Last week’s budget saw an increase in Australia’s overseas aid program which was criticised by shadow treasurer Joe Hockey in light of the many Australian families who are ‘doing it tough’. There is no denying that many Australians face cost of living pressures. Even so, ‘doing it tough’ is a relative concept — just ask the 1.7 billion people living in absolute poverty on US$1.25 a day.

The increase of $1.9 billion over four years will keep us on track to meet the commitmentwe made at the UN to increase our aid to 0.5 per cent of Gross National Income by 2015. In fact, both Labor and the Coalition are on record in support of this target and Hockey’s comments were quickly shut down by the opposition’s foreign affairs spokesperson Julie Bishop.

But this welcome increase in funding aside, our aid program is in need of some major renovations. The effectiveness of Australian aid is currently undergoing an independent review, which is a good start.

As it stands now, the program’s aim is to reduce poverty in line with our ‘national security and economic interests’. Conversely, the UK’s International Development Act allows the relevant minister to spend funds on ‘sustainable development and welfare’, but strictly prohibits British aid being linked to ‘British goods and services’. And again,USAID almost completely aligns aid with national security policy. Australia’s policy sits somewhere between these two poles.

We use aid dollars to create markets for Australian exports and to stem the flow of refugees by bribing our neighbours to control immigration and upgrade detention centres. Providing Indonesia with $31.2 million from the aid budget for an anti-people smuggling program will not help those most in need.

Evidence abounds that aid is most effective when governments, local communities and civil society in recipient countries are empowered to set priorities for its expenditure. Malawi, one of Africa’s poorest countries is on target to reach its Millennium Development Goals. A UNDP report notes ‘Malawi has proved at international level that policies that speak to lived realities may initially be viewed as defying prescribed western models for economic growth, but that they can work based on local situations and with country-based opportunities’.

Surely it’s not too much to ask that aid programs prioritise the national interest of recipient countries — and not our own? Contrary to the evidence, and Australia’s own commitment as a signatory to the OECD Paris Declaration on Aid Effectiveness, which puts country ownership at its centre, Australia persists in using aid as a tool of foreign policy. It may not be as far down this track as the United States but poverty-reduction should be an end in itself. And that end is best achieved through funding health, sanitation and education schemes — and not through sending technical advisors to train local officials in the art of negotiating free trade deals.

A perfect example of Australia’s use of aid as leverage in our national interest are thePACER+ trade agreement negotiations between Australia and 14 Pacific Island nations.

Australia appears hell bent on bringing these agreements to a rapid conclusion. In their current form, they threaten vital education and health services, and could have a negative impact on food security in the region. For example, promoting changes in land practices to open up opportunities for foreign investment undermines the capacity of Vanuatu and PNG small-scale farmers to produce locally nutritious food. Why? Because more and more land would be dedicated to producing food for export and biofuels.

And yet one of the carrots used in negotiations with Pacific Island governments is the promise of future aid increases — if they open up their markets to Australian exports. These are David and Goliath encounters. Do we really need to be blackmailing tiny island states to get our way? Even the World Bank admits that trade liberalisation can only benefit countries once they have developed strong domestic markets and institutions. In the case of the Pacific Islands, that stage of development is still way off.

We also need to ensure we keep our aid clean. Despite the ever increasing impact and threats posed by climate change, the minimal amount that Australia gives to fight climate change is double-counted as climate aid to the UNFCCC and as aid to the OECD. This is expressly violates the UNFCCC requirements that climate funding be additional to ODA. This means vital resources to fight poverty are diverted, whereas climate funding should be additional in recognition of the fact that it is an additional burden for developing countries, particularly low-lying island states.

Keeping it clean also means reducing the over-reliance on outside contractors. According to the 2009 Australian National Audit Office review of Australia’s aid, managing contractors delivered over 70 per cent of Australia’s bilateral aid. This was largely in the form of technical assistance, which has been severely criticised by a number of NGOs for its lack of effectiveness.

The ANAO report notes that only 38 per cent of technical assistance was carried out ‘in a way that enables partner countries to exercise leadership over the assistance provided’. A recent review of Australia’s aid found that of the $400 million given annually to Papua New Guinea, Australia’s second largest aid recipient, more than half was paid out to consultants.

Simply put, the Australian Government needs to ensure that more of its money reaches those who need it. Our aid allocations need to be attuned to recipient countries’ needs, and to prioritise building schools and employing nurses over giving donor government bureaucrats lessons in how to write reports.

For example, in Mali, budget support which directs money straight to Mali’s education system, has seen an increase in the enrolment rate of primary school children to 67 per cent in 2003 up from 26 per cent in 1990. A World Bank loan and targeted international aid has laid the groundwork for 100 per cent primary school attendance rates by 2015.

Finally, AusAID must become more transparent about what it funds. The one line description on AusAID’s website of contracts granted is not enough. As a signatory to the Paris Declaration, the Australian Government should disclose more information about the aid projects it funds and in a more timely fashion. It should also make clear what the conditions it attaches to them are. That way, we’ll know whether or not Australian aid dollars are being spent helping those who are doing it tough in our region and further afield.

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