DFAT backtracks on controversial budget decision

CANBERRA — The Australian Department of Foreign Affairs and Trade has backtracked on a controversial decision made as part of the Oct. 6 federal budget that would have seen the allocation of 304.7 million Australian dollars ($214.1 million) for COVID-19 assistance to the Pacific and East Timor as funding that was not official development assistance.

On Oct. 13, the Organisation for Economic Co-operation and Development confirmed to Devex that it was looking into the decision and said it could have implications for the comparison of donor data. “We will be discussing this with Australia, and so for the time being we are unable to comment,” an OECD spokesperson had said.

Under questioning from Sen. Penny Wong, shadow minister for foreign affairs, at Senate estimates in Canberra on Thursday, DFAT Chief Financial Officer Murali Venugopal confirmed an about-face on the decision and said that the funding will be reported to OECD as part of Australia’s ODA. The additional funds, allocated over two financial years, will see AU$202.4 million added to Australia’s official aid budget. This increases the total from AU$4 billion to AU$4.2 billion this year.

“When we report it to the OECD DAC [Development Assistance Committee], it will be ODA,” Venugopal told Wong.

How did DFAT get it wrong?

The information on the new classification of budget funds was revealed as Wong accused DFAT and Foreign Minister Marise Payne of reducing aid budget transparency by releasing just a four-page summary on development assistance.

Late last week, DFAT released COVID-19 development response plans to provide additional insights into country and regional programs, which Payne said improved transparency. Wong disagreed.

“It’s about transparency,” she said. “I think transparency to the Parliament about what we are spending development funds on is a good thing. So the fact that you didn’t publish anything on budget night — you’ve now put online the development plans, but you’ve given a four-page glossy instead of the reasonably comprehensive budget summary that we used to get — I think is a reduction in transparency.”

The updated budget information from Venugopal meant that funding allocations presented to Parliament were also incorrect — and added to Wong’s frustration as she sought to understand how DFAT got it so wrong.

“Senator, in the very early briefing period … during the budget lockup, there were some questions around whether [the AU$304.7 million was] ODA-eligible or not,” Venugopal said. “At that point in time, I did not have the exact information available to me in my hands.”

“How could you not know that?” Wong responded.

“The answer that the department gave at that point in time was that we’ll need to make an assessment whether it is ODA or not, which of course subsequently within 24 hours we did go out and say it is ODA,” Venugopal said. The Australian Council for International Development confirmed to Devex that it was not informed of this decision change. Confusingly, Venugopal later suggested that the decision was made too late in the budget process to avoid information being presented incorrectly.

Wong did not consider any explanation acceptable.

“This is not transparency,” she said. “This is supposed to be a budget table. I quite like tables to actually make sense, and a budget table that … doesn’t include 300 million [Australian] dollars of additional funding — which you are now saying you should include.”

Despite the clarification on the total aid budget, Payne later quoted figures of AU$1.44 billion being provided by Australia to the Pacific and AU$1 billion for Southeast Asia this financial year — incorrect figures from the aid budget, as they do not include the “supplementary” funding.

While DFAT has begun the progress of allocating the new money through bilateral programs, aimed at vulnerability and economic recovery this financial year and fiscal crisis next financial year, the budget night figures are sticking in official communication for the aid program from the minister in charge, creating a problem for transparency.