Cuts to aid funding in the Budget 2015 unfair and short-sighted

| May 12, 2015

The Government announced severe cuts to Australia’s aid funding in the Budget 2015. Dr Kylie Bourne explains why lifting people in our region out of poverty is in our own interest.

On Monday Foreign Minister Julie Bishop joked that she could use magical powers to prevent Treasurer Hockey from taking the razor to Australia’s aid budget. After the deliver of the budget on Tuesday night few, if any, were seeing the funny side.

The budget confirmed the $1 billion cut to aid funding that was announced in 2014. This cut, and others delivered in December last year, came despite the promise the government made when elected to increase funding for aid in line with inflation. In total, the Coalition has announced $11.3 billion cuts to aid. This sees our spending on aid at its lowest rate ever, relative to the state of the economy. In terms of generosity, this puts us in the bottom half of the league of OECD donors, even though our GDP has increased by 40 per cent since 2005-06.

The disproportionality of the savings made by cutting the aid budget relative to other expenditure streams is striking. The 2014 budget sourced 21 per cent of savings, even though aid only accounted to 1.22 per cent of government spending. After another hit in December last year, aid was again in the budget firing line.

Indonesia had braced for cuts to aid, not necessarily because of the recent execution of Andrew Chan and Myuran Sukumaran, but because projects initiated after the tsunami were due to be completed. Even so, it will take some not insignificant skill to navigate the size of the announced cuts. A 40 per cent cut to any budget is not to be taken lightly, and how this will impact on trade and diplomatic relations will remain to be seen.

Other cuts are just as large: the Philippines and Vietnam must also endure a reduction of 40 per cent to their funding, while funding to Africa was slashed by 70 per cent and is now at a historic low.

Conversely, Cambodia and Nauru saw increases in funding, sparking speculation of partisan politics that sees countries rewarded for processing asylum seekers on Australia’s behalf.

That these cuts harm the most vulnerable in our region is obvious. That Australia as a wealthy, developed nation cuts funding to its own region that houses two thirds of the world’s poor is ungenerous and unfair. But what is most striking is that cutting funding to aid ultimately is not in Australia’s interests, not only because it reduces the range of diplomatic tools at our disposal, or that it harms relationships with our neighbours. It is short-sighted because lifting people in our region out of poverty, helping to provide economic and social infrastructure to developing economies is in our own interest. The more we help provide secular education, reduce maternal mortality and improve local governance, the less likely it is that we will have radicalisation on our doorstep. The better our relationships with our neighbours, the better our regional capacity to deal with natural disasters, such as the earthquakes in Nepal, or with emerging pandemics.

The Treasurer called this budget the “fair go” budget. For the poor in our region, and ultimately for ourselves, it is providing anything but.