Meeting Global challenges
Tremendous progress has been made in recent decades as the world increased its focus on the problems of global poverty.
Since 1990, extreme poverty has been slashed by almost three quarters; child mortality by almost two thirds; and the world has been stepping up to liberate people trapped in slavery.
These are significant achievements – however these gains are fragile.
Climate change, proliferating conflicts, and poor governance are threatening to push more people into poverty and vulnerability, and undo this progress. For the first time in decades, hunger and acute malnutrition are increasing; while the number of people displaced around the world has risen to an unprecedented 68.5 million people – fuelling trafficking and forcing millions into extreme poverty.
The Impact of Aid
The above gains have been propelled forward by a concerted global mobilisation. Multiple sources have financed this progress: tax, remittances, foreign investment, export revenue and aid. The role of aid has been significant, particularly in achieving progress on health indicators, providing emergency humanitarian relief and assisting in spreading the benefits of economic growth to those most in need.
Targeted aid programs play a significant role in improving global health. For example, foreign aid is widely credited as eradicating small pox, an achievement that has saved at least 60 million lives. Aid has helped reduce the number of deaths caused by other diseases such as malaria and diarrhoea (health improvements have averted about 10 million deaths per year, from these diseases alone)6 . Aid has also meant that millions of children have been able to attend school, communities have been given access to clean drinking water, and governments have received assistance to strengthen their tax systems.
How much does Australia give to aid?
From 2000 until 2013, Australia’s aid program reflected the global trend, and was on a steady upward trajectory – both in real dollar terms and as a percentage of GNI.
Between 2007 and 2013, the rate of increase reached 7% per year, rising from $3 billion to $5.6 billion. Australia’s generosity in aid rose to 0.33% GNI, and the aid program enjoyed bipartisan support for an aid target of 0.5% GNI.
In recent years however, For the past six years (2014-2019), Australia’s aid program has experienced unprecedented and consistent cuts. The largest single year cut occurred in December 2014, with a massive funding slash of $1 billion, equivalent to 20% of the entire aid program.
Australia now ranks 19th among rich country aid donors. And Australian aid generosity languishes at a historic low of 0.22% GNI, and is budgeted to continue falling.
The 2019/2020 budget revealed that total aid expenditure will fall by $117 million, with the aid budget dropping from $4.16 billion this financial year to $4.04 billion in 2019/20.
This is because, as announced last year, aid has been frozen and will not growing in line with inflation, until indexation is resumed in 2022-2023.
This means Australia’s aid budget has fallen from $5.05 billion in 2013/14 to $4 billion in 2019/20. And with this latest announcement, Australian aid will remain at its least generous level ever.
Australia will now give just 0.21% of our Gross National income to combating poverty worldwide.
That’s just 21 cents in every $100 we make as a nation. This will drop to 19 cents in 2021-22, before indexation kicks in 2022-2023.
To put this in perspective, Australian Aid was at its most generous level ever in the 1960s. And that was under a Liberal Party Government who gave 0.48% of GNI to Australian Aid.
The Australian Government justifies these cuts pointing to a tight fiscal position and rising Government debt. However, Australia is one of the least indebted countries amongst all official aid givers (with net government debt set to peak this year at just 19.1%). The only countries with comparative debt levels that give less aid than Australia are the Slovak Republic and Korea.
These countries have significantly lower incomes (33% and 55% respectively, when measured by GDP per capita) and they are both former aid recipients that have only recently graduated to become aid donors. Australians are the wealthiest people on the planet, when measured by median wealth; the Australian budget is set to return to surplus in this coming financial year; the nation has had the longest run of uninterrupted economic growth in the developed world and Australia, has relatively low Government debt.
Micah believes that compassionate generosity reflects the values that Australians hold dear.
Compassionate generosity is also consistent with the kind of nation Australia aspires to be. As one of the most prosperous and least indebted developed nations in the world, Australia is well placed to be a world leader in terms of generosity towards its global neighbours.
The International Aid Target
Since 1970 there has been a broad consensus amongst the international community that rich nations (of which Australia is one) should aim to give 0.7% of their gross national income (GNI) in aid. This target has been reaffirmed many times since, including at the discussion surrounding the MDGs in 2002 for the Monterrey Consensus, and then again in the lead up to the SDGs in 2015 at the Addis Ababa Action Agenda on Financing for Development.
Since 2000, the world’s rich nations – in response to these global development challenges– have been collectively stepping up their aid giving. Aid in recent years has been at a record high, reaching 146.6 billion USD in 2017 – more than double the aid given at the start of the MDG period in 2000. Six official aid giving nations have achieved the target set in committing to both the MDGs and SDGs, and contribute 0.7% of their GNI to aid. These include the United Kingdom, Sweden, Norway, Luxembourg and Germany.
Even amidst tight austerity measures, in 2013 the UK’s conservative Government reached the 0.7% target. In 2015, the UK enshrined this international aid target of 0.7% in legislation.
In the face of those calling on him to slash the aid budget, the then Prime Minister, David Cameron, famously said, ‘We will not balance our budget on the backs of the world’s poor’.
What Should Australia be Giving?
Australia can and should do more. As one of the richest and least indebted aid giving nations in the world Australia, should be a leader in aid generosity. It’s time to begin moving in this direction.
To achieve this ask, Australia would need to scale up its aid program to approximately 0.295% GNI by 2021-22.
Italy currently ranks 14th amongst the 29 members of the Organisation of Economic Cooperation and Development Assistance Committee, with an official aid to GNI ratio of 0.2946%.
This ask is consistent with the Australian Council for International Development’s call to rebuild the aid program to 0.33% of GNI in the next 6 years, starting with a minimum increase to the aid program of 10% per year.
Australia should return to the top half of rich country aid donors by the end of the next parliamentary term.
Australia should commit to achieving the internationally agreed aid target of 0.7% by 2030.
What can I do?
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