Pre-Christmas aid cuts on the horizon?

The NGO and aid community is in battle mode again after an article in the Australian Financial Review last week [paywalled] suggested that Treasurer Joe Hockey and Finance Minister Mathias Cormann were in a clash with Foreign Minister Julie Bishop over whether the aid budget would face further cuts.

The Mid Year Economic and Fiscal Outlook (MYEFO) should be out this month, and Deloitte has forecast dismal numbers, projecting the 2014-15 deficit to reach $34.7 billion, $4.9 billion worse than what was projected by the Treasurer in May. A number of the planned savings measures in the budget have also been knocked back by a hostile Senate.

News Ltd reported that Ms Bishop’s staffers have been privately warning NGOs of looming cuts and advising them to get in touch with Hockey and Cormann—something Bishop’s office denies.

If aid cuts go ahead, it would be on top of the 10 per cent cut (after inflation) out to 2015-16 already delivered by the Coalition from the 2012-13 aid base it inherited.

When pressed, Ms Bishop wouldn’t deny the swirling rumours, and said that if the aid budget is cut again, it would be on Labor’s head.

“If savings are found from my department, I will hang that around the neck of Tanya Plibersek each and every day until the next election,” Ms Bishop said.

“She has a choice — pass the Budget proposals that we took to the Budget and have been arguing for, otherwise if there are savings from my department she as the Shadow Foreign Minister will be accountable for them. She will be responsible.”

On launching the photo exhibition celebrating 40 years of Australian aid in Canberra last week, the Foreign Minister emphasised the quality of Australia’s aid—there was careful avoidance of any mention of quantity.

This is not the first aid cut scare in recent months, with rumours in The Australian back in October. There was speculation at the time that was a ‘trial balloon’ to test how the public might react to further cuts. Back then, the Foreign Minister vowed to fight any cut, but this time there are not the same assurances.

As in October, the NGO sector has geared up in response, with ACFID, World Vision, CARE and ChildFund among the many organisations releasing statements calling for the aid budget to be left alone.

But in the pre-Christmas December haze, it might be a challenge to muster sufficient public outrage. It is a strategy that has been used before—most recently by Labor, in December  2012 when announcing that part of the aid budget would go towards funding domestic asylum seeker costs.

Perhaps it is unsurprising that the government should look to raid the aid kitty again, given the Essential Poll after the budget that showed that the aid cuts were the only popular cuts among voters across all parties. But further cuts would not only be bad for the world’s poor. They would also undermine the Coalition’s claim that it, unlike Labor, would give the aid program certainty and predictability.

3 Responses

  1. Stephen Howes
    Stephen Howes December 15, 2014 at 10:29 am

    I spoke on Radio National Breakfast this morning on the widely reported aid cuts. As reported, they are, by a long shot, the largest cuts the aid program has ever seen. We’ll be putting out more analysis once the MYEFO is released. Meanwhile, my interview is here.

  2. Joel Negin
    Joel Negin December 15, 2014 at 9:47 am

    From the ABC:
    “The ABC’s AM program understands the aid budget will be reduced to Howard-era levels and more than $3 billion will be cut over the next four years.”

  3. Stephen Howes
    Stephen Howes December 14, 2014 at 3:46 pm

    I saw in the Canberra Times that Joe Hockey was quoted as saying that there will be spending cuts, but that they will be modest and will not harm the domestic economy. The clearest signal yet that aid will be cut on Monday?

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