Few left unscathed as impact of cuts to Australia’s aid budget unveiled

Australia’s federal budget has spared foreign aid from further cuts, but there has been no reprieve from the 3.7 billion Australian dollars ($2.92 billion) in cuts announced in December. Released May 12 in Canberra, the 2015-16 budget unveils the full impact of the cuts to the aid budget: AU$1 billion will be slashed for the 2015-16 financial year, followed by reductions of AU$1.35 billion and AU$1.37 billion in subsequent years. By the 2017-18 financial year, Australia’s foreign aid budget will drop to just AU$3.9 billion, down nearly AU$2 billion from its 2013-14 allocation. As a result of the cuts in the aid budget, the allocation for foreign aid within the Department of Foreign Affairs and Trade will be reduced 24 percent to $3.3 billion for the 2015-16 financial year before beginning to climb again. The Australian NGO Cooperation Program was spared from the expected 20 percent reduction in funding, instead seeing funding cut by 5 percent. Australian nongovernmental organizations are also set to be hit, with critical programs from DFAT set to reduce available funding by 5 percent. The Australia volunteers program was less lucky, however, and will see a 30 percent reduction in its budget. Funding for humanitarian responses to international emergencies has meanwhile been relatively unscathed, and the budget revealed a new initiative through the establishment of a Gender Equality Fund. Some countries and programs will also be hurting more than others as the budget papers reveal the cuts have not been dispersed evenly throughout the foreign aid program. East Asia suffers brunt of aid cuts Compared with the final budget announced under Julia Gillard’s Labor government, last year’s budget saw big cuts made across the board to country and regional programs. This year, the downward trend continues. While a number of countries were spared, others saw cuts range between 5 and 82 percent. No countries or regions saw funding increase. East Asia — including Indonesia, Vietnam, Laos and Myanmar — absorbed the majority of the AU$1 billion reduction in Australia’s aid budget, with total DFAT funding reduced by AU$386.8 million. This comes despite the fact that many countries in the region are vulnerable to natural disasters. Cambodia is the only country in the region spared from cuts after it agreed to resettle refugees who travel to Australia by boat. Indonesia, meanwhile, suffered the largest financial loss not just within East Asia but across all of Australia’s country programs. Its 40 percent reduction in aid means available funding for this financial year is short by AU$219 million. In sub-Saharan Africa, Australian aid has been cut 70 percent, leaving very little left in direct funding from Canberra. Middle East and Africa fared worse, seeing an 82 percent cut in DFAT funding. In total, the budget for Africa and the Middle East has been reduced from AU$106 million last financial year to just AU$31.8 million. The Pacific was largely spared, but global programs, including funding through U.N. development agencies, were not immune from Australia’s cuts. NGOs denounce ‘depressing’ budget cuts While the cuts were foreshadowed, Oxfam Chief Executive Helen Szoke said the reductions were still a blow. “Our worst fears have been confirmed by the government tonight — it has turned its back on millions of people who rely on Australian aid and gambled with Australia’s interests,” Szoke lamented. “Aid not only saves lives and helps people rise out of poverty, it is an essential investment in the security and stability of our region and our economy. This lose-lose budget grab will ultimately help no one.” Julia Newton-Howes, CEO of CARE Australia, told Devex Australia’s foreign aid program was once one of the country’s proudest international achievements. Now, it “had effectively become the government’s ATM; the place to withdraw funding on a whim.” She called on the government to at least make good on its pre-election promise to bring foreign aid to 0.5 percent of Australia’s gross national income. And smaller NGOs are likely to feel the effects of these cuts the hardest. Nusa Tenggara Association delivers aid programs in East Indonesia. Its executive officer, Phil Domaschenz, said the cuts will hit them hard as DFAT funding accounts for 75 percent of its small AU$199,083 budget. “Any reductions in government funding will have a big impact on our organization,” he told Devex. For Aaron Moore, director of overseas operations at Global Concern, the cuts will affect its ability to deliver lifesaving projects, including food security. “The budget cuts … undermine Australia’s commitment to the poor and detrimentally impact the lives of families living in extreme poverty,” he told Devex. “Australia should strive to do the opposite of this, by keeping our commitments to the poorest and most vulnerable and seeking to positively impact their lives by helping lift them out of poverty.” But the budget will also affect Canberra’s political influence in the Asia-Pacific region, according to Nigel Spence, CEO of ChildFund Australia. “Cutting aid makes no sense when it is a key pillar of building peace and prosperity in our region, complementary to our investments in diplomacy and defense,” he said. “This budget cut will dramatically impact the ability of our regional neighbors to respond to the economic, social and climate challenges they face.” Spence called the budget “depressing” and told Devex his organization would only gain clarity on the impact the cuts will have on its programs and projects after it speaks directly with DFAT. New strategies for changing aid Marc Purcell, executive director of the Australian Council for International Development, told Devex Australian NGOs are now looking at diversifying funding and finding new ways to deliver their international aid programs. With federal government funding only likely to dwindle further in coming years, forming new partnerships will be essential. These new partnerships will enable them to explore new ways to deliver foreign aid and make the highest impact. “Our direction for the future is to work with private sector, universities and think tanks with an interest in Australia’s place in the world, not just foreign aid,” he told Devex. “We are seeking new ideas and ways of thinking about reducing poverty and inequality and there will be a strong focus on sustainability and environmental impacts.” But despite the growing hardships faced by Australian NGOs, Purcell said leadership and unity will ensure the sector remains strong and delivers sustainable aid now and in the future. “The work of NGOs is long term,” he said. “Our new narrative focuses on this and the positive impact Australian funding has on the world.” Read more international development news online, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you FREE every business day.