Overseas aid plays a significant role in international relations, both by way of international mechanisms (including the United Nations) and by direct country-to-country assistance. While capacity to provide aid varies, there is widespread agreement that developed countries should work towards contributing 0.7% of their Gross National Product (GNP) to aid programs, with the actual average currently at 0.47%. Aid is targeted at improving developing countries’ performance on a range of indices including the Millennium Development Goals (MDGs) – a set of measures targeted at eradicating poverty and hunger and improving health, education, and gender equality.
Much progress has been made, including the halving of the number of people living in extreme poverty over the last twenty years. However, there is still much work to be done: around 850 million people go hungry each day, one in five primary-school-aged girls globally are not receiving any formal education, and in 86 countries less than half the population has reliable access to clean drinking water.
Aid has long been part of Australian government foreign policy. This stems from the recognition that, as a fortunate and wealthy country, we have a moral responsibility to help alleviate the poverty of our sisters and brothers around the world. Since World War I, the aid program has grown from $100,000 to around $5 billion in aid per year, or 0.35% of our GNP (a quarter lower than the average OECD contribution).
Programs we support in majority world countries include humanitarian relief, building schools and hospitals, training and institutional reform, and policy dialogue with government, civil society, and business. While this assistance improves the lives of those in recipient countries, Australia also benefits. Increased standards of living overseas result in increased capacity to participate in trade with Australia: we export $120 billion worth of goods and services each year to countries to which Australian aid is delivered.
Despite continued extreme disadvantage in much of the world, and a strong international norm of aid provision, the Global Financial Crisis saw Australia’s commitment to the 0.7% target weaken. A reduced 0.5% target was deferred, and has now been removed altogether. Moreover, aid has also been cut directly and its indexation ceased. Given these changes, Australia’s contribution is predicted to drop to only 0.3% of GNP over the next five years.
Two rationales have been put forward for the cuts. On the one hand, the National Commission of Audit and the May Federal Budget argued that Australia does not have enough money to increase the aid we provide. However, Australia’s debt is among the lowest in the OECD, and there is a very large body of evidence suggesting that current spending is sustainable.
On the other hand, the reduction in spending may be seen as part of a subtle shift in the purpose of aid. The policy is now to “promote Australia’s national interest” through aid, rather than to provide assistance primarily for the benefit of those who need it. Making aid about the benefit to the donor rather than recipient raises not only moral but empirical questions: evidence does not suggest that focusing on private sector development and trade will necessarily result in poverty alleviation for disadvantaged people.
For a range of reasons, many are concerned by current cuts to Australia’s aid commitment. Primarily, cuts disregard the international agreement to increase aid to 0.7% of GNP. They leave Australia even further behind the majority of wealthy countries, some of whom already contribute more than 1% of GNP.
Moreover, cuts will have real impacts on the people who are currently being assisted by our programs overseas, and will reduce the ability of developing countries to reach the MGD’s basic standards for human dignity.
Cuts will have even broader effects than this: evidence shows that poverty and disadvantage exacerbate regional instability, conflict, and humanitarian crises. As our aid is focused on the Asia-Pacific, destabilisation will have flow-on impacts for Australia in the mid- to long-term. We will see increased numbers of migrants and refugees, decreased diplomacy and cooperation, and falling bilateral trade opportunities.
While Australia has a long history of helping developing nations, in the current climate of austerity our contribution is being significantly pared back. This is despite the fact that there is no real evidence suggesting that aid cuts are necessary. The likely outcome will be strongly negative for the individuals who currently receive assistance, for the communities and countries they comprise, and for Australia itself.
We should instead be standing proudly by our historic commitment and our international and moral responsibilities regarding aid. This means focusing not on inaccurate and short-term assessments of Australia’s own financial position and trade interests, but instead working towards an aid program of at least 0.7% of GNP, the core purpose of which is empowerment and poverty reduction.
Rik Sutherland works in social policy at St Vincent de Paul. He is a lawyer by training, having worked previously in the ACT Supreme Court. Outside work, Rik is active in animal rights advocacy, and is completing his Master of Law.