Everything you need to know on Australian Aid before the Federal Budget

With the scent of election season on the winds, it is easy to forget that prior to hitting the voting booths, the government will hand down its annual budget —usually a highlight of the political calendar.  

In the past 12 months there have been some shifting sands. We’ll take you through the main announcements and conjecture in the aid space ahead of budget 2019-2020.

November 2018

Pacific ‘Step-up’ 

The Coalition led Pacific ‘step-up’ took full flight on 8 November 2018 when Morrison announced a $2 billion Australian Infrastructure Financing Facility For the Pacific .

Specific to aid, the AIFFP includes $500m in grants, a $10 Million, 3 year Australian Aid: Friendship Grants Program, a dedicated vessel to deliver humanitarian support during natural disasters, and a Church Partnerships Program in the Pacific.

The step up in programs and financing has been complemented by a relational increase, with a rise in ministerial visits to the Pacific, including a recent visit to Vanuatu from Morrison, significant as Prime Ministers have generally only visited for regional forums.

The AIFFP announcement could have been met with a positive reception from the aid and development sector, however, as only $1.5 billon of the ‘step up’ is tabbed to come from the federal budget, it is likely the remaining $500 million in grants will actually be diverted from other areas of the aid budget. Further cuts to current aid programs mid-stream would only contribute to Australia’s growing reputation as an unreliable development partner.

The aid budget is already under immense strain, and Australia was warned last year that a lack of funding is the single biggest threat to the undoing of our otherwise efficient and effective aid program.

While the aid funding diversion question will be answered after the budget is released next week, there still remains other significant concerns regarding the AIFFP and its role in shaping aid in the Pacific.


December 2018

ALP Announcements:

On 17 December 2018, the ALP announced that a Labor Government would commit $500 million over five years to the UNHCR.

This funding helps to build capacity in the staff, training and facilities required by the UNHCR to process the 68.5 million people displaced globally.

Severely underfunded, the raising of Australia’s financial commitment to the UNHCR was one of the primary focus points at Micah’s Voices For Justice 2018. If enacted, not only will the funding help negate ‘push factors’ in forced movement, this commitment will work towards re-establishing Australia as a leader in helping the world’s extreme poor, displaced and oppressed.

On 18 December 2018, at the ALP Conference is was announced that an elected Labor Government would increase aid as a percentage of gross national income every year, with a goal of achieving a funding target of 0.5% of GNI.

This announcement was widely welcomed by the aid and development sector although no specifics of timeframe for achieving 0.5% were given. A post-conference media release stated that ‘rebuilding Australia’s international development assistance program is a core element of Labor’s foreign policy.’ 


The Mid-Year Economic and Fiscal Outlook, also in December last year, demonstrated that we are on track to reach surplus in 2019-2020. It also revealed there have been some significant changes in forward estimates, labelled as ‘decisions taken but not yet announced’, around $9.2 billion in unspecified revenue.

The lack of commentary and clarity was received with disappointment.

The response to calls from the aid sector to increase Australia’s aid commitment has repeatedly been met with ‘wait for the budget to be in surplus’.

Without any new information on aid forecasts, it gives little context to possible outcomes of the impending budget.

February 2019

The Treasurer with Pastors:

In February this year, 12 pastors from the electorate of Kooyong met with Treasurer Josh Frydenberg to discuss their vision and concerns with the Australian aid budget. Agreeing with the pastors on Australia’s moral obligation to the poor, Frydenberg cited the increased presence in our region as one way of targeting the aid budget to those our doorstep, the area we have the most responsibility for.

The discussion also touched on the importance of mitigating ‘push factors’, that leave people to desperate circumstances where they are more likely to flee their home country.

Despite the positive discourse on ideas, the question still remains if the forecasted surplus will deliver the long-held push back to increasing Australian aid come this budget.


Wong Speech:

The boldest update on Australian aid policy from the major parties came from Penny Wong’s recent speech at the University of Queensland Annual Lecture in Political Sciences and International Relations.

In her speech, Wong laid out their rationale behind why Australia needs to rebuild it’s aid program, and some ideas about how it might be achieved.

She noted that at the recent ALP conference, a policy platform amendment was made to commit to increasing the aid budget by a certain percentage each year, beginning with the first budget. Framed as a long term plan, there were no specific numbers on what percentage the increase would be.

A loss of leadership and technical expertise was cited as restricting Australia’s ability to deliver aid assistance in the most effective and efficient way. Wong suggested building development capability within DFAT to improve program quality.

She touched on Labor’s thematic priorities in regards to aid; health, education, climate change, infrastructure, gender equality and inclusion, which line up with a number of the Sustainable Development Goals.

Appointing a global human rights ambassador was also suggested, to better address human rights abuses by Australian businesses.

In line with the emerging trends both in Australia and internationally, Wong advocated for a regional focus, touted as being better for our national interests, easier to exercise influence through and making the best use of standing capabilities and strengths.


Where are we now?

In the current budget, Australia’s aid commitment is the lowest it has ever been, at just 0.22 percent of GNI. This is painfully lower than our OECD target of 0.7 percent.

Our aid has also fallen in regards to international standards too. In 2018 Australia also reached its lowest ever ranking in international ODA levels, sitting well in the bottom half at 19th out of the 29 aid giving nations.

Unless there is change, the aid budget is set to continue to fall. This is due to the freezing at $4.2 billion, rather than keeping up with the consumer price index, therefore causing the real dollar value delivered to programs to drop.


Where could we go?

If the current trajectory of aid continues unchanged, our aid budget will suffer further losses in real value over the coming years, until at least FY 2021-2022.

If it is confirmed $500 million will be diverted to resource the AIFFP, the forecast is even more dire for our current programs.

Being an election budget, it appears the ALP has taken this opportunity to introduce some specific measures in answer to aid advocates tireless voices.

If the announcements are upheld, a Labor government would incrementally increase aid, retain the regional focus, up our commitment to the UNHCR and introduce the Pacific Avoidable Blindness and Vision Loss Fund.

Our hope is between the budget announcement and the election, the Morrison government would seek to match some of these commitments, or show even greater leadership in Australia’s commitment to the global poor.