Australia sets foreign aid budget cap

The Australian government announced on Wednesday major upcoming changes to the already troubled foreign aid portfolio — including a future AU$5 billion ($4.64 billion) cap on the budget. According to Foreign Minister Julie Bishop, the federal budget is in “far worse” shape than expected and that will prevent any future rise, at least while Tony Abbott is still prime minister Bishop argued during an event in Melbourne that as global remittance payments and foreign direct investment have by far outstripped ODA in the past few years, it’s time for the private sector to shoulder more of the burden for development programs. In line with this statement, she insisted that the previous Labor government's initial target of spending 0.5 percent of GNI on foreign aid by 2015 is still unrealistic, and explained that the goal now is to slowly increase the annual ODA budget — from about AU$4 billion in 2014 to $4.2 billion in 2016-17 — until the AU$5 limit is reached. This is a far cry from the Abbott administration's pre-election commitment to modestly grow the aid budget to a projected AU$5.7 billion in 2016-17; in January, Bishop revealed a significant AU$650 million slash for 2013-14. If the AU$5 billion cap is enforced, achieving the 0.5 percent of GNI target will be virtually impossible in the near future, and Bishop on Wednesday again refused to commit to a specific percentage by the end of Abbott’s mandate in 2017. “The budget is in a far worse position than has been previously made public, so of course I will be constrained with what we can do in the future,” said the head of the Australian Department of Foreign Affairs and Trade, which now oversees all the country’s foreign aid activities in place of the defunct AusAID. Bishop did not disclose more details on planned cuts ahead of the May 13 federal budget release, but mentioned the focus will be on results and value for money, including performance benchmarks for funding. Three months ago, the DFAT chief announced that her goal was to make Australian aid more effective and efficient by putting its activities under scrutiny to create and enforce a strong “culture of accountability” and pulling the plug on funds on programs that are not performing well. Read more development aid news online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day. See more: Aid cuts make Australia 'a less generous nation' Aussie NGO chief calls Abbott's aid cuts 'indecent' Is aid for trade the way to go for Australian ODA?