How Australia's newly boosted aid budget will be spent

Australia’s new government has announced a boost of 1.43 billion Australian dollars ($926 million) to its official development assistance over the next four years. The Australian aid budget for the 2022-23 financial year will increase by AU$97.6 million on the previous budget announced in May, taking the total to AU$4.65 billion for the year. The announcement, delivered in Canberra on Tuesday, is just one of many changes being delivered by the new government led by Anthony Albanese who came into power in May. This includes an election promise of a 2.5% annual increase in the aid budget to be delivered in forward forecasts that will continue to see aid grow, with the hope that it will increase ODA as a percent of gross national income from the current low base of 0.2%. New funding allocations show a continued focus on the Indo-Pacific region but also Australia’s response to growing economic constraints and humanitarian crises globally. • AU$900 million has been announced in support of the Pacific over the next four years with a focus on climate, gender, security, and infrastructure financing. • AU$470 million will be directed to Southeast Asia over the same period, AU$200 million of which is directed to a climate and infrastructure partnership with Indonesia. COVID-19 recovery, regional security, food security, and economic empowerment are other priorities for these new funds. • NGOs will receive a AU$30 million increase in funding over four years through the Australian NGO Cooperation Program, an additional AU$7.5 million allocated for this financial year. • Departmental allocation supporting staff and the management of aid programs will increase by AU$26.6 million, including AU$3.6 million this financial year. • The central disability inclusion budget has been restored, increasing from an annual budgeted AU$9.6 million in May to AU$12.9 million. • AU$58 million more in Australian ODA will flow through to the Middle East and Africa this financial year through increased funding to multilateral partners including the World Food Programme. New government priorities are highlighted through the budget in new categories/groupings of funding. • Climate change and the environment receives its own budget lines, with AU$137.2 million allocated for the 2022-23 financial year. WASH is included in this category, with increasing links to climate resilience in programming. • Gender equality, disability, and social inclusion are grouped, with AU$97.7 million in total. • Development effectiveness and research receives a AU$13.8 million line item and includes research programs, support for collection of ODA statistics and data, and funding for membership to the International Aid Transparency Initiative. • Greater transparency in the aid program is also emphasized with the budget itself better allocating funding to regions thanks to improved data collection methods. And the previously separated “temporary” budget support — excluded to reduce the overall ODA figure — has now been merged into baseline ODA allocations. • National and economic resilience has been itemized in the budget, defined to include cyber cooperation, regional peace and security, as well as debt relief and other partnerships The Australian Infrastructure Financing Facility for the Pacific remains a priority funding and partnership tool despite its slow progress. Established in response to increasing presence of Chinese development in the region, the AIFFP provides loans and grants for major infrastructure programs in the Pacific region and East Timor. This not only aims to improve development outcomes for countries, but also promotes Australia as the business partner of choice. In the new budget, announcements included: • An increase of AU$500 million in ODA grants to be delivered through the AIFFP, doubling the initial grant allocation. • An increase of AU$25 million to support departmental costs to implement new partnerships, including a previously announced Pacific Climate Infrastructure Financing Partnership, which will focus specifically on climate-related infrastructure and energy projects under the AIFFP umbrella. New non-ODA measures in the budget also allow for insight into new priorities. A AU$147 million package for security support to the Pacific has been announced along with enhanced capability supporting programs in Southeast Asia including establishment of the new Office of Southeast Asia, the establishment of an Office of First Nations Engagement, and expansion and support for the Pacific Labour Mobility scheme. But this is just the tip of the iceberg for changes to come for the Australian aid program. In August, the Department of Foreign Affairs and Trade announced a review into development finance to increase private and philanthropic investment. And in October they called for public submissions to support the development of a new international development policy. Submissions close on Nov. 30, and an external advisory group will be established to guide DFAT in the development of this new policy. The next federal budget, to be announced in May 2023, will provide the funding associated with the new policies and partnerships to be announced in the coming months.