• Aid. In the National Interest. (Part 3)

    Posted by Ben

    20 February, 2014

    In this post, I wanted to pick up on detail of the Government's statement about the purpose of Australia's aid program, namely its focus on "international economic growth":

    "The department will deliver an effective and high-quality aid program that promotes Australia’s national interests by contributing to international economic growth and poverty reduction."

    Everyone agrees that aid needs to aim at sustainable poverty reduction – building the capacity of countries and communities to reduce poverty and support human flourishing sustainably over the long-term. Where possible, aid should be about addressing urgent human needs in sustainable ways, ensuring that when the aid is no longer directed to a particular project or sector, then the benefits of the aid don't disappear. Nobody wants an aid-supported hospital to close after the aid is gone, or a bridge to collapse, or teachers to abandon their students.

    So, supporting ecologically-sustainable economic growth and the provision of decent jobs and opportunities for people in poverty is definitely a valid investment for our aid budget.

    However, there are three reasons why an overemphasis on Australian aid contributing to economic growth in other countries might not be the best idea. Particularly if other emphases for aid – especially saving lives, improving health, and contributing to education and learning – are neglected.

    The first reason is that we don't really know how to cause economic growth in other places.

    Second, the link between economic growth and reducing poverty is not always obvious and poor and marginalised groups do not always receive any benefits of growth.

    Third, aid can work to save lives, improve education and provide hope and opportunity even without contributing to economic growth.

    First off, the idea that it's hard to work out the best way to cause or contribute to economic growth should not be very surprising. Frankly, we have enough trouble knowing how to cause economic growth in our own country, so we should be appropriately cautious about the idea that we can use aid to reliably influence economic growth in very different contexts.

    It is also hard to ascribe economic growth rates to any particular policy, set of policies, institutions or characteristics. For example, did China grow rapidly because it pursued (a very state-driven) market model, or because it has a large internal market to develop industry and commerce? Or was it because it enjoyed a long period of industry protection and large-scale copying and scaling of technologies and innovations from other countries, or because it has sacrificed the quality of its air and water (in sometimes deadly ways) in pursuit of growth? Or a combination of all of these, and more?

    Second, it's one thing to achieve economic growth. It's quite another thing to ensure that the benefits of any growth actually reach the poorest and most marginalised people. Wealth does not, contrary to what some people assume, authomatically "trickle down". The famous economist, John Kenneth Galbraith, once referred to this notion as the horse-and-sparrow theory: "If you feed the horse enough oats, some will pass through to the road for the sparrows."

    In fact, the Asian Development Bank notes that the wealthiest countries or those with the fastest growing economies in the Pacific, for example Papua New Guinea and Fiji, also have the most rapidly increasing inequality. Growth, in these cases, is further enriching the already wealthy, while failing to provide tangible benefit for the poorest. Equity, inclusion and redistribution policies are all needed if growth is to help the poorest people claim their rights, access decent services, and participate fully in societies and economies.

    Finally, when it comes to poverty, money really isn't everything. It is a great blessing that the world has achieved the income target of Millennium Development Goal 1 – halving the proportion of people who live on less than a USD1.25 a day. However, moving from an average per capita income of $1 a day, to an income share of $1.50 or $2 a day does not signal a liberation from poverty. Particularly if the things that matter most to people's lives – good health, decent education, clean and safe water, land and air, security and dignity in employment – are still missing or inadequate.

    And, in fact, making rapid advancements in these areas can and does happen even where national economies are growing slowly, or stagnating. For example, thanks to government intervention, good policies, community engagement and aid helping to deliver vaccines, medicines, food supplements and the like, the global child mortality rate has fallen by 41% in just two decades – which means 15,000 fewer children dying every day compared to 20 years ago.

    Tragically, 6.9 million children still die each year from causes we can prevent or treat, but it shows that the world can make progress against poverty and its atrocities.

    This progress, too, has not been limited to fast-growing economies or countries with unimpeachable governance. Nepal, for example, achieved a 65% reduction in child mortality despite swapping civil conflict for gridlocked government and experiencing low growth, and even economic contraction, over the period.

    Australian aid has been able to contribute to remarkable transformations. In 2012–13, our aid helped to

    * vaccinate more than 2.7 million children against deadly diseases, and assist more than 300,000 additional births to be attended by a skilled birth attendant,

    * provide access to safe water for an additional 2.2 million people, basic sanitation to 1.9 million people, and increased knowledge of hygiene practices to almost 1.9 million people,

    * enrol one million additional children in school,

    * support more than 2,200 civil society organisations to track service provision,

    * and provide 11.8 million people with life-saving assistance in conflict and crisis situations.

    These are contributions of which all Australians can be justifiably proud.

    Oh, and by the way, investments in health and education themselves, of course, contribute over the long term to building a stable and productive society, which benefits economic growth.

    Moreover we must not reduce our ambition to eliminate poverty's many harms. Worldwide, ensuring that every person has access to clean water and adequate sanitation is within reach. It is possible for every child to be vaccinated against the most prevalent diseases. It may not be easy everywhere and all the time, but the partnerships exist, the mechanisms exist. They just require adequate coordination, funding, and a sustained commitment to invest, innovate and build on what we have learned.

    In a recent speech, Foreign Minister Julie Bishop, said of the aid program that, "We want to deliver more effectively for those most in need."

    We agree, but the poverty focus of the aid program must not be lost in the rush to prioritise economic growth, large-scale infrastructure and partnership with the private sector.

    As Charles Kenny notes, in his magnificent book Getting Better,

    "The grail of economic growth should not be used to justify sacrifice of the well-being, freedoms, or lives of a country's citizens... In countries poor and rich alike, policymaking should be not merely or indeed primarily about the creation of financial wealth but instead about the maintenance and improvement of the broader quality of life of a country's citizens."


    (This is the third of a 4-part mini blog series examining the role that "national interest" plays in shaping Australia's aid program. To view the other blogs click here.)


    Ben Thurley is the Political Engagement Coordinator of Micah Challenge Australia.