Australian aid: The financial impact of a new government revealed

CANBERRA — Released Monday, Australia’s midyear budget was expected to detail the financial impact that the introduction of the Australian Infrastructure Financing Facility for the Pacific and the government’s increased security focus would have on aid. Instead, it has raised more questions than answers.

Still, there are insights to be gleaned. Here, Devex presents a guide to the impact of new Prime Minister Scott Morrison’s vision for Australian aid.

What is the cost of the Australian Infrastructure Financing Facility for the Pacific?

The total cost of AIFF for the Pacific is partially known. Although work is not expected until the 2019-20 financial year, 89.2 million Australian dollars ($64 million) has been set aside for its establishment.

But capital measures associated with AIFF’s establishment — meaning the change required in nonfinancial assets to support the established and ongoing management of the facility including equity injections or loans — are listed as “not for publication” because of “national security sensitivities.”

AIFF consists of an AU$1.5 billion loan facility and AU$500 million grant component, but it is not clearly identified within the midyear budget raising questions about its proposed start date.

What are the costs of other Pacific initiatives?

As part of a cross-portfolio initiative “Australia's Indo-Pacific Engagement — enhanced engagement in the Southwest Pacific,” there are a total of 12 new budget activities.

• AU$135.9 million will support the Australian Federal Police in expanding programs to provide specialist advice and training on law enforcement in Papua New Guinea.

• AU$30.6 million will expand Australia's diplomatic presence in Palau, Niue, Marshall Islands, French Polynesia, and the Cook Islands.

• AU$29.2 million will enhance Australia's sporting ties with Pacific Island countries.

• AU$17.7 million will establish a Pacific Fusion Centre to equip Pacific decision-makers with the information they need to better identify and respond to security threats.

• AU$12.1 million will establish a new Pacific faculty at the Australian Institute of Police Management focussing on policing leadership.

• AU$10.9 million will establish the Office of the Pacific, led by a new Pacific coordinator, within the Department of Foreign Affairs and Trade to enhance coordination and engagement with the region.

• AU$2.8 million will establish a Pacific Centre of Law Enforcement Cooperation to enhance coordination and alignment of policing capabilities across the Pacific.

• AU$1.2 million will introduce an Australia-Pacific Business Gateway Card to streamline travel arrangements for Pacific nationals to Australia.

And values “not for publications” will be set aside for the redevelopment of Fiji's Blackrock Peacekeeping and Humanitarian Assistance and Disaster Relief Camp, and a range of defense and humanitarian initiatives in the Pacific.

Finally, the Export Finance and Insurance Corporation's callable capital will be boosted by AU$1 billion to support Australian businesses to expand export opportunities into the Pacific.

“Provision for part of this measure has already been included in the forward estimates,” the paper reads. “The measure will also be funded from the reprioritisation of existing expenditure,
including from the Official Development Assistance Program.”

Where is the money coming from?

Only one midyear budget line item suggests where the money to fund these new initiatives may be coming from within the ODA program: multilateral replenishments.

A total of AU$749 million will be removed from projected budgets from the current financial year until 2021-22. A total of AU$207 million will be taken from the current financial year budget initially allocated to multilateral replenishments and AU$210 million from the 2019-20 budget.

Which organizations will be affected was not clear. In the 2018-19 Australian aid budget summary, AU$219.9 million was forecast to be spent through contributions to the United Nations, Commonwealth, and other international organizations including UNDP, UNICEF, UN Women, World Health Organization, and Green Climate Fund.

But the cut from multilaterals is not unexpected — Morrison had previously discussed his dislike of them saying they were “international club joining exercises,” which he thought was “pretty useless.”

DFAT was asked to respond to four questions of clarification. These concerned which multilateral institutions would see a reduction on replenishment funds; whether this was the sole Australian aid budget measure being undertaken; why some figures associated with AIFF were “not for publication;” and whether federal police and defense activities in the Pacific were considered development assistance.

DFAT did not respond to questions before the publication deadline.

“The Government is playing catch-up on its own announcement on infrastructure loans,” Marc Purcell, CEO of Australian Council for International Development, told media of the budget. “For a major shift in foreign policy, it has been ill-thought through and existing aid programs are paying the price.

“In the geopolitical competition for the region, we must ensure poverty reduction is not sacrificed for infrastructure. Health and education can’t be replaced by roads and bridges. If you build a school or hospital in the Pacific, you need teachers and nurses. One is useless without the other,” Purcell said.