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Budget Australia 2012-2013: foreign aid allocation slowdown



On May 8, 2012, treasurer, Wayne Swan, announced the Australian budget for 2012-2013, by declaring that it is returning to surplus, as promised, which is said to confirm the country’s strong economy against global comparisons.

One of the features of the budget was the “slowdown” or “deferral” of its foreign aid commitment target by 12 months, in an effort to return the budget to surplus over the upcoming financial year (ABC Radio Australia, 8 May 2012).

Australia’s overall foreign aid budget for 2012-13 will rise by 4% from 2011-2012, but won’t reach its target of 0.38% of the gross national income (GNI). This is a budget of $7.7 billion by 2015-16, with the delay expected to save the government $2.9 billion over four years on previous forecasted (and promised) figures. Even with the saving, the treasurer said it was the largest foreign aid budget in Australia’s history, and that this government (a Julia Gillard Labor government) has increased aid by 60% on the previous government (a John Howard Liberal government), according to the Canberra Times on May 10.

Australia’s foreign affairs minister, Bob Carr, said the Official Development Assistance (ODA) allocation will increase by $300 million this year (2012-13) and maintain a level of 0.35% GNI. This means that the government is deferring its goal of providing 0.5% of GNI by one year. The ODA funding will continue to grow but at a slightly slower rate – therefore instead of 0.5% of GNI being reached in 2015-16, it will now be reached in 2016-17.

Carr indicated that over the next three years, the government will provide 10 million childhood vaccinations; safe drinking water for 8.5 million people and better sanitation for about 5 million; assistance for 4 million students to enrol in schooling; and assistance for 30 million people affected by conflict, natural disasters and other crises (Canberra Times, 10 May 2012).

Although the Australian Greens are strongly opposed to the budget measure, it will enable the government to slow the increase in foreign aid spending (The Australian, 10 May 2012). Greens leader, Christine Milne, said her party wouldn’t block the measure in the Senate because it may be contained in appropriation Bills. Hence the Greens will pass the appropriation Bills.

Simon Birmingham, Liberal senator and co-convenor of the Parliamentary Friends of the Millennium Development Goals, responded by saying that the slowdown reflected a cut in foreign aid by slowing down the gradual increase in funding over four years, thus axing $2.9 billion (Canberra Times, 10 May). He said it was a “broken promise” and Labor mismanagement, putting the Millennium Development Goals at risk.

Aid groups criticized the delay, saying it would save the government $2.9 billion over four years – equivalent to about 200,000 lives. The goal to target an investment of 0.5% GNI to foreign aid commenced in 2005 under the Howard Liberal government (Canberra Times, 10 May). Marc Purcell, director of the Australian Council for International Development that represents 76 aid agencies, said that the slight dollar increase this financial year (up $300 million to $5.1 billion) is actually about $400 million short of the anticipated funding. He said statistics from OECD in April 2012 revealed a 3% decrease in foreign aid pledges from donor nations around the world, except Britain which expected to increase its aid funding. Although other countries are cutting foreign aid spending, he maintains that Australia should maintain its forecasted pledge.

About 70% of Australia’s foreign aid is directed at the Asia-Pacific region. Hence, the effects of the slowdown may be felt in countries such as Papua New Guinea, Solomon Islands, China, and India, due to moderate cuts in their aid allocation.

However, the government responded by adding that around $52 million will be spent over the next five years to increase Australia's diplomatic presence overseas, primarily in creating two new mission posts in China and Senegal. Immigration minister, Chris Brown, said the government will designate 13,750 places under its humanitarian program next financial year for the resettlement of refugees from three key regions of Africa, Asia, and the Middle East (ABC Radio Australia, 8 May).

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