people living in developing countries beyond our borders’.[10]

Oxfam Australia noted that ‘[m]ore than a quarter of the Gillard Government’s $1.5b surplus will come from cuts to Australia’s aid program that helps the world’s poorest people’.[11]

The Shadow Minister for Foreign Affairs, Julie Bishop, said that the Coalition remained committed to the 0.5 per cent ODA/GNI target, but that this year’s Budget had made the 2015 target ‘impossible’.[12]

[1].       Unless otherwise indicated all information is derived from the Statement by Senator the Hon Bob Carr, Minister for Foreign Affairs, Budget: Australia’s international development assistance program 2012-13, Commonwealth of Australia, Canberra, 8 May 2012, viewed 9 May 2012; see also Summary of Australia’s Overseas Aid Program: Budget Highlights 8 May 2012, viewed 9 May 2012.

[2].       Statement by the Hon Kevin Rudd MP, Minister for Foreign Affairs, Budget: Australia’s international development assistance program 2011-12, 10 May 2011, viewed 9 May 2012.

[3].       B Carr (Minister for Foreign Affairs), 2012-13 International Development Assistance Budget, media release, 8 May 2012, viewed 9 May 2012.

[4].       S Howes, ‘Weak on quantity, strong on quality: the 2012 Australian aid budget’, 9 May 2012, Development Policy Centre Blog, viewed 9 May 2012.

[5].       AusAID, Helping the World’s Poor through Effective Aid: Australia’s Comprehensive Aid Policy Framework to 2015–16, Commonwealth of Australia, Canberra, May 2012, viewed 9 May 2012.

[6].       R Tomar, Australian aid to Afghanistan, Background note, 2011–12, Parliamentary Library, Canberra, 18 July 2011, viewed 9 May 2012.

[7].       Australian Government, Budget measures: budget paper no. 2: 2012–13, Commonwealth of Australia, Canberra 2012, viewed 9 May 2012.

[8].       According to the Statement by Senator the Hon Bob Carr, Minister for Foreign Affairs, Budget: Australia’s international development assistance program 2012-13, op cit., p.135, ‘External members are appointed by the Minister for Foreign Affairs, while the Director General of AusAID appoints the AusAID representative’.

[9].       ACFID, Aid: a promise broken, media release, 8 May 2012, viewed 9 May 2012.

[10].     CARE Australia, Aid budget stall breaks promise to world’s poorest, media release, 8 May 2012, viewed 9 May 2012.

[11].     Oxfam Australia, Government’s surplus paid for by the world’s poor, media release, 9 May 20012, viewed 9 May 2012.

[12].     B Hall, ‘Coalition won’t keep aid commitment’, Sydney Morning Herald, 11 May 2012, p. 7.

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