The Retreat of Australia’s Aid Program

Australian Aid Policy

Key Points

  • In 2015-16, Australia’s Aid Program will be around A$4 billion, which is less than half the size of what it would have been if the bipartisan promise to reach 0.5% of GNI in 2015 was kept.
  • The cuts to the aid program over the last three years have disproportionally affected the world’s poorest countries, with aid to Sub-Saharan Africa to fall to less than 10% of the level it was promised to be.
  • Only the Pacific and countries that Australia has a refugee processing deal with have been spared the bulk of the cuts, as aid to the Pacific is still set to be almost 60% of the level originally promised. 

Background

Three years ago the Australian Government released a blueprint for the bilateral aid program in 2015-16 disaggregated by region. The plan was for a geographically diverse aid program that had a presence in the world’s poorest countries, while still clearly prioritising Australia’s immediate neighbourhood. However these spending promises have failed to be fulfilled. Instead, Australia’s aid program almost exclusively focuses on the Pacific and some nearby countries in East Asia. The chart below shows that Africa and the Middle East as well as Latin America and the Caribbean have disproportionally suffered from the aid cuts since 2012.

Australian 2015-16 Aid Budget

Potentially one of the most concerning aspects of the retreat of Australia’s Aid Program from its trajectory three years ago is the shift away from the world’s poorest countries. As discussed in this blog, Australia’s aid program was already dramatically disproportionally skewed away from the world’s poor. The latest round of aid cuts is set to exaggerate this imbalance even further.

Source:

DFAT 2015 <http://dfat.gov.au/aid/Pages/australias-aid-program.aspx>

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>

Find Your Place in the Global Population Pyramid

Global Development

The World Bank along with the International Institute for Applied Systems Analysis operate an online portal where you can find your place in the Global Population Pyramid. For example, if you are Australian and today was your 30th Birthday, this interactive website would show you that while the majority of the world’s population are younger than you, 60% of Australians are older than you. To find out more check out the following video or the website for yourself.

This initiative highlights that the shape of a country’s population pyramid tends to correspond with their overall level of development. Typically high income countries, like Japan or Australia, have an aging population where the average person is well over 30. While most middle income countries, like China and India, are in the process of benefiting from a demographic dividend whereby the bulk of the population are of working age. Whereas in the average low income country, such as Uganda or Mozambique, the vast majority of people are below the age of 30. You can use the online portal to see how your place in the global population pyramid would vary if you had been born in a different country or time period.

Source

The World Population Project 2015 <http://www.population.io/>

The Cricket World Cup is an Unequal Contest

Global Development

Have you ever thought to yourself how unequal the playing field is in the Cricket World Cup? Some of the world’s richest countries, like Australia and the United Kingdom, compete against some of the world’s poorest countries, like Zimbabwe and Afghanistan. To indicate the upper hand some countries have over others, the graph below ranks countries by income per person and the size of their middle class population (measured by developed country standards).

 Cricket World Cup Chart copy

The richest country, Australia, has 100 times more income per person than the poorest country, Afghanistan. Surely this unparalleled high standard of living partly explains why Australia has won more World Cup titles than any other country.

The United Kingdom has around 1000 times more people in the middle class than Zimbabwe. The size of the middle class is a better measure than just population alone because despite some countries like India having large populations, many live in extreme poverty. Defining middle class by developed country standards (living over $US13 a day) ensures a fair comparison of the same standard of living can be made across both developed and developing countries. Ultimately this measure illustrates the point that countries are not competing on a level playing field.

So this World Cup, are you going to go for a rich and highly populated country or a country that despite being relatively poor is punching above its weight?

For other blogs that illustrate how uneven many global sporting contests are, check out these popular posts in relation to the Football World Cup and the Commonwealth Games

Sources:

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

World Bank 2015 <http://iresearch.worldbank.org/povcalnet/index.htm>

The End of Extreme Poverty in the Developed World

Global Development

Key Points 

  • Extreme Poverty was only eliminated in the developed world relatively recently, around 50 years ago, having only begun falling dramatically from around 1850. This illustrates that progress in the fight against poverty can occur quite rapidly.
  • For the whole of human history prior to 1850, more than four-fifths of the world’s population lived on less than $1.25 a day. Today less than 15% of the world’s population live in extreme poverty and it is projected to potentially fall below 5% by 2030.

Background

Extreme poverty was the common experience for most of human history until recent generations (see here for more information about the Beginning of the End of Extreme Poverty). Former World Bank Economist, Martin Ravallion, has estimated the historic reduction in the number of people living below $1.25 a day in the developed world using data on income and inequality. While it is difficult to be exact, he provides the best insight available into historical trends in poverty reduction, which are shown in the chart below.

mravallion1a

Note: ACN – Australia, Canada, New Zealand, ACH – Austria-Czechoslovakia-Hungary BSM – Benelux-Switzerland-Micro-European States PS – Portugal, Spain, UKI – United Kingdom and Ireland

It was not too long ago that developed countries had similar rates of extreme poverty to what developing countries have today. For example, in the late-19th century, the United States had a similar rate of extreme poverty to what India has today, while at that time the United Kingdom had a similar extreme poverty rate to Ghana today. Another example is that over three-quarters of the populations of Australia, Canada and New Zealand were in extreme poverty 200 years ago, which is on par with the poorest countries in the world today, like the Central African Republic. However extreme poverty reduced to around 5% of their populations by 1915 and was eliminated by around 1950.

Significant progress against extreme poverty began in the 1800s and by the mid 20th century it was completely eliminated. The relatively recent elimination of extreme poverty in the developed world provides hope that rapid progress can occur and that it is feasible that one day soon the world could be free from extreme poverty.

Source:

Centre for Global Development 2014 <http://www.cgdev.org/blog/poverty-rich-world-when-it-was-not-nearly-so-rich>

How Committed are Rich Countries to Development in Poor Countries?

Global Development

Key points

  • Recently, this year’s Commitment to Development Index was released, which ranks rich countries based upon a number of factors, such as Aid, Trade and Environmental policies.
  • Northern European Countries, such as Denmark, Sweden and Norway continue to be on the top of the list. While South Korea, Japan and Switzerland are at the bottom.
  • Interestingly, New Zealand substantially outperforms Australia, while the United States and Germany are on par with Greece and Spain respectively.
  • The index shows that all rich countries could be doing much more to contribute to international development.

Background

Each year the Centre for Global Development, an international development think tank, ranks rich countries based upon how their policies enable or inhibit development in poor countries. The seven factors included in the index relate to Aid, Trade, Finance, Migration, Environment, Security and Technology. The latest rankings released in early January are shown in the Figure below.

CDI Figure

The index measures rich countries commitment to international development beyond comparing aid levels alone, which dramatically alters the rankings of some countries. Luxembourg falls from 1st place based upon aid as a share of GNI to 18th place based upon the more comprehensive index. While Portugal moves much higher up the list to 6th place compared to 12th place when comparing just aid.

Importantly, this index shows that rich countries could be doing much more to contribute to international development. Every country performed poorly in at least one of the seven factors included in the index.

Source:

Centre for Global Development 2015 <http://www.cgdev.org/publication/commitment-development-index-2014>

What does the G20 have to do with the World’s Poor?

Global Development

This week World Leaders are meeting in Brisbane, Australia for the 2014 G20 Summit. To find out more about what this has to do with the World’s Poor, check out the infographic below and this blog.

GuideToG20Infographic_v2

Lets be clear on what the “middle class” is

Global Development

Key Points

  • A number of world leaders, including the Australian Prime Minister, have claimed that millions of people have been lifted out of extreme poverty and are now living in the “middle class”.
  • However, there is no universally accepted definition of “middle class” and the use of this term is often very misleading. The “middle class” in developed countries, such as Australia, have substantially higher living standards than the vast majority of people in developing countries.
  • While there have been large reductions in extreme poverty over the last twenty years, 93% of people in the developing world still live below the United States’ national poverty line of less than US$13 a day.

Background

Earlier this year, the Australian Prime Minister claimed that hundreds of millions of people have been lifted from extreme poverty to “middle class” and there are now almost two billion people in the global “middle class”. Statements such as this do not represent how the notion of “middle class” is typically understood in the developed world.

The lowest possible standard of middle class in a developed country is living above the United States’ national poverty line (defined as $13 a day (2005 US PPP)). According to the latest World Bank data, 93% of the developing world’s population live below this line. As the chart below shows the huge decline in people living in extreme poverty has not been matched by a decline in the share of people living below the United States’ national poverty line.

From Poverty to Middle Class

The incredible reduction in the population living below the extreme poverty line (shown in the chart above) should be celebrated. However this should not be misrepresented to suggest most of these people live in “middle class” by any developed country standard.

Sources:

World Bank 2014 <http://iresearch.worldbank.org/povcalnet/index.htm>

Australian Government 2014 <https://www.pm.gov.au/media/2014-01-23/address-world-economic-forum-davos-switzerland-0>

40 Hour Famine

Global Development

This weekend, hundreds of thousands of Australians gave up something they live with everyday (food, furniture, technology etc) to fundraise as part of World Vision’s 40 Hour Famine. This year the focus is on alleviating poverty in Rwanda, particularly reducing hunger in children under five-years old.

The table below provides a snapshot into just how different life is like in Rwanda compared to Australia. For example, for every 1 maternal death in Australia, there are 143 in Rwanda. While for every $1 spent per child on primary education in Rwanda, over $300 is spent per child in Australia.

AUSTRALIA

Aus flag

For Every RWANDA 

Rwanda flag

1

Maternal death

143

1

Child that dies before five-years old

11

1

Preventable death

14

1

Undernourished child

30

1

Person per square kilometre

157

303 Dollar spent per child on Primary Education

1

93

Dollar spent on Health

1

2

Child completing Primary Education

1

10 Internet user

1

8 Child in pre-school education

1

According to World Vision, just $1 fundraised as part of the 40 Hour Famine is enough to feed 1 person for up to 5 days. If you are interested in finding out more and/or donating check out: http://www.40hourfamine.com.au

Sources:

World Bank 2014 <http://data.worldbank.org/data-catalog/world-development-indicators>

Revised Commonwealth Games Medal Tally

Global Development

As the 2014 Commonwealth Games come to end have you ever wondered how fair the playing field is?

Most members of the Commonwealth are developing countries and many are small islands. Only a few countries, like the United Kingdom, Australia and Canada, are rich enough and have sufficiently large populations to have well nourished populations that have time to hone their skills in competitive sports. This significantly reduces the competition at the top of the medal tally. For example, to illustrate the inequality between Commonwealth countries compare the richest and poorest countries. The richest country, Australia, has over 125 times more income per person than the poorest country, Uganda.

Countries rankings would change dramatically if the medal tally were revised to adjust for differences in income per person and population size, as has been done for the table below. This removes disparities in wealth and population and allows for a fairer comparison of how countries have performed.

 

Rank Country Revised Medal Tally Change in Ranks
1 Nauru 1482 24
2 Samoa 459 15
3 Kiribati 373 23
4 Grenada 253 16
5 Jamaica 148 4
6 Saint Lucia 77 21
7 Kenya 61 1
8 Bahamas 39 10
9 Trinidad and Tobago 38 4
10 New Zealand 27 -5
11 Cyprus 27 1
12 Uganda 26 3
13 Fiji 26 15
14 Cameroon 25 0
15 Isle of Man 24 14
16 Barbados 23 14
17 Namibia 22 2
18 Papua New Guinea 14 3
19 Mozambique 13 3
20 United Kingdom 11 -19
21 South Africa 10 -15
22 Zambia 9 1
23 Australia 9 -21
24 Mauritius 8 7
25 Nigeria 8 -18
26 Botswana 6 6
27 Malaysia 6 -17
28 Singapore 5 -17
29 Canada 4 -26
30 Ghana 4 -6
31 India 3 -27
32 Pakistan 2 -16
33 Sri Lanka 2 0
34 Bangladesh 1 0

Small islands countries and some African countries perform substantially better when the medal tally is revised to take into account income per person and population size. Nauru, Samoa and Kiribati take the top three places because they are middle-income countries with tiny populations and still managed to get five medals between them (including a gold and three silver). While Australia, the United Kingdom and Canada fall to the bottom third of the rankings.

Sources

Commonwealth Games 2014 <http://results.glasgow2014.com/medals.html>

World Bank 2014 <http://data.worldbank.org/data-catalog/world-development-indicators>