Balancing the Books on the Backs of the Poor

Australian Aid Policy

Key Points

  • This year Australia will provide less than 0.25% of GNI in aid, which is around one third of its international commitment to reach 0.7% of GNI by 2015.
  • Successive Australian Governments have cut a total of almost $20 billion from the aid budget in recent years, after abandoning a domestic commitment to give 0.5% of GNI in aid by 2015.
  • As a result of these aid cuts, Australia provides around 1/5 as much aid as the United Kingdom (UK) despite Australia being in a much stronger economic position.

Background

Australia has fallen spectacularly short of its international commitment to provide 0.7% of GNI in aid by 2015. This would have equated to providing less than 3% of the Government’s budget in aid, however Australia only provides around 1% (see here).

Successive Australian Governments have cut the aid budget six times in three years, which was justified as necessary to help with balancing the government’s books. This had led to an abandoning of a bipartisan agreement to increase the aid budget to reach 0.5% of GNI by 2015. Therefore while global aid flows are increasing, Australian aid is shrinking (see here). The chart below shows how this year, Australia’s aid budget will shrink to around one-third of its international commitment and less than half of its domestic commitment.

Graph

Australia’s lack of aid generosity compares unfavourably to many other aid donors, especially the United Kingdom. In the same week as the UK parliament passed a law to provide 0.7% of GNI in aid, the Australian Prime Minister described Australia’s vicious aid cuts as ‘modest’. This is despite Australia being in a significantly better economic position than the UK, as can be seen in the table below. Australia has an income per person more than 50% higher than the UK and Australia has only around 20% the level of government debt, yet it provides only 1/5 the level of aid.

Table

While the UK Prime Minister, David Cameron, famously said the UK would not ‘balance the books on the backs of the poor’, it appears Australia is trying to do just that.

Sources:

World Bank 2015 <http://data.worldbank.org/data-catalog/world-development-indicators>

IMF 2015 <http://www.imf.org/external/pubs/ft/weo/2014/02/weodata/index.aspx>

OECD 2015 <http://www.oecd.org/dac/stats/idsonline.htm>

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