What the Australian aid cuts mean for the Pacific... and Kiwis

A member of the Royal New Zealand Air Force unloads humanitarian aid for Labasa, Fiji. Cuts to Australia's aid budget may also affect its neighbor donor country, New Zealand. Photo by: New Zealand Defense Force / CC BY

In announcing his first cabinet, Australian Prime Minister Tony Abbott on Monday confirmed international development and Pacific island affairs will not be a priority for his government, at ministerial and even parliamentary secretary level.

The announcement comes on the heels of Abbott’s proposed cuts to the foreign aid budget, which are expected to affect not only AusAID-funded development projects in the Pacific, as well as neighbor and fellow donor New Zealand.

New Zealand will soon start to feel the pressure to fill in the void, especially in the Pacific island nations, according to the local chapter of TEAR Fund, a British iNGO. Australia’s southeastern neighbor may thus be left alone at the forefront of development in the region, where several poor nations risk reversing course on the progress made so far in education, health or disaster resilience.

“[The aid cuts] are a cause for concern as they puts more pressure on the New Zealand government to step up its aid commitment [in the Pacific region] in order to achieve the same outcomes,” TEAR Fund New Zealand education and advocacy representative Frank Ritchie told Devex.

Australia’s new conservative government under Tony Abbott have been under intense scrutiny days after its electoral victory over its firm stand on pursuing domestic development over foreign aid. Cutting aid in a region like the Pacific, where small island nations are largely dependent on official development assistance from Canberra, may spell disaster in the next few years.

Even before the elections, New Zealand Prime Minister John Key warned that slashing the aid budget would stunt the development of countries such as the Marshall Islands, which this year suffered a severe drought that left most of the archipelago without drinking water for weeks on end. TEAR Fund New Zealand CEO Ian McIness went even further and noted Australia’s policy decision means Pacific island nations are not a priority anymore.

With countries in the region slightly behind their sub-Saharan Africa counterparts in achieving the Millennium Development Goals, pressure is rapidly building up to gain results, and New Zealand Aid, with its limited budget, will find it tough to do it alone.

Ripple effects

The aid cuts will have massive consequences to all stakeholders in every level in all the countries involved, making a ripple effect with a not-so-good outcome in sight, according to Ritchie.

If Australia decides to push through with the proposed cuts, the TEAR Fund expert said these will put more pressure on aid recipients, which will likely have to reduce development programs from their national budgets and even incur in higher debt. For NGOs, it will mean that they will get even less funding than now, while programs with unclear outcomes but essential to development such as governance may be scrapped in favor of other with more tangible results.

As for the people of the Pacific island nations, the reduced ODA will slow down their momentum toward meeting the MDGs, and increasing poverty.

Some academics believe the cuts clearly send a message not only to the Pacific region but to the entire aid community that Australia has now embarked on a road that to some may not include the development of these aid-dependent nations.

“It is a concern in the sense that Australia is an important player in Asia-Pacific and will look selfish and inward-looking by the international community,” University of Auckland professor Jennifer Curtin told Devex.

So what can the aid community do to avoid this likely scenario from happening?

Ritchie said it’s all about putting the same pressure to the Australian government: “Both in Australia and abroad, pressure can be put on the new Australian government to keep its promises and to see the risk they run to their own economic well-being should the nations they have been assisting see a developmental decline.”

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About the author

  • Lean 2

    Lean Alfred Santos

    Lean Alfred Santos is a 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. Prior to joining Devex, he covered Philippine and international business and economic news, sports and politics. Lean is based in Manila.