Under new management, Australia’s aid program set for more modest course

On Saturday, Tony Abbott declared Australia “under new management” after he led the Coalition — a center-right political alliance — to a resounding election victory over Prime Minister Kevin Rudd and the six-year Labor government. Elected on a pledge to return the budget to surplus, Abbott is expected to be sworn in as prime minister early next week. As Labor prepares to turn over the keys to the Australian Agency for International Development to the spending-wary Coalition, Australian aid groups fear that the heady days of growth and expansion for Canberra’s now more than AU$5 billion ($4.6 billion) aid program may be over. “In the current environment and based on all of the other stated budget commitments of the Coalition — around spending and tax priorities — it is unclear to me how they will continue to keep the current [aid] growth trajectory,” Matthew Maury, national director of TEAR Australia, said. Under the Labor government, Australia has been one of a few donors that have significantly increased foreign aid in the aftermath of the global financial crisis — Canberra’s aid spending has grown 49 percent since 2008. Rudd, the first prime minister to bind Australia to the target of contributing 0.5 percent of gross national income toward foreign aid, garnered praise across the Australian development community for his deep commitment to the Australian aid program. Insiders within the Coalition say that while Abbott may not share Rudd’s strong personal interest in the Australian aid program, the prime minister-elect is nonetheless broadly supportive of Australia’s global development engagement. “He hasn’t spoken the same rhetoric about the aid program [as Rudd] but he certainly has recognition and sympathy for those who are less well-off. I think he also sees this as a national interest priority,” Russell Trood, former chair of the Australian Senate’s foreign affairs committee, told Devex. “There’s been no evidence that there’s going to be a slash and burn policy taken to the aid program.” Continued aid growth — but 0.5 percent target on the backburner On the eve of Saturday’s general election, the Coalition reaffirmed that it shared the Labor government’s 0.5 percent ODA to GNI target — albeit while still refusing to set a timetable for meeting this goal. Labor had pledged to reach the 0.5 percent aid spending target by 2017-18, two years behind Rudd’s original deadline. In an effort to save up to AU$4.5 billion over the next four years, the Coalition has also announced plans to index growth in Australian aid spending to the rate of inflation. Based on projections from the Australian National University’s Development Policy Center, the incoming Coalition government’s aid budget is slated to rise from AU$5 billion in 2013-14 to AU$5.7 billion in 2016-17. The Coalition’s aid budget for 2013-14 cuts Labor’s planned aid spending for the current financial year by 12 percent. Under the Coalition’s spending plans, Australia’s ODA to GNI ratio would drop sharply from 0.37 percent this year to 0.32 percent in 2016-17, prompting skepticism over the Coalition’s adherence to the 0.5 percent target. “[Coalition] costings mean that the 0.5 target will not be achieved by 2017, as Labor had budgeted. While the Coalition remains formally committed to this target, its achievement is now effectively off its policy agenda, at least as a short-term goal,” Andrew Rosser, an expert on Australian aid at the University of Adelaide, asserted. As the Australian aid program continues to grow — albeit much more modestly — the Coalition is expected to channel more aid money toward private sector development and economic growth initiatives, as was the case in the last conservative government under Prime Minister John Howard from 1996 to 2007. Climate change is one sector that could experience funding shifts. Before becoming leader of the opposition, Abbott had expressed skepticism over the science behind climate change. The Coalition looks poised to keep its word to scale back Australia’s AU$200 million in annual climate financing. Some analysts say that the Coalition could protect funding for climate change adaptation, which unlike climate change mitigation, does not imply man-made global warming and is more easily weaved into traditional environment and disaster risk reduction programs. “It’s very hard to see why they would be opposed to the use of aid for climate change adaptation … I suspect in time they will agree to the use of aid for climate change adaptation,” Robin Davies, associate director of the Development Policy Center at ANU, said. Aid to Africa and Latin America could be in jeopardy Under six years of Labor government, AusAID has aggressively expanded its presence to Africa as well as Latin America and the Caribbean in a bid to reach more of the world’s poorest people. Zimbabwe — the leading recipient of Australian bilateral aid in Africa — now counts Australia as its fifth largest aid donor. Following the Coalition victory, there is widespread expectation in Canberra that this trend will soon be reversed. “[The Coalition] has a general view that the aid program has become too geographically dispersed … The Coalition has made clear that they would want to see some consolidation of the aid program,” Davies pointed out. In early 2011, the Coalition leadership had considered a proposal from its right flank to call for the Labor government to effectively discontinue Australian aid to Africa. In the years since, Coalition stalwarts have quieted their criticism of Australian aid to Africa and Davies, for one, told Devex that he doesn’t anticipate dramatic cuts to the AusAID program on the continent. Generally skeptical about the effectiveness of multilateral institutions, the Coalition does seem keen on shelving the Labor government’s plans to join the African Development Bank. There is also some suspicion that the bulk of Australian aid to Latin America and the Caribbean — which currently stands at only AU$38 million compared with AU$355 million for sub-Saharan Africa — will be on the chopping block under the incoming Coalition government. Deputy opposition leader Julie Bishop — in line to be Abbott’s foreign minister — had previously expressed reservations over the Labor government’s decision to expand Canberra’s aid program to Latin America and the Caribbean. “If you think of this in political terms, reducing Australia’s aid program to Latin America and the Caribbean is likely to be fairly uncontroversial because there’s just not a strong domestic constituency that would really advocate strongly for a continued orientation toward that part of the world,” Rosser argued. In the event of an AusAID pullout from either Latin America and the Caribbean or Africa, Canberra is likely to focus its aid program even further on the Asia-Pacific region, which has historically garnered the lion’s share of Australian aid spending. Activist NGOs out of favor In line with the recommendations of the 2011 aid effectiveness review, Coalition officials have indicated that they intend to maintain and even strengthen the Australian aid program’s engagement with both private sector partners and nongovernmental organizations. The Coalition’s costings statement released Thursday seemed to commit the now incoming government to bolstering AusAID‘s funding for NGOs. “The Coalition will re-prioritize foreign aid allocations toward nongovernment organizations that deliver on-the-ground support for those most in need,” the Coalition’s costings read. Despite the Coalition’s overtures to Australia’s aid community, former Coalition Senator Trood and other observers say that the incoming government could inherit the Howard government’s reluctance to fund NGOs that are critical of Australian government policy. Most notably, in 2005, then foreign minister Alexander Downer revoked a AU$65,000 AusAID grant to Forum Tau Matan after the East Timorese human rights group publicly challenged the Howard government’s policy toward East Timor. At about the same time, several other East Timorese advocacy NGOs were also reportedly denied AusAID funding. “It’s certainly true that there is a [Coalition] view that NGOs that are committed to the delivery of aid should be in the delivery of aid business and not engage in political activities and things of that kind,” Trood said. “It’s not going to be a high priority but it’s certainly a disposition on the part of the Coalition that if you’re an aid deliverer, then you deliver aid.” Sources within Australia’s NGO community did emphasize to Devex that the Howard government largely steered clear of defunding activist aid groups based in Australia, many of which wield considerable political influence in Canberra. “There were experiences when policy dialogue with the Howard Government was difficult but I had no experience of funds being cut to Australian-based NGOs. Non-Australian based NGOs are more vulnerable to such actions, as [was] the experience of the East Timorese NGOs,” Andrew Hewett, Oxfam Australia’s executive director from 2001 to 2012, told Devex. “How a possible Abbott-led government will behave one cannot be sure,” Hewett added. Join the Devex community and gain access to more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health. Read more: What should the new government’s top 3 priorities be for the Australian aid program? Why Australia should stand by its aid commitments Massive aid cuts loom if Australian opposition wins vote Australians demand 0.5 percent aid spending target