Australia's aid budget gets a lift despite looming election

Australia’s federal election is expected “in a matter of weeks,” according to Treasurer Josh Frydenberg, with the budget announced in Canberra on March 29, a last-ditch effort to attract voters — who polls suggest are souring on Prime Minister Scott Morrison’s coalition government in droves. Domestically, the rising cost of living, health, and economic impacts of COVID-19 and climate change have been factors for voters, and new measures announced aim to respond to these concerns. But the growing concern about China’s influence in the Pacific and the social and economic instability caused by the COVID-19 pandemic has also produced a budget boost for Australia’s aid program with a total of 4.55 billion Australian dollars ($3.4 billion) allocated for the 2022-2023 financial year, up from a total spend of AU$4.46 billion in 2021-2022. New program support Australia’s aid program has seen a range of new measures announced in recent months that boosted projected spending for the current financial year up from a forecast of AU$4.3 billion. The total includes increased funding support for Pacific labor mobility, with AU$9.9 million; humanitarian assistance to Ukraine, with AU$50 million; and global health security, with AU$77.5 million. For the 2022-2023 financial year, support for the COVID-19 response in the Pacific and East Timor, at AU$281 million, additional support for Pacific labor mobility, at AU$13.6 million, and funding for the ASEAN Comprehensive Strategic Partnership, at AU$5.7 million, leads the new budget boosts. “Australia’s aid budget … does not provide the ambitious and targeted new investments that are urgently needed.” --— Susanne Legena, CEO, Plan International Australia Global health security will receive AU$375 million in total to support initiatives in the region over the next five years. Contributions to global health programs have increased by AU$77 million, with new funding allocated to the Global Fund to Fight AIDS, Tuberculosis and Malaria; Gavi, the Vaccine Alliance; and the Coalition for Epidemic Preparedness Innovations. An additional AU$85 million pledge to COVAX was announced, along with plans for more COVID-19 vaccine sharing in the Pacific. Humanitarian assistance has also had a budget boost through additional funding for “Protracted Crisis and Strengthening Humanitarian Action,” increasing from AU$114.3 million to AU$144.9 million. The International Committee of the Red Cross and World Food Programme have also seen increases of AU$2.5 million and AU$2 million respectively as part of boosts to this section of the aid budget. A new program supporting gender equality in Southeast Asia was also announced as part of the budget, seeing a total investment of AU$300 million over five years to 2026-2027 to support economic empowerment, leadership, and rights of women and girls. A range of new and expanded climate change mitigation and adaptation programs are also expected to support increased commitment to climate finance. The new budget announcements contribute to “baseline” and “temporary” development assistance. The 2021 aid budget was the first year Australia separated its ODA budget in this way, and it has continued this year with projections to 2026. Both figures contribute to an overall development assistance total which is reportable to the Organisation for Economic Co-operation and Development and appears to simply be a decision to align with a freeze on aid announced in the 2019 budget. Shoring up infrastructure The Australian Infrastructure Financing Facility for the Pacific, a controversial infrastructure financing initiative, which has seen slow progress, will see its lending capacity increase from AU$1.5 billion to AU$3 billion as part of the new budget — a response to infrastructure requirements in the Pacific and East Timor. To date, the AIFFP has finalized financing for over AU$700 million in airports, ports, submarine cables, and solar farms, with projects still at varying stages of progress. Loans are expected to continue to be concessional, and no decision has been made on whether the additional funding will consist of grants that made up AU$500 million of the initial AIFFP funding allocation. Core functions Direct funding to country programs and core programs remain relatively steady from 2021, including the central disability budget, which will continue to receive just AU$9.6 million. But there are some shifts. Regional scholarships and education programs and the Australian Volunteers Program in particular will see declines in budgets for the coming financial year. And after criticism of multilateral institutions, investments in this space are set to increase through boosts beyond just health. The United Nations Development Fund and global education partnerships will receive additional contributions from Australia. Global NGO programs will see an AU$2 million increase in support to continue advancing their partnerships with Australia’s aid program, but NGOs fear this is not enough. “Australia’s aid budget, delivered tonight, does not provide the ambitious and targeted new investments that are urgently needed to address the three big ‘Cs’ facing our region and the entire world right now,” Susanne Legena, CEO at Plan International Australia, said. “Climate change, the ongoing impacts of COVID-19, and the devastating humanitarian crises unfolding right now — from extreme food insecurity in the Horn of Africa and Afghanistan, to conflict and war in places such as Ukraine and Myanmar.” The challenge of China The revelation of a security agreement between the Solomon Islands and China on March 24 led to some early budget announcements and insights into Australia’s aid program. AU$22 million was announced to support the Solomons Island government, with a range of budget support measures including funding salaries for essential workers, and economic recovery from COVID-19 and civil unrest. Overall, direct country allocation to the Solomon Islands remains steady at AU$103.1 million. But the news of the security agreement highlighted the key purpose behind a focus on the Pacific in the Australian aid program: China. “This is why we doubled our development assistance into the Pacific,” Morrison explained on March 28. “This is why we provided support to the major infrastructure projects across the region, including the Solomons … We have been long aware of these pressures. That's why we had the Pacific step up. That's why we doubled our effort.” This effort extends beyond development assistance with the budget announcing expanded programs in Pacific defense cooperation and maritime security. With the Office of the Pacific, a branch of the Department of Foreign Affairs and Trade, coordinating these programs, the priorities of these non-ODA military programs are expected to influence broader regional engagement including the aid program under a Morrison government. This budget, however, is dependent on the outcome of the imminent election. Its design is that of Morrison and his government, and will only proceed if he is reelected. If the result sees a new Labor government in control, a new budget will be delivered before the end of 2022. And Australian aid will once again be put on a new path.