Analyzing the 2019-20 Australian aid budget

CANBERRA — The release of the 2019-20 Australian aid budget on April 2 brought a shift in aid policy under the leadership of Prime Minister Scott Morrison. It saw new language brought into the assessment of aid that puts Australia’s self-interests front and center: a step away from the Green Climate Fund, a shift away from growing global increases in official development assistance, and growing shifts in the priorities for Australian in supporting the Sustainable Development Goals. Delving deeper into the budget papers, beyond the headline figures, provides insights into changes for aid and the impact on the development sector. A new Devex interactive on the Australian aid budget helps to break this down — and provides further analysis that shows how the budget impacts the delivery and effectiveness of the Australian aid program. “We’ve got cuts to an inadequate climate policy that was meant to be [AU]$2 billion over a decade, and now it’s [AU]$2 billion over 15 years.” --— Andrew Leigh, shadow assistant treasurer Changing language for Australian aid targets The Department of Foreign Affairs and Trade portfolio budget statement contains performance criteria for the Australian aid program that sees shifting delivery goals, assessment criteria, and targets from 2019-20 that proritize Australia’s self-interest over ODA. While the performance management framework, “Making Performance Count,” and associated targets for gender remain important in the delivery of all ODA, it will no longer be part of the performance criteria, which instead includes the promotion of Australia’s interest as the main aim, followed by the delivery of an effective, efficient, and transparent program. Specific targets include sustainable, inclusive economic growth and poverty reduction; a 90 percent target for country attributable development assistance to the Indo-Pacific; Indo-Pacific goals for the SDGs; a target of 85 percent effectiveness and efficiency in aid quality checks; and publication of all country and regional aid performance reports on the DFAT website. In multilateral replenishments within ODA, again, the performance criteria is against the promotion of Australian interests. The changes align aid assessment with DFAT’s 2018-19 Corporate Plan, but it is a change that also makes way for the new Australian Infrastructure Financing Facility for the Pacific to justify a shift to loans while skating a fine line with ODA definitions to be in the benefit of the recipient country. Climate is an unclear priority In addition to changing performance criteria, there is a shift in how Australia will deliver its 1 billion Australian dollar ($712 million) commitment to climate funding. Contributions to GCF have been scrapped, and instead, this 2019-20 financial year will see Australia deliver an AU$200 million commitment by mainstreaming climate activities through other areas of the aid program. Pacific regional and infrastructure programs will include a climate action component, and a new $75 million Australia Pacific Climate partnership will be introduced. The change was highlighted by the Australian Council for International Development in its budget analysis as a “missed opportunity” for Australia to increase investment in international climate adaptation assistance. It was also highlighted by Shadow Assistant Treasurer Andrew Leigh as a component of an overall budget that suggests Australia is stepping away from global commitments. “We’ve got cuts to an inadequate climate policy that was meant to be [AU]$2 billion over a decade, and now it’s [AU]$2 billion over 15 years,” he said. “By contrast, Labor will take an emissions target to the next election, which is appropriate to what we signed up to in Paris. And we’ll do this through a range of initiatives including the Clean Energy Finance Corporation, investment in electric vehicles, and ramping up the safeguard approach for large businesses.” Joining the 0.2 percent club puts Australia’s foreign engagement at risk Australia is now set to join 10 countries whose ODA is at 0.2 percent or less of gross national income — Czech Republic, Greece, Hungary, Korea, Poland, Portugal, Slovak Republic, Slovenia, Spain, and the United States. It was a club Stephen Howes, director of the Development Policy Centre, suggested Australia should not want to join, putting its goals of international development out of line with the majority of OECD donor countries who are increasingly contributing more than 0.5 percent of GNI. Australian government spending has increased under the Coalition government and is forecast to increase in spite of calls that spending needs to be reigned in. Leigh said that this created challenges for Australia to improve its global standing and influence to benefit the Indo-Pacific region. “If we cut the Australian aid program we risk creating a region that is more volatile in our dealings with fragile states. A healthy Australian aid program is how we assist,” Leigh said. This, in turn, impacted opportunities for new partnerships and even economic development for Australia. Country cuts risk Australian aid effectiveness At a budget night briefing, DFAT staff explained that the objective of Australian aid is to be “affordable, effective, and designed for maximum impact.” But the release of "Performance of Australian Aid 2017-18," to coincide with the budget, raises concerns that the priorities achieve the opposite. Bangladesh, Indonesia, and Cambodia are among the highest performing countries in the Australian aid program, according to the report. But these are countries that faced budget cuts to support the “Pacific step up.” Myanmar, Samoa, Tonga, and Papua New Guinea — the countries that will benefit from the step up — are the worst performers. It raises an important question: Are assessments being used to prioritize aid programs. Private sector as a growing delivery partner The statistical summary of Australia’s official development assistance for 2017-18 highlights additional ongoing changes in aid program partners that can influence delivery. Commercial suppliers sector partners reached a record $945 million in 2017-18. Multilateral organizations remained the main delivery mechanism, accounting for $1.8 billion while partnerships with NGOs and universities and academic institutions continue to decline — accounting for AU$422 million and AU$268 million respectively in the 2017-18 performance report. The focus on commercial partners is expected to grow as the Australian aid program engages new players to support more efficient delivery of Australian aid within its reduced budget. Infrastructure’s impact on supporting the SDGs Since the 2017-18 budget, DFAT has detailed linkages between investment priorities and how Australian aid is supporting the delivery of the SDGs. Devex’s Tableau interactive of the Australian aid budget demonstrates the impact a focus on infrastructure and building resilience has on the SDGs — at the expense of education and environmental objectives. Since the 2017-18 budget, funding for projects supporting SDG 9: infrastructure, trade facilitation, and competitiveness have grown by AU$168 million. This growth has been concentrated in the Pacific which has seen an AU$147 million increase as well as Southeast and East Asia with AU$122 million in growth while South and West Asia, Africa and the Middle East, and global investments have declined. This category, according to DFAT, contributes to the delivery of six goals: zero hunger (SDG 2), affordable and clean energy (SDG 7), decent work and economic growth (SDG 8), industry innovation and infrastructure (SDG 9), sustainable cities and communities (SDG 11), and partnering for the goals (SDG 17). All area goals that have seen increased financial support from DFAT because of this. In comparison, quality education (SDG 4) and gender equality (SDG 5) are supported by investment priorities in education as well as gender equality fund and empowering women and girls. The latter has remained steady since 2017-18. But education has declined by AU$56 million seeing an overall drop in investment supporting these two goals. The AU$1.1 million decline since 2017-18 in support for agriculture, fisheries, and water, while small, still shows a declining focus on life below water (SDG 14) and life on land (SDG 15), both environmentally driven targets. And this raises further questions on whether the priorities of Australian aid are in line with the needs of Indo-Pacific countries and global concerns.