Australia gives no aid to the US, of course. But Washington hosts the World Bank and other major development aid bodies. And Australia is now a big, big player in the A$100 billion international aid industry.
How big? Consider this: by year’s end there will be twice as many Australian officials in Washington devoted to disbursing aid as those working directly on defence policy, despite Australia’s ongoing engagements with the US in Afghanistan and elsewhere, not to mention the overarching issue of the ANZUS (Australia, New Zealand, United States) alliance. (Many other uniformed defence staff are here but dealing with other issues, mostly procurement.)
This is indicative of a broader trend. Globally, Australia now gives away almost four times as much aid as it spends on Australia’s broader foreign policy and diplomatic network.
Ten years ago, Australia spent roughly similar amounts on foreign affairs and on international aid, while both were a mere fraction of its defence spending, then at around A$20 billion. No more. Over the past decade, Australia’s aid spending has doubled to more than A$5 billion, while foreign affairs has shrunk and defence spending has remained essentially static.
Bipartisan commitments by both the major political parties to increase Australia’s aid to 0.5 per cent of gross national income would make Australia one of the most generous donors in the world on per capita terms. Already the country is the 15th-largest economy in the world but the seventh-largest international aid donor.
As a consequence, Australia is giving aid in new regions such as Africa and Latin America, and has become a major donor to UN development agencies.
But it is also in danger of giving away more money than its traditional recipients can absorb. The announcement by the prime minister of a A$320 million initiative for Pacific Island women is a good example. Regardless of the merits of the program, it will be impossible to spend such a sum sensibly, given that it is larger than the entire GDP of many of the states it is intended to assist.
Growth in Australia’s aid disbursements has paralleled a significant erosion in its formal diplomatic capacity. A 2009 Lowy Institute study found that of 30 OECD countries, only Ireland, Luxembourg, the Slovak Republic and New Zealand have fewer diplomatic posts than Australia. While new posts have been promised in Africa and China, this trend is likely to continue, given current budget settings.
This year, Australia’s defence spending will also decline sharply. Despite the 2009 Defence White Paper’s commitments to major expansion in the submarine fleet and Joint Strike Fighter acquisitions, Australia will spend A$24.2 billion, or just 1.56 per cent of GDP, on defence — less than even the European average.
This Swedish-style profile means that in budgetary terms Australia is on track to become the Scandinavia of the South Pacific — a country which is generous in giving aid to other countries and supporting international institutions but which spends relatively little on its own foreign affairs and defence hard power.
Unsurprisingly, US officials are increasingly voicing their concerns that defence spending in Australia has slipped below America’s other allies.
Washington’s international aid bureaucrats, by contrast, are delighted (if somewhat puzzled) by the emergence of Australia as a new donor in regions like Africa and Latin America not previously on the radar screen. ‘Small country, big ambitions’, one said to me. ‘AusAID has become our go-to funding source’ admitted another.
And the Australian voter?
They can be excused for being more than a little confused. Over the course of a decade, with almost no public debate, Australia has apparently transformed its international priorities, becoming an aid powerhouse, a foreign affairs lightweight and — if current spending levels are maintained — a military minnow.
Benjamin Reilly is a professor of political science at the Crawford School of Public Policy, ANU, and currently a visiting professor at the Johns Hopkins School of Advanced International Studies, Washington DC.
This article was first published here in The Canberra Times.
AusAID welcomes informed debate on the Australian Government’s aid program, unfortunately Benjamin Reilly’s article “Australia an aid superpower” (September 7, p19), is neither informative nor accurate. His article contains at least five major factual errors:
1. There are only two AusAID officials in Washington, compared with 20 working on Defence policy alone.
2. According to the OECD’s Development Assistance Committee, AusAID is the 10th largest aid donor in volume in the world, not the 7th.
3. Australia is the 13th largest economy in the world not the 15th, according to the IMF.
4. The $320 million initiative to help stop violence against Pacific Island women is over a 10-year period, not one year as Reilly implies.
5. Reilly is wrong again when he claims there has been no public debate on the growth of the Australian aid program. The Independent Review of Aid Effectiveness commissioned by the federal government in November 2010 undertook a broad range of consultations with all stakeholders in Australia and received more than 300 public submissions.
Peter Baxter, Director General, AusAID
AusAid’s rather defensive response to my piece is telling. Instead of taking the opportunity to defend Australia’s ever-increasing aid budget, they want to debate the details (which I will respond to below). Missing was any attempt to make a positive case for an increasing aid budget at a time when other facets of Australia’s international engagement are being cut back.
My argument was not that our emergence as an aid superpower is a bad thing, but rather that it has come at the expense of funding for defence and foreign affairs – which are, unlike aid, core responsibilities of national government.
In response to AusAid’s points:
1. The Australian Embassy has one Defence Counsellor (Policy) who is assisted by another officer. AusAid will soon have four officials at the Embassy. As I said in my article, there are many other defence officials at the Embassy dealing with other issues.
2&3. The relative size of Australia’s economy and aid disbursements varies depending on the baseline year used, currency valuations, the information source and other factors. I am happy to accept AusAid’s figures, which have no bearing on my argument.
4. My point about the $320 million Pacific women’s initiative is that it will be impossible to spend the money sensibly, a point which AusAid did not contest.
5. The Aid Review did not consider the relative balance of Australia’s defense, diplomacy and development aid spending, which was the focus of my article.
Finally, as an organisation that receives over $5 billion in public funding, AudAid need to do a better job of presenting a positive response to public debates about aid funding. Shining a light on the growth of the aid program is something that should be welcomed, I would have thought.
Ben,
I agree with the idea us having a discussion about levels of funding for aid, defence and diplomacy and also on shining a light on the growth of the aid program.
However your initial article didn’t seem to me to shine much light, with its exaggerated statements about Australia becoming “an aid superpower” and the use of selective and often incorrect statistics to back this up.
The bottom line is that Australia currently contributes 0.35% of GNI to aid. The latest internationally comparable data puts us at 13 out of 23 OECD donors in terms of share of GNI to aid. When we lift this to 0.5% we are likely to rise to 9th or 10th position . How does this make us ”one of the most generous donors in the world on per capita terms”?
When we reach 0.5% of GNI to aid in 2016/17 this will be around 7% of current OECD aid. Unless there is an extreme drop in aid by other donors, how can we be correctly described as an “aid superpower”?
And you are obviously in the wrong job if you can say with such confidence that “it will be impossible to spend [the $320m allocated for Pacific women] sensibly” – we need you in AusAID making these valuable assessments. However, you neglect to mention that this is over ten years and that there are around 5 million women in the Pacific. That is around $6 per woman per year. I haven’t checked but I don’t think they planned to spend it all in Tuvalu.
In regard to AusAID’s response to your article, I think they feel understandably constrained promoting an increase in the volume of aid – this is a government decision. Their job is to use the planned increase as well as possible. I do agree that they could improve their explanation and promotion of the aid program but it seems to me that this is getting better. We are starting to see much greater transparency and active use of a wide range of media to share information about AusAID’s work.
Most importantly, why are you trying to suggest that the relative funding of aid, defence and diplomacy are important? Why not look at other areas of government expenditure and income also if you think that funding for defence or diplomacy is too low?
If people think defence and diplomacy are important they should argue for them in their own right and not try to imply that aid is merely another tool to protect Australia’s interests. As the Independent Review of Australian Aid pointed out, aid should not be seen just in terms of any economic or security benefit it gives to Australia but “should put people first.”
Just last week UNICEF released figures which showed that the number of children dying in the world has continued to fall – dropping 42% since 1990. Aid – through medical research, vaccines, basic education, emergency assistance, staff training, drug supply etc has been a big part of this.
However there are still 7 million children dying each year because proven and cost effective interventions are not getting to all communities. This is the sort of information that should drive the size of our aid program, not the relative size of aid, defence and diplomacy budgets.
Garth Luke
Lead, ODA and Emerging Issues
World Vision Australia