Arrest the decline of aid, & reset its paradigm.

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Marc Purcell.

Waiting for the Government to invest in our international development footprint and to drive Australia’s international development program strategically, is like waiting for a bus which never comes. This year sees the sixth successive Australian aid cut. The long-term decline of aid adds up to a Government bereft of vision for development assistance, failing to meet its international commitments, and unable to foresee how Australians and their expertise can build cooperation with Asia and harness our place in the evolving world order. 

Australia’s international relationships – crucial for trade, peace, and stability – are being risked in favour of isolation and a retreat to our ‘backyard’. Last year, the OECD asked Australia to ‘shore-up development aid’. The Australian Government has ignored their call. 

In the world of realpolitik, Australia has decided, with its US and other allies, that it will now ‘step up’ in the Pacific. But in the haste, there remain unanswered questions, policy incoherence, and ill-considered financial trade-offs. 

Knee-jerk reactions to China’s Pacific expansionism has clouded long-term judgment. The epitome was the Australian Government’s last-minute gazumping of Chinese telco Huawei to build the Pacific undersea internet cable between Australia, PNG and the Solomon Islands. Soon afterwards –and despite a flurry of Australian intervention to stop it – Huawei was approved to construct the domestic internet cable in PNG. 

Siphoning funds from poverty alleviation programs in Indonesia and the Pacific to pay for the cable is a symptom of incoherence spreading through the development program. In the context of a declining development assistance envelope, moves like this ensure our Pacific ‘step-up’ is also a ‘step-down’ in Asia. Every time a new initiative is funded by a withdrawal elsewhere, we pick-up a relationship at the cost of another. This time, the Government is halving assistance to Pakistan and Nepal, two of the poorest countries in the world. 

The alarm in the defence and foreign policy establishment has led to a $2-3bn push on infrastructure lending into the Pacific, a region already highly indebted. Why countries should be servicing debt to the Australian Government instead of budgeting for their own health and education costs has not been explained. A reallocation of $500m has been made from existing aid programs to fund the new infrastructure facility. It is unclear from where these funds will be drawn. 

The burgeoning black hole emerging in the Government’s aid agenda risks setting back effective development cooperation policy for years to come. The Government’s present commitments to funding multilateral institutions have not been matched by the requisite budget allocation in the coming fiscal year, or across the forward estimates. In the short-term, this means Australia risks reneging on its immediate international commitments. In years to come, Australia’s multilateral funding commitments, under-funded from the outset due to the lack of indexation, will fall due in fiscal years in which there is not budget to replenish them. The growing black hole will mean the Government will not be able to fund these replenishments without slashing further from other under-funded bilateral programs. 

Despite the Government’s statement that “no long-term foreign policy objective is more important to Australia than ensuring our region evolves peacefully”, the region is fraying at the seams, and is not being greeted with adequate investment or strategic response from Australia.

Political instability is growing in Thailand, Myanmar, and Cambodia. Human rights violations, illiberal populism, authoritarianism and instability are spiking. Yet the Australian aid program is declining in Southeast Asia, most notably this year in Indonesia and Cambodia, with reductions of $17.7m and $17.6m respectively. Australia’s aid program is not evolving to help build democracy and stability in the region – a region upon which we are becoming increasingly reliant . 

As geopolitical competition is rife for the attentions of the burgeoning economic powerhouses of Indonesia and Malaysia, Australia is also pulling back from supporting the development and governance aspirations of partners graduating to middle-income status. 

We are calling for the next Australian Government to reset the aid paradigm by creating a future-facing Australian development cooperation policy and program to meet the changing development demands of our diverse region, and avoid losing sight of our relationship with Asia. At its heart, a new development cooperation policy should be driven by our partners’ development needs and aspirations, not those of Canberra. If we don’t become that partner – characterised by deep knowledge and engagement – others will.

Picture this: the Australian development cooperation program is consistently funded, strategically positioned at the heart of foreign policy, and driven by global Sustainable Development Goals. It enables effective diplomatic, economic, and trade relations, shores up regional stability, and focuses on creating resilient societies in which people are free from extreme poverty, persecution, violence, hunger, and sickness. 

Australia has the prosperity, people, and expertise to do it. Now, we need the political will and vision to achieve the Australian development cooperation program all Australians and our neighbours should have.  

Marc Purcell is the Chief Executive Officer of the Australian Council for International Development (ACFID), which he joined in 2009. ACFID unites over 130 Australian international aid and development organisations working to alleviate poverty and injustice in over 100 countries. ACFID members raise around $1.5 billion from a variety of sources, and are supported by 1.5 million Australian’s annually. Marc has worked for 25 years in community, international development, and human rights sectors in Australia.

This piece was originally published on 2 April 2019 on the blog of the Australian Council for International Development and has been used with their permission.

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