Ben’s Blog

Here’s the big picture of the volume trend in Australian aid:

____ = Budgets to present
_ _ _ = Forward estimates to 2012/13 (loosely planned expenditures for those years)
_ _ _ = Implied trajectory to reach Rudd Government commitment to 0.5% GNI by 2015
____ = Path to reach 0.7% GNI by 2015

As you can see, aid has now hit 0.34% of Australia’s Gross National Income (which, by the way, is a level of aid spending as a proportion of our national income that we haven’t reached since 1992/93). Aid spending slumped in the latter years of the Hawke/Keating Government, and then was gutted a couple of times under Howard before he really began to increase it in the lead up to the World Summit in 2005. Rudd has maintained that increase and put a definite goal (0.5% by 2015) to aid spending.

Though, note that the “slow and steady” increases to the aid budget under Rudd so far mean that more substantial increases need to be delivered after the three-year forward estimates period, well after the next election. This is problematic for a few reasons:

It increases the likelihood that the goal will not be met either because its delivery will be the responsibility of a different government (we have at least 2 elections between us and Kevin’s 2015 target date) or because a slower time-frame means more time for “unforeseen circumstances” to throw a spanner in the works.

“Backloading” aid (ie. postponing or delaying the major aid increases) limits the contribution it can make to the achievement of Millennium Development Goals and limits the support and resources available to poor countries to weather the storm their are facing right now. Instructively, European donors are frontloading much of their aid (spending more of the committed budget in earlier years) so it does the most good to those who need it under the current circumstances:

The Commission is frontloading €3 billion, or 72% of its foreseen budget support to African, Pacific and Caribbean nations thereby ensuring that social spending is not forsaken when most needed… Overall, frontloading by the European Commission should bring forward €4.3 billion resources to 2009.

Sure, frontloading implies a tailing-off of aid in later years, just as backloading implies a scaling-up of aid in later years. But if investments are made now that address the current shocks, and build resilience and capacity in poor countries and communities, this needn’t be a huge problem.

Despite the dire global economic circumstances Australia can still afford to lift its aid to the internationally-agreed target of 0.7% GNI. Our aid budget is still small as part of the Government’s overall revenue and expenditure (just over 1% of total expenditures) and you can, in some respects, think of it in the same light as the domestic stimulus package (worth tens of billions) put forward in the same budget. If we are seriously committed to limiting “the scale of the human impacts” of the global recession, and tackling the tragedy of global poverty, then it’s a reasonable proxy indicator of that commitment. (The green line on the graph above shows the straight-line trajectory our aid budgets would need to follow to reach 0.7% by 2015. It’s ambitious, but achievable.)

I’ve discussed this 0.7% target a little bit before. I understand that the political and economic circumstances don’t seem good for setting a timetable to reach this target. (However, circumstances were also apparently never quite right during 16 years of uninterrupted economic growth and a dozen or so massive budget surpluses either…) I think it’s high time the Australian Government made a timetabled commitment to increase its aid to 0.7% of Gross National Income (that’s 70 cents for every $100 of our national earnings) by 2015. C’mon Kevin 0.7!

This entry was posted on Wednesday, May 13th, 2009 at 11:50 am and is filed under Aid, Back-Talk, Development, Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.