New Zealand unlikely to fill void after Australian aid cuts

Flag of New Zealand. The aid community hopes the country fills in part of the void that will be left by Australia's budget cuts. Photo by: Richard / CC BY-NC-SA

The new Australian government is serious about trimming fat, and foreign aid won’t be spared.

Prime Minister Tony Abbott, who before getting elected anticipated massive cuts to the country’s official development assistance budget, on Wednesday announced the re-integration of AusAID into the Department of Foreign Affairs and Trade under Julie Bishop, the only female member of the cabinet.

Abbott’s conservative government has yet to reveal specific details on which aid programs will be trimmed down and how the new structure within DFAT will play out, but local NGOs already expressed their concern over how these changes will affect Pacific island states.

Now the spotlight is on New Zealand, another top donor to the region but with much less resources than its “big brother” Australia.

Can Kiwis take up the slack?

In the past few weeks, a conversation has been developing within the aid community about the possibility of NZAid filling in at least part of the void left by Australia’s budget cuts.

For some that would be the ideal solution, given Kiwi experience and knowledge of the Pacific. But the reality is that New Zealand just doesn’t have the resources to replace its much richer neighbor.

AusAID’s budget for Pacific island states was about AU$1,104 million ($1,048 million) in 2012-2013, before the cuts. New Zealand’s total aid budget, on the other hand, is only around $550 million for all of its programs in the same period.

“New Zealand is not in a position to take up any slack left by Australian cuts,” Jenny Hayward-Jones, director of the Myer Foundation Melanesia Program at the Lowy Institute, told Devex.

Local NGOs agree.

Terrence Wood, a member of the steering committee of the New Zealand Aid and Development Dialogues, said Kiwi aid is not enough to patch the holes: “Total New Zealand aid is much smaller than Australian aid and so it will not meaningfully be able to fill gaps made by the cuts.”

Uncertainty

AusAID’s integration intoDFAT may be a back-to-the-old-model move by the Australian government — it was made into an executive agency within the department only in July 2010 — but aid groups from across the Pacific are worried the new structure ill bring brewing uncertainty in the region, exposing everyone to risks of all kinds.

According to the New Zealand Council for International Development, the move by the Australian government adds fuel to the fire in the burning wariness of countries and NGOs dependent on Canberra’s helping hand.

“The latest announcement that AusAID is to be reabsorbed into the DFAT adds further turmoil and uncertainty around the region with respect to Australian intentions,” NZCID director Wren Green told Devex.

Green added that these successive moves by the Abbott administration regarding foreign aid will affect “people [in the region] for whom extreme poverty and absence of basic services is a daily reality,” something which aid organizations fear will be a catalyst for instability in the region.

Risks, repercussions

So what will happen to Pacific island nations after Australia’s policy reversal on foreign aid?

Frank Ritchie, education and campaigns officer for TEAR Fund New Zealand, said there is a huge risk of “aid politicization,” and here there are lessons learned for Australia from its “little brother.”

“The risk is the same as it has been for New Zealand — the politicization of aid, where aid money becomes tied to serving the political and trade interests of Australia abroad rather than what it is intended for,” he said.

All these will affect Australia’s image to the world as a leading aid donor, noted Green.

“This sends the signal that ODA is an easy place to suddenly slash aid expenditure by any government, regardless of the consequences to the recipients,” explained the NZCID chief. “That’s irresponsible, bad for Australia’s image and performance as a responsible donor, and bad for the image of OECD government as responsible donors.”

Read more development aid news online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.

About the author

  • Lean Alfred Santos

    Lean Alfred Santos is a former Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. He previously covered Philippine and international business and economic news, sports and politics.