Foreign Minister Julie Bishop has outlined the government's “aid for trade” agenda for the $5 billion dollar aid budget in an address to the National Press Club today.
The changes in spending, which follows billions of dollars in budget cuts, will include new benchmarks to link funding to program performance.
Ms Bishop says the government wants high standards in value for money in 85 per cent of aid investments or they will be cancelled within a year.
Aid will also have an Indo-Pacific focus, she said, with more than 90 per cent of foreign aid funding to be spent within the region.
Where Australia spends its foreign aid
Source: Department of Foreign Affairs and Trade.
In addition to programs aiming to empower women economically, Ms Bishop said innovation would be focus.
“This is ground breaking stuff,” she said. “… Within the department of Foreign Affairs and Trade, we will establish a new development and innovation hub.”
Ms Bishop also defended the significant budget cuts, saying “we cannot continue to live beyond our means and Australia’s aid budget is no exception”, and highlighted the push towards private sector support.
“The global contact for financing development has changed and our aid program must change with it,” she said.
The announcement has been criticised by Greens leader Christine Milne, who said the government was “corporatising foreign aid”.
Cuts to the foreign aid budget
Almost $8 billion will be wiped from Australia’s foreign aid spending over five years under the proposed cuts outlined in the Abbott Government’s first federal budget, delivered last month.
Funding is set to remain at the current level of $5 billion in both 2014-15 and 2015-16.
The Coalition pledged to limit foreign aid spending growth in line with inflation before of the 2013 federal election, saving $4.5 billion, shortly after Australia recorded its first fall in year on year foreign aid spending in almost a decade.
The earlier Commission of Audit report had also recommended reforming foreign aid, including limiting aid growth to "a rate no greater than the rate of inflation" and refocussing programs on outcomes.
Handed down prior to the budget, 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.
- with AAP.
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