How will Australia’s aid budget impact partners and deliverables?

Australia’s aid budget for the 2021-22 financial year, released on May 11, was delivered with limited detail on how its $4.3 billion Australian dollars ($3.4 billion) will be directed. Just over AU$300 million in additional funding is being provided to respond to the COVID-19 pandemic outside of a fixed AU$4 billion aid budget. This is part of an AU$1 billion support package that will end in 2024. This budget provides limited room to move financially. Increasing humanitarian need in the Indo-Pacific or increasing costs to procure and deliver equipment may require cuts to programs deemed less essential. It is also reliant on the mainstreaming of focus areas such as gender, disability, and climate to deliver on objectives rather than direct programs. And this budget is also reliant on more than the aid program to deliver assistance. “Funding for foreign affairs, trade, and tourism is aimed squarely at building a more secure and resilient Australia while furthering our interests abroad,” foreign minister Marise Payne explained in a statement. “A region that is healthy, prosperous and stable is ultimately good for the Australian people, their security and their living standards.” For partners assisting the Department of Foreign Affairs and Trade in delivering development programs, understanding the long-term objectives are important — but the four-page budget summary provides little clarity on the information required. Where is the aid program going? Aid today makes up 0.74% of Australia’s overall budget, while defense, in comparison, makes up 7.4% of the budget. Forward estimates show the aid budget will decline further in 2022-23, when it will drop to AU$4.2 million before increasing to AU$4.3 million for the following two years. After the loss of supplementary COVID-19 funding, it is set to decline again in anticipation of a world that has returned to normal. In analyzing the budget under the Coalition government, Stephen Howes, director at the Development Policy Centre, described the current budget as “bumping along” after major cuts beginning in 2015. “There was a pretty significant increase this year in 2021, a 10% increase, but … it has not been sustained and when you step back, it looks like noise more than any attempt to put the aid program on a positive trajectory,” Howes said. Where regional information is provided, the focus is on the Pacific and Timor-Leste, which account for approximately 40% of aid program spending. Global programs through funding of multilateral and other international organizations take the second-largest share of the budget by region but have been in an overall downward trend since 2013 and may continue to reduce. Funding for Southeast Asia had been in decline since 2014, with the expectation that economic growth would allow Australia to step aside as a development partner. But the impact of COVID-19 and fears of the flow-on effects of an economic downturn on trade and investment has seen growth again over the past two budgets. Whether this will be maintained after 2024 is yet to be communicated by DFAT. Details on funding by sector were not provided on budget night. But Howes explained that past details show that education, resilience, and health were the areas that have borne the brunt of cuts since 2013 — with health clawing back some of those funds as part of pandemic response. Infrastructure has been the growing area of focus for DFAT through its pivot toward increasing trade and private sector partnerships. Multilateral institutions are the largest partners for DFAT to deliver the aid program — but in analyzing Australia’s development assistance compared to the rest of the world, Howes said this is trending downward with Australia increasing its focus on direct partnerships with recipient countries through bilateral programs. Looking outside of the aid budget, development assistance data published by the Organisation for Economic Co-operation and Development by calendar year showed a challenge in DFAT’s current approach in its ability to deliver programs. The data showed a decline in DFAT spending from July 2020 as it set about responding to needs emerging from the pandemic. “DFAT and the government were quick to bring out a new aid strategy in response to COVID, and perhaps that reflects DFAT’s strengths in strategy development,” Howes said. “The result on the ground speaks to weaknesses in DFAT around actual aid management and aid implementation.” This is a weakness Howes expects to continue within the restrictions of budget projections. What is the information delivery partners need? How DFAT is getting money out of the door is just one piece of the puzzle its aid partners require greater communication on. How they are delivering on objectives supporting gender, climate, and disability is another — with the budget showing mainstreaming as the preferred solution. “There was a pretty significant increase this year in 2021, a 10% increase, but … it has not been sustained and when you step back, it looks like noise more than any attempt to put the aid program on a positive trajectory.” --— Stephen Howes, director, Development Policy Centre According to DFAT, AU$1.3 billion will be spent on programs with a “principal” or “significant” gender objective for the 2021-22 financial years. The budget lists only AU$65 million set aside for direct gender equality initiatives. Disability inclusive development received less than AU$10 million, and with DFAT’s disability strategy expiring this year, it is hard to predict what the future holds. “We face the challenge at the moment that core funding is only a small proportion of disability,” Jane Edge, CEO at CBM Australia, explained. “Mainstreaming has taken on this sense of being everything. But the catalyst for effective mainstreaming is strategically resourced leadership and accountability. That is what a centralized disability fund does. “My concern is we are in a space of potential complacency and a lack of urgency that will see this agenda of the past decade and work on the ground continually eroded.” The bigger picture of aid and how it fits into foreign policy is also an issue that partners need clarification on. The foreign policy white paper was released in 2017 in a very different geopolitical environment. With shifting boundaries, partners are calling for a new white paper that will establish clearer direction. “The value of the foreign policy white paper is that it should, in theory, bring together all of the foreign policy tools — diplomacy, trade, defense, and development,” Mat Tinkler, director of international programs at Save the Children Australia, told Devex. There is a need to recognize development as a core part of Australia’s foreign policy framework, and “invest heavily in things like education and social protection that has a greater benefit for the population in our region and a greater political and geostrategic benefit for Australia,” Tinkler said. “That’s where I want to see the policy debate head.”