International aid and development

Policy analysis by Kate Neely and Heath Pickering, School of Government, University of Melbourne

DFAT AusAID foreign aid

Key points


Foreign aid is calculated as a percentage of Gross National Income (GNI). Currently, for every $100 in tax revenue earned, the Australian Government spends 25 cents (0.25%) on foreign aid. This converts to around $3.8 Billion.

Australian foreign aid serves several key purposes:

  • Security – assisting fragile countries to maintain stability helps keep Australia safe from disease and violence
  • Economic – by helping other countries to develop their prosperity and markets we create new and stable trading partners
  • Human rights – we have a global responsibility to ensure that all people are accorded their human rights
  • Reputation – Australia’s reputation as a global player, including our ability to gain support within the UN, rests on strong development and humanitarian programs

The policy area of foreign aid has not featured prominently at this election.

THE COALITION PROMISES:

  • In the 2013 election, the Coalition committed to a foreign aid budget equal to 0.5% of GNI
  • The Coalition has said that they can only achieve this target once the Federal Budget and national economy has improved

LABOR PROMISES:

  • In 2009 when in Government, Labor pledged a foreign aid commitment of 0.5% of GNI
  • Reject the $224 million cuts announced in the 2016 Federal Budget
  • An additional $800 million commitment over four years

THE GREENS PROMISE:

  • The Greens have committed to a "minimum" foreign aid budget of 0.7% of GNI by 2025
  • They reject the $224 million cuts announced in the 2016 Federal Budget

Background to foreign aid policy

The benchmark rate of overseas development assistance (ODA) recommended by the United Nations since 1970 is 0.70% of GNI. The global average is just over 0.30%. Australia’s contribution in 2016/17 will be 0.23% of our GNI.

In the 2015 Budget, $1 billion was cut from foreign aid—a 20% reduction in one year—the biggest aid cut ever in a single year. Another $224 million in new cuts was announced in the 2016 Budget and rejected by both Labor and the Greens. This brings Australia’s ODA commitment to just 0.23% looking forward, the lowest level of foreign aid since recordkeeping began.

Australia’s reputation for consistent and strong development programs has been damaged by sudden withdrawal of funding over the last two budgets.

Where does Australian aid go?

The current aid focus for Australia is the Indo-Pacific region. While the last few years had seen some growth of development programs in Africa, these were mostly withdrawn due to funding cuts. Programs currently funded or promised by the Coalition include cyber security, combating human trafficking, resilience programs in Syria, leadership (governance) programs in Pacific nations and a variety of climate resilience measures.

Labor also supports a foreign aid focus on the Indo-Pacific region. Labor has pledged to support additional funding for the UNHCR, additional emphasis on evaluation and reporting on aid programs, and more focus on governance in developing countries.

Part of the information in this article was adapted from Foreign Aid Fail

Banner image: Flickr/DFAT