Budget Factbox: Foreign Aid spending

The Coalition pledged to limit foreign aid spending growth in line with inflation, before of the 2013 federal election. Here's a snapshot of what, and where, the federal government has spent on foreign aid.

The Coalition pledged to limit foreign aid spending growth in line with inflation ahead of the 2013 federal election, shortly after Australia recorded its first fall in year on year foreign aid spending in almost a decade.

The new government also absorbed AusAID into the Department of Foreign Affairs and Trade, prompting the resignation of its Director General Peter Baxter.

World Vision Australia’s Andrew Johnson said the charity had concerns over the long term impacts of aid cuts by both sides of government.

“We’ve been concerned for some time that both sides of politics pulling back from their commitments had an impact on our standing internationally, particularly in light of our position on the UN Security Council and our hosting of the G20 this year,” he said.

“We’re hopeful that if the government fulfils its commitments this year, that we may start to get that more on an even keel.”

Listen: Andrew Johnson speaks to Stephanie Anderson.

Mr Johnson said World Vision would also be examining the government’s intention to focus foreign aid on the Asia Pacific and Indian Ocean regions.

The Australian National University’s Stephen Howes said the foreign aid program - totalling $5 billion - was up from around $2 billion a decade ago, due to significant increases of up to “several hundred million dollars” a year.

Professor Howes said Australia had become one of the world’s major donors, but global aid levels had stabilised over recent years.

He said although recipients wouldn’t experience cuts in absolute terms, it would be a sharp change from previous years.

“We’re going to be a less generous donor, both in our region and worldwide,” he said.

“… Australia is not alone, we’re not going to stand out for what we’re doing in our aid budget, but it is a sharp contrast with what’s gone on in the past decade.”

Where Australia spends its foreign aid

Source: Department of Foreign Affairs and Trade.

Budget to be test on transparency

Professor Howes said transparency should also remain a primary issue, following recommendations put forward by the Independent Review of Aid Effectiveness in 2011.

The former Labor government developed a transparency charter following the review, though Professor Howes said it was unclear if the process would remain in place.

“In fact, we’re unclear as to even how the budget will be presented now that AusAid no longer exists as a separate entity,” he said.

“… The budget actually itself will be a test of the government’s commitment to transparency around the aid program.”

Listen: Professor Stephen Howes speaks to Stephanie Anderson.

The review, which Professor Howes took part in, also labelled the aid programme as fragmented and unsustainable.

It recommended the consolidation of individual programmes and projects, a proposal referred to in the Commission of Audit report, handed down last week.

Commission of Audit report recommends reform

The Commission of Audit report recommended reforming foreign aid, including limiting aid growth to “a rate no greater than the rate of inflation” and refocussing programs on outcomes.

It stated that Australia’s official development assistance stood at approximately $5 billion and would reach $9 billion within a matter of years if the Abbott Government met the previous Labor government’s target.

The Commission recommended that Australia’s Official Development Assistance programme be better managed including by

• not tying aid spending to the level of Gross National Income, rather managing it in the same way as other agency funding, with any increase in resources justified in terms of the overall fiscal context rather than to a set of funding targets
• increasing future aid spending at a rate no greater than the rate of inflation, noting that even with this funding, aid spending would be at historically high levels
• reducing the significant fragmentation, with bilateral aid delivery tightly focussed on countries of strategic interest to Australia and with assistance to other countries addressed through the better performing multilateral funds
• focusing aid programme reporting on outcomes achieved rather than the quantity of resources applied

The recommendations followed an earlier Senate inquiry into foreign aid, which urged the Abbott Government to undertake a white paper process to refine the long term strategic objectives of Australia's aid program.