• Why we disagree with the Government

    Posted by Ben

    21 December, 2012

    So many Micah Challenge supporters are telling the Government, "Don't Divert Aid", that they are already receiving standardised email replies from some politicians or being argued with by the staff who answer the phones in the politician's office. I think that's a sign that the campaign is getting through.

    So, following on from my previous post, I wanted to put in one place our reasons for disagreeing with the Government's plan to divert $375 million of the aid budget towards domestic refugee costs. Sorry that this post is a little long and slightly policy wonkish.

    For those who want the summary version, we oppose the Government's plan and disagree with its reasons because the planned diversion of aid:

    1. is a massive, sudden and poorly-considered shift in the aid program's priorities.

    2. represents a cut to poverty reduction programs overseas to meet a domestic expense.

    3. makes our aid program less predictable, and thus less effective.

    4. is unnecessary – Australia has the resources and responsibility both to care for refugees at home and work to overcome poverty in our region and beyond.

    For more details, read on.

    In what follows, I'll be responding to public statements or responses to campaigners that have come from Labor politicians over the last two days. Everything in bold represents actual words from Government ministers, Labor MPs or Senators. Everything that follows each bold statement represents our response. I hope this will be a helpful resource as you continue to tell the government, "Don't Divert Aid".

    "Aid in 2012/13 is budgeted at $5.2 billion, which is $2.1 billion more than when Labor came to office."

    This is true. 

    The Government has a good record on aid, including implementing an independent review of aid effectiveness, developing a comprehensive strategic framework for our aid program and ensuring that it is more strongly focused on reducing poverty and achieving the Millennium Development Goals. It has also increased aid to its highest level as a proportion of our national income since 1989 as the chart below shows (source).

    "Australia remains on track to increase aid to 0.5% of Gross National Income (GNI) by 2016-17."

    We're very glad to hear it. One good thing about the planned diversion of aid is that rather than cutting the aid budget in pursuit of a surplus, the Government worked to maintain the aid budget at its current level, even though this meant planning to report as aid previously unbudgeted domestic refugee support costs. That at least means that the Government is trying to keep to its revised timetable for increasing aid to 0.5% of Gross National Income (GNI) by 2016-17.

    "Australia is a generous nation."

    As private individuals we certainly are. The 2012 World Giving Index ranks Australia as the most generous nation on earth in terms of donating to charity, volunteering, and offering assistance to strangers.

    Yet, despite the improvements and increases noted above, our Government aid program does not compare quite so favourably with those of other countries. In fact, we rank 13th of 23 developed country donors and our aid spending at 0.35% GNI is well below the OECD average of 0.41%, as the graph below shows (source). The international aid target of 0.7% GNI is represented by the black dotted line. Only five nations have so far met or exceeded that target, though the UK will achieve it next year.

    There's definitely room for improvement.

    "Providing assistance to asylum seekers having their claims processed in Australia is not a reduction in Official Development Assistance (ODA)."

    This is also true and we have never claimed that this represents a reduction in our ODA. We argue that the Government's plan would represent an inappropriate and disturbing diversion of aid, but we accept that it is not a cut of the total aid budget. That's why our campaign is called Don't Divert Aid.

    "The plan to report up to $375 million for basic subsistence for refugees waiting to have their claims heard in Australia is legitimate and in accordance with OECD guidelines."

    Yes, the OECD rules about what can be reported as aid (which are set by the donor countries themselves) do allow for the first 12 months of in-country refugee support costs to be reported as aid.

    "Other OECD nations also report in-country refugee costs as aid. For example, the United States ($895 million in 2010), France ($435 million in 2010) and Sweden ($397 million in 2010)."

    This is true, as far as it goes. But it neglects to mention that most OECD donors actually report very little aid in this way, while some report none at all.

    It also neglects to mention that very few OECD donors who report aid in this way spend as large a proportion of their aid budget in this way as Australia is planning to. The $375 million the Government plans to divert in this way represents around 7.3% of Australia's $5.2 billion aid budget.

    Of the three countries listed above who spend more of their aid on in-country refugees than Australia is planning to, only Sweden spends a higher proportion of its aid budget (8%) in this way. The US ($895 million out of a $30 billion aid budget) and France ($435 from a $13 billion aid budget) spend only around 3% of their aid on supporting refugees at home.

    The reason for this, of course, is that most developed countries recognise that they have the resources and the responsibility to support refugees on their own soil without drawing on funds primarily intended for supporting poverty reduction in developing countries.

    Until recently, Australia too spent relatively little of its aid in this way. In fact, in the 11 years of the Howard Government, just $334 million was spent on in-country refugee costs (source), an amount the Foreign Minister's plan would outstrip in a single year.

    So, this is our first major problem with the Government's plan. It represents a massive and sudden shift in aid priorities. Such a shift shouldn't be made on the run, or announced just before Christmas. A shift of this magnitude needs to be tested against the fundamental purpose of Australia's aid program, which is to help people overcome poverty. To our thinking, this shift doesn't pass this test. 

    "The government is not making cuts to our foreign aid budget in order to pay for refugees."

    This is quite a slippery statement actually. It's not untrue, so much as unhelpful.

    As noted above, it's true that there are no cuts to the total aid budget. However, to find the $375 million dollars to meet the rising costs of supporting refugees in Australia, some foreign aid programs that have already been planned and budgeted will be cut. Or, if you prefer the Government's terminology, "delayed or deferred" (which is certainly a cut with respect to this year's budget).

    We don't yet know where the money is going to come from, and which programs will be cut delayed or deferred.

    And this is our second major problem with the Government's plan. While allowed within OECD rules, and in line with what some other donors do, it represents a cut to poverty reduction programs that have already been planned and budgeted in order to meet a rising domestic cost and prop up the federal budget bottom line.

    A spokesperson for the Foreign Minister has confirmed that $20 million will be taken back from United Nations humanitarian and development agencies. However, this only confirms the scale of the challenge. How is the Government planning to claw back the remaining $355 million? Which other programs will be delayed or deferred?  The training of teachers in Indonesia or midwives in Ethiopia? Helping to build water and sanitation infrastructure in Bangladesh or helping to build effective institutions in the Solomon Islands? The delivery of life-saving vaccines through the Global Alliance or life-saving food supplies through the World Food Program?

    A third and related problem is that it makes our aid program less effective. In seeking to delay or defer programs that have already been planned and budgeted, the Government is breaking its own commitment to make aid more predictable. GetUp's ad skewering the planned diversion might be a piece of satirical black humour, but something like those conversations must be going on, as AusAID and other Government departments seek to claw back $375 million that has been committed in this year's budget, but not spent.

    Multi-year, predictable aid is a key factor in ensuring that aid is effective. Without this predictability, our aid partners might find themselves unable to plan or budget their programs properly, or not able to properly follow through with implementation or monitoring. They might find themselves cutting a program short before it has had a chance to achieve real impact. In short, they will not be able to effectively do the complex, difficult and long-term work of overcoming poverty. 

    Finally, this planned diversion is unnecessary. Australia has the resources and responsibility to both care for refugees and asylum-seekers here at home, and support the work of overcoming poverty in our region and beyond. Despite the protestations that this policy shift was in line with OECD guidelines or represented a balancing of competing priorities in our aid program, it was always clear that seeking these cuts was part of the Government's search for a surplus at (almost) any cost.

    The fact that the Treasurer has now announced that the Government is no longer seeking a surplus highlights just how unecessary this shift is. It is wrong to balance our books on the backs of the world's poorest people at any time. But now that we are no longer even balancing our books, the $375 million needs to be restored to programs that fight poverty and its atrocities.

    The Treasurer has said that he is not "loosening the purse strings", even if the budget will not return to surplus this year. However, the Government still has the opportunity to ditch this plan and return the money to the programs that need it most.

    If you haven't already, or even if you have, please contact the Treasurer and Foreign Minister (again), telling them "Don't divert aid".



    Ben Thurley is the Political Engagement Coordinator for Micah Challenge Australia. Ben has previously worked with TEAR Australia and in Nepal as advocacy advisor to United Mission to Nepal.