Australia reveals additional cuts to foreign aid budget

Australian Prime Minister Tony Abbott. The Abbott government plans to further cut its country’s foreign aid budget. Photo by: Rob Maccoll / G20 Australia

Australia is planning to cut the country’s already diminished foreign aid budget by a further 3.7 billion Australian dollars ($3 billion), according to the government’s midyear budget report released Monday.

The move will put the overall cuts in the country’s official development assistance at over AU$11 billion — on top of the original AU$7.6 billion a little over six months ago — and marks the third time that the government has slashed the aid budget since Prime Minister Tony Abbott took office 15 months ago. The latest cuts will be spread out over the next three years until 2018.

The government justified the reductions to give way for the country’s pursuit of better and more stable economic growth, and to repair the previous Labor administration’s budget, that according to the current conservative government inflicted an “unsustainable trajectory of debt and deficits” to the country.

Marc Purcell, executive director of the Australian Council for International Development, described the cuts as a “lazy way to find budget savings,” while Micah Challenge Australia’s Ben Thurley said the decision was “disgraceful” and highlighted the Abbott government’s (vicious) appetite for not keeping its promises on this issue.

“The Abbott government has broken its promises on aid and turned to our poorest neighbors to find their budget savings,” Thurley said in a statement, adding that development programs in countries like Indonesia and Bangladesh which rely on Australian ODA will have to suffer because of the government’s “continued plunder of the aid program.”

To the critics of the Abbott government, the (in)decision to dabble in the country’s foreign aid budget and slice it like butter speaks of the underlying priorities (and contradictions) of the current administration. Shadow Treasurer Chris Bowen said the government treats the foreign aid budget as an ATM that dispenses money at their will.

After announcing a cap on the country’s foreign aid budget in April and then delaying the previous plan of increasing the budget with the consumer price index as the basis to 2016 in May, the latest budget report says that ODA spending will now have to return first to the level “when ODA was last funded from budget surpluses rather than debt” before it can grow incrementally through CPI — something that, according to the budget report, may not happen at least in the next five years.  

The document also revealed that some of the spending decisions were taken given the “changes in the international security environment” with around AU$1.5 billion set aside to keep “Australians safe and secure” and also help fight the threat of terrorism through financial assistance in the operations in Iraq.

Australia’s bureaucracy will also be trimmed with an additional 175 government bodies expected to be dissolved in addition to the 76 shut down previously as part of the government’s Smaller Government reforms to eliminate “duplication and waste,” streamline services and reduce administration costs. This follows earlier staff cuts and voluntary redundancies in the Australian bureaucracy when the country’s aid agency was integrated into the Department of Foreign Affairs and Trade last year.

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About the author

  • Lean 2

    Lean Alfred Santos

    Lean Alfred Santos is a Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. Prior to joining Devex, he covered Philippine and international business and economic news, sports and politics. Lean is based in Manila.