Smith Explains Australia's New Aid Budget

Stephen Smith, foreign affairs minister of Australia. Photo by: Australian government

Despite increasing its overseas development assistance by some 500 million Australian dollars (USD449 million), the Australian government is drawing flak from some groups for modifying the calculation of the country’s national income, which they claim will take 1 billion Australian dollars out of the aid budget.

Australian Foreign Minister Stephen Smith, however, is not at all concerned about this claim, stressing that the recalculation of national income could in fact bring about 2 billion Australian dollars to 3 billion Australian dollars more in aid over the coming years.

“Because of the changed calculation we have to book, under the Budget rules, technically a saving. So technically it’s a saving, but the reality is we see (500 million Australian dollars) spent more this year, by the time we get to 2015/16 it will effectively be between two-and-a-half and (3 billion Australian dollars) more that we will spend,” Smith told ABC’s Radio National program, “The World Today.”

World Vision Australia chief executive Tim Costello deems the issue is simply a misunderstanding of the government’s intention.

“We choose to take the Prime Minister [Kevin Rudd] at his word. And we believe the reframing of the formula on GNI (gross national income) has been represented as a billion‐dollar cut when in fact it will mean ‐ by 2015 ‐ the very opposite. By 2015 the promise of 0.5 per cent on the larger cake – the new GNI figures – should see an increase to (8.9 billion Australian dollars) rather than the previously estimated (8 billion Australian dollars) going to foreign aid,” Costello said, as quoted by Christian Today.

Questions were also raised regarding the allocation of ODA financing for climate adaptation initiatives, which is not supposed to come out of ODA.

Stephen said there is a mix of sources for Australia’s financing for climate adaptation and mitigation support. The key thing, he said, is that the funding for climate adaptation is “new money … (and it) is not cutting away from any of the existing programs.”

Australia’s climate financing will target low-income developing countries particularly in the Pacific, he added.

Aid groups and the Australian government, however, see eye-to-eye on plans to review of the use of technical advisors in delivering aid to ensure that Australian taxpayers’ money is used for its intended purposes. The review aims to improve the capacity of AusAID in managing development assistance.

“We are looking at changed arrangements so far as AusAid is concerned in the portfolio of Foreign Affairs and Trade to make sure that we have got the managerial capacity to deal with and enhanced budget,” Stephen said.

Caritas Australia and World Vision lauded the move, saying it is a positive step toward more efficient and more transparent use of aid, Christian Today reports.

About the author

  • Ma. Rizza Leonzon

    As a former staff writer, Rizza focused mainly on business coverage, including key donors such as the Asian Development Bank and AusAID.