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budget savings at the expense of the poor: australia and overseas


Following the Abbott government’s first budget last week, there has been a lot of analysis of the many cuts that are set to be made to everything from health and education to the Abalone Aquaculture Health Accreditation Workshop (as highlighted by The Guardian’s First Dog on the Moon budget cartoon).  There hasn’t, however, been as much discussion of an area which will bear much the brunt of the savings.

Foreign aid, despite accounting for a measly third-of-a-percent of GNI (Gross National Income), will account for 20 per cent of all savings made by the government over the next four years, more than any other single area of expenditure.

This 20 per cent saving (which amounts to $7.6 billion over four years) will be achieved partly by the $4.5 billion in forward estimates that was stripped from the aid budget in an announcement made the day before the last election, and partly by changing the way that the amount of money allocated to foreign aid is calculated.

In the past foreign aid has been linked to GNI. In other words, this means we’ve been calculating the amount of money allocated to aid as a percentage of the total amount of money we have available.  This is what campaigns like Make Poverty History are talking about when they call for governments to reach a target of 0.7 per cent of GNI to meet the Millennium Development Goals.  Under the previous government, the lesser target of 0.5 per cent was postponed a number of times, but this goal has now been pushed back even further, with the Coalition stating they won’t even consider getting there in the next four years.

For the next two years, the amount of aid we spend will remain the same as this year’s amount, and after that it will be linked to CPI (the Consumer Price Index).  The CPI roughly equates to the rate of inflation, which means that while the amount of money we spend in real dollar terms may increase every year, the buying power of the aid budget will remain the same.  So, instead of the percentage of GNI we spend on foreign aid increasing as planned, it will flatline for two years and then start to go down as the Australian economy grows.

But how does this sit with the Abbott government’s priorities? For anyone who’s been listening, the new Government has been talking a lot about the need for ‘efficiency and effectiveness’ in Australia’s aid budget, and a big part of this is transparency.  NGOs and aid agencies need to be more transparent about how much money they have and how it’s being spent. But the irony is that in their first six months of government, the Coalition has been significantly less transparent about what money will be made available for foreign aid, which directly reduces agencies’ ability to work effectively.

One of the big moves in the area has been the ‘folding’ of AusAID into the Department of Foreign Affairs and Trade (DFAT).  One of the reasons given for this move has been the alignment of foreign aid spending with Australia’s interests overseas, but there has been little acknowledgement of the fact that our international aid program already serves Australia’s interests by creating a more prosperous and stable region as well as improving the lives of the world’s poorest people, a worthy goal in and of itself.  The merger is also consistent with the classically conservative notion that less bureaucracy equals more efficiency.  Think of the pie chart those people who stop you on the street always have handy, showing how small the admin slice for their particular organisation is.  The idea is that more of your money is going directly to the people in need, but that’s pretty cold comfort if the programs being funded are poorly operated or completely ineffective, and the same is true of government funded programs.

Other major themes in the government’s rhetoric have been the importance of investing in women and girls and the need for Australia’s aid to be focussed on the Asia-Pacific region. These are both worthy goals, however it seems that they will be achieved by re prioritising money from elsewhere, rather than by growing the pie.  While the decision to return to the aid budget the $375 million which was removed under the previous government to fund the cost of detaining asylum seekers is a positive step, programs in Papua New Guinea are set to receive by far the most funding of any Pacific nation, leading to concerns the government is paying off the impoverished nation for housing Australia’s asylum seekers on Manus Island.

Much of this has been overlooked in the analysis of the budget this week, and understandably so.  It’s hard to be concerned about global poverty when you’re living from pay cheque to pay cheque, and there have been many other concerning developments in the announcements made this week.  But if you can, spare a thought for the people outside Australia, many of whom will be affected by this budget too.

2 thoughts on “budget savings at the expense of the poor: australia and overseas

  1. Pingback: The Real Aim Behind the 'Three Word Budget' | lip magazine

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