Article appeared in the Sydney Morning Herald. By Debra Jopson.

THE Federal Government has wrongly counted $113 million it is spending on supporting refugees during their first year in Australia as foreign aid, a Sydney-based watchdog says.

This has contributed to almost $1 billion of the $3 billion Canberra is spending on foreign development assistance this year that has falsely inflated its aid budget, Aidwatch says in a report to be released today.

Almost a third of the entire aid budget is being spent on programs in which no new money flows to the countries said to be getting it, Aidwatch has calculated.

Instead, the foreign aid budget has made Australia look more generous than it is by including debt cancellation, funding to help refugees settle here and money spent playing “regional sheriff” to enforce security, the independent body says.

For instance, $112 million – half the total aid to the Solomon Islands this financial year – pays the salaries and logistics support of the Australian Federal Police, while millions more went to James Packer’s company GRM International to run law and justice services there, including the prisons.

Overseas aid is being used as a “massive leveraging tool” to further Australia’s foreign policy, said one of the report’s authors, Kate Wheen, an Aidwatch co-director.

“We are getting further and further away from public perceptions of what aid does,” she said.

Scholarships that pay expensive full fees for foreign students studying here, when primary students overseas could benefit instead, are also counted as aid, says the report, Fighting Poverty or Fantasy Figures: The Reality of Australian Aid.

“In the tertiary sector, rather than giving scholarships, Australia would be better advised to support successful educational institutions in aid recipient countries,” Aidwatch says.

Calling refugee funding aid has already created a predicament for the Government, the report says.

“Having spent $2.08 million in 2001 on Operation Gabardine, the so-called ‘children overboard’ affair, the Government then claimed this as refugee funding under [Organisation for Economic Co-operation and Development] criteria, and yet the asylum seekers involved were refused refugee status,” it says.

Cancelling most of Iraq’s debt, which accounted for three-quarters of the increase in the aid budget last financial year, should not be counted as aid because it “does not provide a cent of new aid money”.

“You wouldn’t consider the interest that you pay on a home loan as aid so why does it form such a large proportion of our current aid budget?” the report says.

The trend is to target aid to serve Australian interests rather than tackle poverty, moving away from the millennium development goals signed by the Prime Minister, John Howard, the report says.

“Australia is increasing the technical assistance quota of its aid program, recruiting more and more Australian public servants, private people and companies to work within recipient governments on ‘governance’ programs,” it says.

This is despite criticisms in recent report cards by the OECD and the international watchdog Actionaid about the high level of Australian technical assistance that serves its national interest.

However, all official expenditure on aid reported by the Federal Government complies with the guidelines of the OECD’s Development Assistance Committee, AusAID said in response to questions from the Herald.

Debt cancellation, payment for refugee programs in Australia, scholarships and funding for regional security measures, including Australian Federal Police activity, all met the committee criteria. This was consistent with the way other donor countries reported, it said.

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