Australian Aid

Soon after coming to power in September 2013, the Abbott Government announced the integration of AusAID, Australia’s stand-alone aid agency with the Department of Foreign Affairs and Trade – to enable the closer alignment of the aid and diplomatic arms of Australia’s international policy agenda.

The merger was effected in November 2013 and fully implemented by June 2014. Australian Foreign Minister Julie Bishop announced a new paradigm for the Australian foreign aid program in June 2014. She said that expanding opportunities for people, businesses and communities is the key to both promoting economic growth and reducing poverty. The aid program would now provide a sharper focus on investing in drivers of economic growth, including trade, infrastructure; education and health; and empowering women and girls to create new jobs and opportunities that lift people out of poverty. A recent major stakeholder survey of the Australian aid program shows that the transition has not been as smooth as hoped, with staff continuity, staff expertise and predictability of funding all performing particularly poorly.The Lowy Institute’s Jonathan Pryke notes that the way in which the 2016/17 aid budget was delivered provides some hope for the aid program finding its feet within the new merged architecture.

On Monday 21 September 2015, following a cabinet reshuffle by Australia’s new Prime Minister Malcolm Turnbull, a new Ministerial position was created that covers management of Australia’s aid program. Steven Ciobo, formerly Parliamentary Secretary to the Minister for Foreign Affairs and to the Minister for Trade and Investment, was promoted to become Australia's first Minister for International Development and the Pacific. Less than six months into his tenure Mr Ciobo was promoted to Trade Minister, with NSW Senator Concetta Fierravanti-Wells stepping into the role. More direct oversight of Australia’s aid program, as well as the Pacific, by Australian politicians is a welcome development, but continuity is now needed to ensure that they are effective. Australian aid cuts

In December 2014 the Abbott government announced significant cuts to Australia’s foreign aid program as a part of general budget savings in its Mid-Year Economic and Fiscal Outlook. Australian Treasurer Joe Hockey said that savings of $3.7 billion in the foreign aid program over the next four years would offset new commitments in Defence and national security. These cuts, reflected in the 2015-16 Budget, mean Australia's aid budget has now fallen to $4 billion, down from a peak of $5.6 billion in 2012-13.

According to calculations by the Development Policy Centre at ANU, the government’s budget cuts mark both the largest ever multi-year aid cuts (33%) and largest ever single year cut (20% and $1 billion in 2015-16). This will see Australian aid fall to 0.22% of Gross National Income (a global measure of donor generosity) in 2017-18, the lowest level in Australia’s history.

The 2015-16 Budget indicates how Australia will achieve the 20% cut. The decisions seem to have been made from a geographical and political viewpoint rather than through an assessment of the development effectiveness of each country and program. With the exception of Cambodia, Nepal and Timor-Leste, aid to countries in Asia was cut by 40%. The Pacific and Papua New Guinea were largely spared (only a 5% cut to PNG and 10% cut to Pacific Regional funding). Sub-Saharan Africa was slashed by 70%, and aid to the Middle East was cut by 43%. As a result, Papua New Guinea replaces Indonesia as the largest recipient of Australian aid, receiving $477.4 million in 2015-16. The 2015-16 Mid-Year Economic and Fiscal Outlook, which in the past has been used to announce major cuts to Australia’s aid budget, this time left the aid program untouched aside from marginal initial investments into the Asian Infrastructure Investment Bank. The investment, totalling $3.4 million over the forward estimates period, means the remaining $5.2 billion capital subscription will be required in 2019-20, which hardly seems credible if it is to be financed out of the Australian aid budget.

According to research conducted by the Development Policy Centre at ANU, Australia’s declining aid expenditure puts it at odds with the aid budget trajectories that many other OECD countries are following. In 2013, the Conservative government in the UK became the first G7 donor to reach the OECD's 0.7% of GNI target, increasing its official development assistance (ODA) by 27.8% on 2012 levels. It has since passed a bill enshrining the 0.7% commitment into law.

In May 2016 the government handed down the 2016/17 federal budget which confirmed the final round of Australian aid cuts, $224 million or 7.4% of the Australian aid program. As Jonathan Pryke notes, this is the sixth-largest cut in any one year of the aid program’s history, and affirms the trend of Australian aid to the least generous in its history. Increases to the aid program over the forward estimates (the next four years) have been pegged to the rate of inflation, which will result in aid generosity continuing to decline as the economy is forecast to grow. The Labor party has confirmed that it will reverse the latest round of cuts, and committed to contributing $800 million more to the Australian aid program over the next four years. But, as Jonathan Pryke discusses, this adjustment is so minor that it will still leave the Australian aid budget at its least generous levels in history. The Australian Greens, meanwhile, remain committed to a 0.7% aid/GNI target by 2025, a level that has never been achieved in Australia’s history but was recently achieved by the United Kingdom while it was the depths of austerity.

Past projects included bridging the Mekong River between Thailand and Laos with the Thai–Lao Friendship Bridge, and reintroducing the Przewalski's Horse (a Mongolian national symbol which had become extinct in the wild) to the nation.