As Australia’s development community gathered in Canberra to discuss the fallout of budget night, the theme was one of confusion.
Why is aid cut to rein in spending while government spending remains high? Where is the government’s narrative on foreign aid? Why do the cuts seem to be out of sync with the foreign aid policy? And why is there such a lack of transparency?
Tuesday night’s budget appeared to produce more questions than answers at the 2015 aid budget breakfast hosted by the Development Policy Center, which Devex attended.
Have the cuts improved Australia’s economy?
According to Anthony Swan, research fellow at the Development Policy Center, cuts to Canberra’s aid budget have seen little to no impact on Australia’s economy: Government spending is still high, income is dropping and the country’s debt is worsening. And forecasts for achieving a budget surplus still look a long way off on the horizon.
While Australia’s 2015-16 aid budget was spared from further reductions, it underscored how deep the cuts are, with some regions losing as much as 82 percent in funding. We take a closer look at the numbers.
Last year, claims of a “budget emergency” drove up cuts to the aid budget through the 2017-18 financial year, which by December had exceeded 11 billion Australian dollars ($8.7 billion). Swan however questions the forecast data used to justify these reductions.
“Spending isn’t being reined in more broadly,” he said. “In terms of the credibility of the return to surplus, it’s not clear to me that the forecasts put forward are credible.”
With spending remaining high, Swan said cutting the aid budget has done nothing to improve Australia’s economy or prepare for future costs associated with an aging population.
How can we explain the cuts?
“There was never going to be a good way to make these cuts,” Stephen Howes, director of the Development Policy Center, told the audience. But the apparent methodology of “geographical determinism” seemed to have been chosen for diplomatic ease.
“It makes it easier to handle,” he said. “You can explain to the country ‘it’s not that we don’t like you, it’s just we don’t like your region.’”
Howes called it a crude method and asked why it was not linked to poverty.
“There is no mention of poverty. Do we really want to treat the Philippines and Myanmar in the same way?” he asked the audience.
There were also administrative questions that were not factored into the cuts. With most countries facing a reduction in aid of 40 percent or more, projects would need to be closed midstream, providing very little benefit from the money already spent.
Policy versus reality
Her analysis of policy directives led her to believe that the budget should have provided:
1. More funding for bilateral, less for multilateral programs.
2. More funding for immediate neighbors.
3. More aid for trade.
4. Protect innovation funding and gender equality programs.
5. More funding for programs that perform better than most.
Devex analysis of the top 50 NGOs in Australia finds that more than one-quarter of their funding comes from the federal government. With the 2015-16 federal budget, to be released Tuesday, expected to include further cuts to the foreign aid envelope, how will reduced funding affect these NGOs' programming?
With the exception of protecting innovation funding and gender equality programs, the reality was the opposite.
“There was clearly no attempt to link funding to performance,” de Lacy said. “In fact, the worst performing programs were protected at the expense of the better performing ones.”
Performance data from DFAT suggests programs in Cambodia are among the worst performing, while Indonesian projects are among the best. Yet Indonesia’s aid program was slashed while Cambodia’s saved.
“On balance I think we can conclude that there is at best only a partial link between the policy framework and how the cuts were decided in this year’s budget,” de Lacy told the audience.
Where is the narrative?
The lack of clear policy is further heightened by the lack of government narrative on the aid program, according to Julia Newton-Howes, CEO of CARE Australia.
“The fact that there isn’t a clear narrative around the aid program, the purpose of the aid program or the multiple purposes of the aid program, ultimately I think has led to the fact that it has been so vulnerable to these cuts,” she told the audience.
Newton-Howes said policy information in existence were “flimsy documents with limited detail,” making it very hard to understand the goals, objectives and outcomes of the aid program.
Speaking to Devex, Nigel Spence, CEO of ChildFund Australia, said it was important for the government to provide the clarity required.
“We are in doubt of the focus and direction of the aid program,” Spence said. “It always makes sense for our work to be complementary to government, but we need clarity from DFAT on whether the direction is still in line with the new aid paradigm and how goals will be achieved with this new budget.”
Greater transparency, accessible data needed
Marc Purcell, executive director of Australian Council for International Development, told Devex this was the most challenging time for the sector since the recession of the late 1980s and early 1990s. Lack of clarity from the Australian government was a key factor in this.
“Basically, the government has dropped the ball on the education of Australian aid,” he said.
Two recent events have highlighted growing public misconceptions about Australian aid, which have not been corrected by DFAT.
See more stories on Australian aid:
● With cuts in the pipeline, Australian aid effectiveness in question
● Inside the takedowns of AusAID and CIDA
● Australia reveals additional cuts to foreign aid budget
● DFAT's James Gilling: 'We are trying to make ourselves more open'
● Doing business with DFAT: A procurement process guide
Independent Sen. Jacqui Lambie called to halve Canberra’s foreign aid, saying Australian-made products should be sent to countries instead. This came even after AU$11 billion was already slashed from the aid budget.
Public condemnation of the execution of two Australians convicted of drug trafficking in Indonesia, meanwhile, led to calls for foreign aid to Canberra’s East Asian neighbor to be cut in retaliation. Indeed, Indonesia lost the most money under the 2015-16 budget, which allocated AU$219 million less to the country than it did in the previous financial year.
“These damaging and misleading comments lead to public misconception,” Purcell said. “Research shows that aid is the most misunderstood of all government services. The government should be explaining their programs, policies and the benefits they provide.”
Due to the lack of government leadership, Australia’s nongovernmental organizations are joining forces to increase public awareness. The “We’re for Australian Aid” campaign is the first outcome of this.
But Purcell said greater transparency and accessible information are essential, and while NGOs have a role to play, the role of government is more critical.
“Australian aid data is scattered — finding information on the aid budget is easier on the ACFID website than the DFAT website,” Purcell told Devex.
He is urging the Australian government to make foreign aid information more accessible, in line with the aid transparency projects being developed in the United States and United Kingdom. Not doing this will result in an uninformed Australian public calling for more cuts.
“Government transparency is suffering,” Purcell warned. “We have lost the ability to track how public money is being spent and where.”
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