Why funding predictability will make Australia an aid leader

The Australian flag. Photo by: loserlady

Australia this week released its federal budget, and the outcome for the country’s contribution to international development was a real mixed bag, with some fairly solid highs and some much discussed lows.

A commitment to return to surplus, which could be more politics than economics, and the phenomenal and very welcome investment in a new Disability Care and Insurance Scheme meant that the Australian government was on a mission to find savings. Coupled with an approach to asylum seekers that seems neither sensitive to fiscal efficiency nor in line with human rights, the government found itself backed into a proverbial corner of its own making. And now, unable to extract itself from inefficient and costly policies, it has limited its options for keeping to its foreign aid commitments.

In this context, the government brought down a budget on Tuesday that reports AU$5.7 billion ($5.6 billion) in overseas development assistance.

In itself, this is good news. While it marks a rise from last year’s figures — just how much of an increase, however, is up for debate — and is Australia’s highest aid budget to date, the government has once again pushed out its deadline to scale up the aid program to 0.5 percent of the gross national income by 2015.

With the timeframe moved to 2017-2018, the government gets savings of about AU$4.8 billion between 2011-12 and 2017-18 from money snatched away from the aid program. This begs the question of whether or not the government is really committed to its own pledge.

The government has also twice diverted AU$375 million, once in December 2012 and again in this year’s budget, to asylum seeker costs within Australia comprising 7 percent of the aid program each time. Canberra insists that even with the AU$375 million applied to onshore asylum seeker costs, the real budget increase is AU$517.8 million this year.

But doing that misses a very important point on aid effectiveness and the role of predictability of funding for aid partners. The OECD Development Assistance Committee agrees on this point.

The most recent DAC Peer Review of Australia, released just days before the budget, recommends that “In line with its Transparency Charter and the Government’s decision in 2012 to change its approach to counting in-country refugee costs, Australia should state clearly what refugee costs will be counted as ODA over the coming years and explain how the costs are calculated.” Furthermore, the DAC report has said that “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.”

Making the allocation at the beginning of the fiscal year, as well as capping the figure to ensure within year allocations aren’t suddenly raided when costs increase, does have positive implications for predictability. But calculating that the aid budget has grown by AU$517.8 million this year doesn’t.

In May 2012, AU$5.2 billion dollars of ODA-eligible expenses were planned for, programs developed, partnerships entered into, and projects undertaken to meet agreed outcomes. When 7 percent of the total budget was snatched in December 2012, those shared areas of work had to be either deferred or outright cut to find the cash.

If you think of this year’s aid budget allocation as needing to plug the hole that was left in December 2012, then you’d be better to leave the allocation for fiscal year 1213 at AU$5.2 billion and only subtract the AU$375 million out of this year’s allocation. Doing that leaves you with a real dollar increase of around $125 million. That’s far more like it.

This doesn’t mean the Government shouldn’t get any credit at all. They should, but I suspect the dodgy maths and delayed promises have done far more to damage the narrative than the truth would have. No one likes feeling like they’ve had the wool pulled over their eyes — especially when the only ones fleeced are the world’s poor.

So, what’s next for Australian aid

The OECD Peer Review has given Australia a big tick to move forward with the scale-up of the aid program. It says it has the systems and the processes to manage it.

Much work has been done to implement those recommendations. This is good; it means Australia’s bureaucracy is responsive. It also means it is learning.

Working in a learning environment, providing thought-leadership, being innovative and willing to take the right risks at the right time are all trade-marks of a good aid program, and will only become more, rather than less, necessary if Australia is to stay relevant.

The OECD donors don’t have this market cornered. The BRICS are and have been playing in this space, beginning with their own development bank. Australia can choose to stay relevant, to innovate, partner, demonstrate the role of predictability, make long-term investments and gather and document evidence of our impact on poverty or not.

Leadership will make all the difference and there’s much to recommend a larger role for Australia in the global aid and development arena. Of course, it’s important that the government is still committed to reaching its 0.5 percent of GNI target by 2017-18. In contrast, the opposition is also committed to the same target but is yet to provide a timeframe for doing so.

With an election set for September, let us hope, then, that this is the last in a series of disappointments for Australia’s aid and development community, and that 2014 brings equal parts volume and effectiveness to see the aid budget meet its promise.

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About the author

  • Jo lindner

    Joanna Lindner

    Joanna Lindner is the head of policy for aid and development effectiveness at the Australian Council for International Development (ACFID). She was previously the senior advocacy adviser and humanitarian coordinator with ACFID and has worked with members of all parties within the Australian Parliament at the Australian Reproductive Health Alliance where she led advocacy on women's empowerment, gender equality and sexual and reproductive health and rights. Prior to that she worked with the Asian South Pacific Association for Basic and Adult Education.