Official Development Assistance: a commitment delayed further

Budget Review 2013–14 Index

Dr Ravi Tomar

According to the Aid Budget Statement 2013–14, Australia’s Official Development Assistance (ODA) budget for 2013–14 is $5,666.4 million which is $516.8 million more than the estimated outcome for 2012–13.[1] This represents a 7.8 per cent increase in real terms over the estimated outcome for 2012–13. It is estimated that Australia’s ODA will increase this financial year to about 0.37 per cent of Gross National Income (GNI), as foreshadowed in the Aid Budget Statement 2012–13.

After putting it back by one year in the 2012–13 Budget, the Government has again delayed its commitment to achieve an ODA/GNI ratio of 0.5 per cent:

Australia remains committed to increasing its aid budget to 0.5 per cent of GNI. However, given substantial write-downs to Budget revenues, the Government will defer this target by one year to 2017–18. To reach this target, the Government expects to increase Australian aid to around 0.39 per cent in 2014–15, 0.41 per cent in 2015–16 and 0.45 per cent in 2016–17.[2]

The financial implications of deferring the target are explained in Budget Paper No 2 2013–14:

This measure will achieve $1.9 billion in savings over the forward estimates while still increasing aid spending by 42.4 per cent over this period. The savings over the forward estimates will be achieved by a $1.5 billion reduction in the provision for expanded aid funding held in the Contingency Reserve and a reduction of $415.3 million to existing AusAID resources.

Under the new growth profile, official development assistance spending will have doubled from 2007‑08 levels by 2015‑16.[3]

Of the overall aid budget, $4,944.2 million will be administered by AusAID and $800.5 million by Other Government Departments (OGDs). The Department of Immigration and Citizenship (DIAC) will manage the largest amount of OGD expenditure, $436.2 million in 2013–14. This includes up to $375.0 million for ‘costs associated with the sustenance of asylum seekers on residence determinations or bridging visas class E during their first 12 months in Australia’.

New initiatives

The initiative to enhance commitment to development in the Asia-Pacific region involves funding of $390.9 million over four years. This measure includes $137.0 million to be offset from the funding held in the contingency reserve and $253.9 million from within existing AusAID resources.[4]

To fund new programs in the 2013–14 Budget, $238.6 million across the forward estimates from existing AusAID funding will be transferred to OGDs. This will support government priorities including:

  • Regional Assistance Mission to Solomon Islands—transition
  • Combating People Smuggling—enhancing the regional response and
  • Australian Membership of the African Development Bank Group.[5]

Aid allocations

Indonesia remains the largest recipient of Australia’s ODA. Funding for 2013–14 is $646.8 million, an increase of $105.2 million (19.4 per cent) over the expected outcome of $541.6 million. Papua New Guinea remains the second largest recipient with an allocation of $507.2 million. Other countries to receive large increases in allocations include Myanmar which will receive $82.8 million (up from $64.2 million in 2012–13) and Fiji at $58.2 million (up from $49.2 million in 2012–13).

Reactions to the aid budget

As Professor Stephen Howes from the Australian National University has observed, despite an extra $500 million in the aid budget and a lifting of the ODA/GNI ratio to 0.37 per cent, the response of the aid community has been ‘overwhelmingly negative’ for two reasons—the deferral of the ODA/GNI target by another year and the use of $375 million to support asylum seekers.[6]

The Australian Council for International Development (ACFID), the peak organisation for aid Non-Government Organisations (NGOs), said that the Government had delayed its ‘aid commitment for a second year in a row’ and that ‘pocketing $375 million a year for domestic use will never help combat poverty overseas’.[7] CARE Australia called the aid budget ‘utterly disappointing’ and was critical of the money that would be used to ‘support the onshore processing of asylum seekers’.[8] Oxfam Australia was also critical of the Government’s ‘broken promise’ and its decision to ‘plunder another $375 million … to pay for its domestic asylum seeker policy’.[9]

[1].       Unless otherwise indicated all information is derived from: B Carr, (Minister for Foreign Affairs), Budget: Australia’s international development assistance program 2013–14, statement accessed 16 May 2013; see also Summary of Australia’s overseas aid program: budget highlights 14 May 2013, accessed 16 May 2013.

[2].       Statement by the Hon. Bob Carr, ibid.

[3].       Budget measures: budget paper no.2, p. 161, accessed 16 May 2013.

[4].       Ibid., p. 162.

[5].       Ibid., p. 163.

[6].       S Howes, ‘Third time disappointed AND the third largest aid increase ever’, 15 May 2013, Development Policy Centre Blog, accessed 16 May 2013.

[7].       ACFID, Budget delays and diversions shouldered by the world's poor, media release, 15 May 2013, accessed 16 May 2013.

[8].       CARE, Budget: Australia is one of the largest recipients of its aid program, media release, 14 May 2013, accessed 16 May 2013.

[9].       Oxfam, Governments broken promise on overseas aid will strip S1.9 billion more from the world’s poorest people, media release, 14 May 2013, accessed 16 May 2013.

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