Prime Minister Tony Abbott says when it comes to helping some of Australia's poorest neighbours, his government will focus on promoting trade, rather than spending on aid.
(Transcript from World News Australia Radio)
The federal government has announced 4.5 billion dollars' worth of cuts to the aid budget over four years, prompting the Opposition to call for a Senate Inquiry.
Thea Cowie reports.
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The Prime Minister says reducing the nation's aid budget is actually the kindest thing Australia can do for its poorest neighbours.
"As far as possible, Australian aid should be designed to enable other countries to stand on their own two feet as quickly as possible. The Australian Government's aid should be directed towards improving other countries' governance and strengthening their economies. Reducing the rate of increase in the aid budget over the next few years will enable the new government to ensure that our aid really is best targeted and most effective."
In 2000 the Howard Coalition government accepted the United Nations Millennium Development Goal promising to increase the foreign aid budget to 0.7 per cent of Gross National Income by 2015.
The Abbott government's spending cuts mean the aid budget will only grow in line with projected inflation, going up from about 4-billion-dollars to $4.2 billion in 2016-17.
On top of the previous Labor government's decision to defer the target twice, Australia's aid budget will fall billions of dollars short of the Millennium Development goal, reaching just 0.3 per cent of GNI by 2016-17.
Tim Wilson, from the business economics research Institute of Public Affairs, is welcoming Mr Abbott's comments.
He says the best aid is not always the most aid.
He shares the Prime Minister's view that trade - rather than aid - is the best way to ensure sustainable development.
"What we know is no country on earth has ever aided itself out of poverty but we know that there are many countries that have traded itself out of poverty. There are a number of problems. Firstly that countries donate money based on what their priorities are, not on what's necessarily going to deliver the best outcomes for the world's poor. But it also displaces often local entrepreneurship and local innovation where countries lift themselves out of poverty, versus trade which is based on market principles and people building sustainable business models."
Chief executive officer of World Vision Tim Costello acknowledges the importance of trade in combating global poverty.
He says that's why the aid organisation is one of the founding members of an independent Australian not-for-profit organisation, Business for Millennium Development.
But Mr Costello says there are many times when trade is not the answer.
"Aid is for those poor people who are left behind and we have now established very clearly that, I think it was the JFK (US President John F Kennedy) truism - 'a rising tide lifts all boats' - isn't true. Yes, economic growth is fantastic in lifting lots of people out of poverty but there are lots of people left behind and I can rattle off nations that have had no economic growth but where infant and mother maternal mortality rates are much lower thanks to aid, despite no economic growth. That's what aid exists for."
Mr Costello says only once a community has reached a certain level of development can it take advantage of trade.
"Trade depends on education and certainly skills. Well if you've got malaria you don't go to school, if you're hungry you can't concentrate in school, if you've got dirty water, you're sick and you don't go to school. This trade argument and somehow we've discovered a much better way to spend the aid dollar we know is just wrong."
The Prime Minister says regardless of the size of the aid budg"
Australia will always provide support during disasters and emergencies.