In 'caretaker' mode: Australia mum on details about foreign aid cuts

The Australian flag. The country's government plans to cut funding by $782 million. Photo by: Marion / CC BY-NC-SA

There’s an air of uncertainty among Australia’s aid partners these days. 

Aid organizations are unsure how the Australian government will decide on the list of sectors, programs and countries on the chopping block. Some fear their projects may not be able to gain ground after Australia plans to cut funding by 879 million Australian dollars ($782 million) and redirect AU$420 million of aid money to help asylum seekers.

The anticipation — or the fear — will build up in the coming weeks until the country names a new administration in September. The country is now in “caretaker” mode, a period where the ruling administration seeks approval of the opposition bloc in any big government undertaking.

When asked about the breakdown of the cuts, AusAID told Devex: “As we are in caretaker mode we are unable to provide the comments you seek.” 

CARE Australia spokesperson Andrew Buchanan aid NGOs “have been left in limbo, waiting to hear where the AU$420 million that is being redirected from the aid budget for infrastructure costs in PNG will come from.”

Other partners, meanwhile, believe middle-income economies may feel the burden of future funding cuts.

“In my view, usually middle-income countries like the Philippines may be affected by the cuts. Let’s say they [AusAID] go for emerging markets like Burma,” Benedictor Bacani, executive director at Philippines-based Institute for Autonomy and Government, which has recently received Australian aid to improve governance in conflict-afflicted Mindanao region.

Crack in the system

Australia’s decision to cut funding in exchange for an asylum resettlement deal with Papua New Guinea finds a common thread among several traditional donors battling huge deficits at home. Like in the United States, debates on cutting government deficits turn to cutting foreign aid.

“Aid should not be treated as a honey-pot in this way,” Marc Purcell, executive director at NGO coalition Australian Council for International Development, told Devex.

But that formula marks a bigger crack in the system: Cutting aid delays much-needed scaleup of aid commitments.

As in the case of Australia and other donors elsewhere, delays to commit 0.5 percent of the gross national income take away billions from the already scrimped aid envelope and further disrupt the predictable flow of aid money.

“While we are pleased that the government remains committed to achieving 0.5 percent of GNI, their five successive cuts and deferrals since 2010 have resulted in a total of AU$5.8 billion less being allocated to aid than originally promised, up to 2017,” Purcell told Devex.

Last year, the Australian government promised to realize its commitment by 2016. This year, the goal was pushed back to 2017 — and the effect is devastating, according to ACID. It would mean AU$1.9 billion in unrealized aid funding in the next four years.

“Development work takes time — time to plan and time to implement,” Caritas Australia Acting CEO Jamie Davies told Devex. “Our local partners are able to achieve significant, tangible results when programs can be designed and implemented over a multiyear horizon.”

Davies argued that achieving results cannot be attained with cutting aid.

“If you want results, you’ve got to commit,” Davies said.

The irony is the government recommended the need for multiyear planning, as this provides “basis of sound results,” noted Buchanan.

Fill the gap

Australia also chooses to cut aid to fill the funding gap in other projects. In its budget statement, the government is expected to provide AU$420 million of an additional official development assistance and an additional AU$18 million in non-ODA funding to PNG.

The Organization of Economic Cooperation and Development commented on Australia’s penchant to fund new ODA-eligible projects within the current budget envelope.

“The predictability of Australia’s aid risks being undermined, however, when newly incurred ODA-eligible costs are met within allocated budgetary envelopes rather than with new resources,” OECD said in a peer review

Last year, Australia decided to pay AU$375 million of refugee costs from an already committed budget for 2012-2013. That led to a decrease of AU$255 million for AusAID’s programming.

“The Australian government is once again taking away aid dollars to fund the ever-increasing costs of their asylum seeker processing policy,” Caritas Australia Acting CEO Jamie Davies.

With this reprioritization, Australia delays rather than cuts projects. But OECD warns reallocating aid money for other purposes “puts at risk Australia’s commitments to its partners as well as achieving the expected results of its development operation programs.”

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About the author

  • Alliage profile

    John Alliage Morales

    As a staff writer, John Alliage Morales covers the Americas, focusing on the world's top donor hub, Washington, and its aid community - from Capitol Hill to Dupont Circle, Foggy Bottom to the downtown headquarters of USAID, the World Bank and Millennium Challenge Corp. Prior to joining Devex, Alliage worked for a variety of news outlets including GMA, the Philippine TV network, where he conducted interviews, analyzed data and produced in-depth stories on development and other topics.