Australia slashes foreign aid spending

Transcript

The Australian government says there are no new cuts to their foreign aid, though the reality is this week's budget is 20 percent lower than last year's.

The director of the Development Policy Centre at the Australian National University, Stephen Howes says it is the single biggest drop ever in foreign aid spending.

He says the government had already announced the cuts last year, which makes the 'no new' claim technically correct.

Most of the cuts apply to Africa and Indonesia and the Pacific has mostly been spared, but Professor Howes told Don Wiseman this has been at significant cost to the other regions.

STEPHEN HOWES: The 20 percent cut for this year hasn't been applied evenly across the board and in fact the Pacific is by in large being insulated from the cuts. There are some modest cuts to the PNG program, I think aid to PNG will fall by 5 percent and there's a modest cut to regional programmes, things like the Pacific Islands Forum. But for other Pacific Island countries, no cuts at all, and that's a very good outcome in an overall budget scenario for 20 percent cut. And compared to other countries, other near neighbours such as Indonesia, which are going to get a 40 percent aid cut. The logic for protecting the Pacific is that many Pacific Island countries will be dependent on aid in the long-term whereas Asia is a much more dynamic region, and we should be thinking of Asia graduating from aid. I think it's a fair enough argument, but it's really the only argument that has been applied. And it is going to be extremely difficult to cut a programme whether its Indonesia, Vietnam, Afghanistan, Myanmar by 40 percent in a single year. So from that point of view the preservation of aid to the Pacific will come at a very high price.

DON WISEMAN: Yes. Now the aid community talks a lot about the 0.7 percent of GDP, and Australia was edging up to around 0.35, and it's now down to the low 0.2s and getting low on the OECD scale. Just how relevant is that?

SH: Well that's right it is a complete turnaround. We had this massive scale up of aid. After a long period where aid hardly grew at all in the 70s, 80s and 90s suddenly the last decade it shot up and our aid to GNI ratio started increasing and there was actually a consensus across major political parties that we should reach 0.5 percent of GNI. As you said, we only got to 0.35 but that was still an achievement. We are now heading strongly in the opposite direction. And I think we are down to about 0.25, we are going to get to about 0.22. I think that's pretty much where New Zealand sits, that's new territory for us. And it does put us into the bottom half of the OECD league tables, and I think it raises some very important questions. We do think of ourselves in Australia as a generous nation. But our economy is 30 percent bigger than it was 10 years ago, but our aid is no bigger at all. It is hard to think that is a very generous response. So there are obviously questions for the government but it's also the case that these aid cuts haven't received, they're probably the only cuts that haven't really been widely attacked and protested against. So I think there are broader questions for Australian society about how generous we really are.