12 Sep 2013

Pacific concerned that Australia's aid cuts will hit those most in need

4:59 pm on 12 September 2013

Australia's new government says it will cut the promised growth in foreign aid, prompting fears Pacific countries will suffer.

Before last Saturday's election win, the coalition announced it would save $4.2 billion US dollars in foreign aid over the next five years.

Australia had previously agreed to increase aid to help the Pacific reach the Millennium Development Goals.

Alex Perrottet reports:

The new government says it's unsustainable to continue growing foreign aid while the economy continues at below trend growth. They have now pegged foreign aid growth to inflation, and taken last year's aid rate as a starting point. Robin Davies, the assistant director of Australia's Development Policy Centre, says this means serious cuts to this year's spending.

"ROBIN DAVIES: More than $650 million out of this year's aid programme, that's where the real pain is going to be felt in the first instance. There's a lot of cuts that have to be made this year in order to get back to that baseline before they keep the programme flat."

It's not clear yet where the cuts will be, but Democratic Labor Party leader John Madigan says they can look first at Indonesia, which recently purchased attack helicopters from the United States.

JOHN MADIGAN: What on earth do they need them for now? And if they've got $5 million-odd dollars to spend on them, why are we, Australia giving them $647 million in foreign aid?

John Madigan says the aid could be increased, but needs to make a real difference to people on the ground, particularly in the Pacific, where Australia's close neighbours are owed assistance after their sacrifices in the Second World War. Aid organisations seem to be preparing for the worst. The Tear Fund's Frank Ritchie says he's ready to lobby the New Zealand government to tell Australia that the Pacific needs more help, not less.

FRANK RITCHIE: If there's any inkling that Australia is going to draw that money out of the Pacific then that leaves a gaping hole on those nations, many of them who I imagine would have forecasted their budgets based on what the last government had predicted they were going to spend. So they are going to have to readjust their budgets and it puts pressure on other aid that's being shipped into the Pacific.

New Zealand's Prime Minister John Key says he is not surprised the new government is to make cuts, as the current commitments are huge.

JOHN KEY: When we announced the education programme a couple of years ago with Julia Gillard we were putting in, I think from memory, about $50 million and they were putting in about $950 million, they were just massive orders of magnitude, so, yes, these are countries that need a lot of support and help and so if there is less money coming their way they will obviously feel that over time.

But some countries like Papua New Guinea, and Nauru, may be safe, considering the recent agreement with Australia to house asylum seekers. Mark Purcell, the executive director of the Australian Council for International Development, says PNG had its aid almost doubled thanks to the agreement with Kevin Rudd, but the new government is inheriting a mess of a programme.

MARK PURCELL: I think a lot of the detail needs to be spelt out, I think it's an appalling waste of taxpayers money, it's poor aid and I don't think we'll see any great outcomes out of it, but I'm sure the Papua New Guinea government is very happy at what they were able to cajole out of Kevin Rudd in the dying days of his government.

Many other OECD countries have already reached the goal of foreign aid being 0.5 percent of Gross National Income. Australia's Labor Government re-committed to reaching the 0.5 level by 2017, but the new plan is aiming even lower. There has been criticism in the UK media that it's unacceptable for a country that has done better than most in the global recession to commit less and less, but Robin Davies says Australia is above average among the OECD donors, though the move is poorly timed with Australia set to chair the upcoming G20 summit.

ROBIN DAVIES: Australia takes up the presidency of the G20 next year. As part of that it's chairing the development working group so there is some embarrassment of course in moving back on that leadership role on aid, but it doesn't make us an especially poor performer, it makes us pretty average.

Robin Davies and Mark Purcell both predict the cuts will be felt by other multilateral partners such as those further afield in Africa. In a move possibly aimed at appeasing NGOs, the new government says it will also re-prioritise foreign aid allocations to those who deliver on-the-ground support for those in need.