Africa, the environment and disaster relief bear the brunt of Coalition aid cuts

Today, at last, the Coalition announced how it would reduce aid by about $650 million below the amount budgeted for this year, or $110 million below last year’s level. It took Labor six weeks to announce how it would cut the aid budget last year 13 by the $375 million which it diverted in December 2012 to pay for asylum seeker costs. It should not have taken the Coalition 19 weeks to announce how it would implement its election commitment.

With the fiscal year more than half way through, there was not a lot of flexibility left and a lot of small cuts were made across the budget. NGOs have been vocal, but cuts to their funding have been relatively minor. The Asia-Pacific region, the biggest recipient of Australian aid, has been largely insulated. The $375 million for asylum seekers has not been touched. But three areas were singled out for particularly deep cuts of $100 million, or close to it.

Aid to Sub-Saharan Africa was cut by $78 million (37%) below last year’s level or by $92 million (12%) below the amount budgeted for this year. This will be controversial.  Our 2013 aid stakeholder survey revealed deeply divided views as to whether aid to Africa should be increased or reduced. I for one support this cut. The 2011 Independent Review of Aid Effectiveness recommended that bilateral aid to Africa be kept at 2010-11 levels, and that our support for Africa expand through increased funding for effective global programs and agencies. Then the AusAID program for sub-Saharan Africa was about $140 million. It had risen in this year’s budget to $225 million. Now it is back at $133 million.

The second area to be singled out for cuts, and the only one for apparent elimination, is support for global environmental programs, including climate change. This is shown at $91.6 million for last year and at $0.5 million for this year. This drastic measure is far harder to defend. Julie Bishop made known her opposition to using aid funding for climate change just before the election, and there have been various signs of the Coalition’s antipathy to it since. But what is the Government’s strategy?

To take climate change as an example, the Government surely still accepts that it is in Australia’s interests to promote international action on climate change. It has long been accepted that funding is a key part in this. At Copenhagen, developed countries, led by the U.S., agreed to find $10 billion a year to support climate change action in developing countries by 2012, and $100 billion by 2020. This has been crucial for leveraging greater developing country action. Where is this money to come from? Either carbon markets or public finance (aid). We don’t seem to support carbon markets, so we had better use our aid budget, as we have done so far.

In the earlier Coalition Government, Downer, Turnbull and Hunt were strong supporters of using the aid budget for climate change action. So was Labor. This Government is yet to explain why it thinks differently.

This round of cutbacks don’t mean all aid funding for the environment and climate change is gone, as some of it will be buried in country programs. But it must mean a large reduction, and it certainly sends a strong, negative and confusing signal.

The third area to be singled out for deep cuts is disaster relief or “humanitarian and emergency response”. This is cut by $26 million compared to last year, but by $101 million compared to what was budgeted for this year. The Independent Review of Aid Effectiveness recommended a large increase in this type of live-saving spending. This year we have what the UN has described as the worst humanitarian disaster since the end of the Cold War. At the just-concluded pledging conference for Syria, Australia pledged a measly $10 million in humanitarian aid. Now we know why.

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Stephen Howes

Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.

7 Comments

  • Mark, You are right. There are lots of other cuts, including to regional programs for Asia and the Pacific and, as you mention, for governance. It is hard to know what to make of them all, without more detail, which, as Joel says, we don’t have. I imagine that a lot of the cuts were about what was possible, and what was possible without too much political cost.

    Julie Bishop did mention aid for trade in her statement (http://foreignminister.gov.au/releases/2014/jb_mr_140118.html) but only to say, as before, that it would be important. There really wasn’t anything new in the statement concerning the overall approach to aid, though I guess that the statement that aid will increase with CPI makes it less likely that there will be further cuts in the next budget.

    • According to the table of cuts published by The Australian, which was leaked to Greg Sheridan for re-front-page story on the morning of the announcement, there will be a further $44 million cut in next year’s budget (although this is obviously not locked in stone).

      Unlike the table officially released by DFAT, this early version [pdf] includes comparisons between 2012-13 spending, the ALP’s 2013 budget and the latest cuts.

      At a time that the 2013-14 budget for the Pacific islands region has been cut from $943.7 million to $882.2 million, it is noticeable that the only country that did not receive a reduction is Nauru – given the current political and legal chaos, this is an understandable but regrettable misdirection of so-called development funding.

      Given that AusAID’s former deputy director-general served as co-chair of the board of the green climate fund until October 2013, and Australian officials played a crucial role in developing the mandate, structure and operations of this innovative multilateral funding mechanism, the government’s decision to reduce all climate financing through multilateral agencies is all the more astonishing.

  • As most of the Africa program is an NGO one then it will be hard to avoid NGO cuts. Her statement about NGO funding was the subsidy scheme which is the 2.5-2.7% she referred to, but the NGO funding is much more than that.

    • Hi Patrick,

      I don’t have the numbers because I don’t think they have ever been transparently released but I do not think that “most” of the Africa program bi-lateral funding is directed through NGOs. It certainly is a chunk but there is a huge amount that goes to scholarships (about a 1000 scholarships per year) plus lots to the Australia-Africa Partnership Facility, plus things like funding to Ethiopia’s multi-donor health fund, South Sudan’s multi-donor health fund, funding through DFID to Zimbabwe food security (some of which does end up in NGO hands), and other programs.

      I’m sure NGO funding will face some of the cuts but I did want to clarify that point.
      Cheers,
      Joel

      • Thanks for the correction: no not ‘most’ but there is a $90m NGO Africa program (~$20m p.a.) which might be afftected; and it will be interesting how much scholarships will be afftected. The $20m culs to NGO and volunteer progams seems to evenly split at $10m each. Given it seems the subsidy scheme won’t be cut at all, then that $10m will come out of bilateral programs NGOs are engaged in, the main one being Africa. CARE have put their cut at $0.5m. I suspect it will be similar for the other large NGO which are part of these programs.

  • Thanks Stephen. At least we know now where the cuts will come from in terms of regions. But not sure we all have the detail as to which exact programs will be cut and by how much. I guess that will trickle out.

    Even as a strong supporter of the Africa program, an effort to streamline and focus the African engagement to fewer countries and fewer sectors would be welcome. And this was the direction that the program was moving in anyway (well, fewer countries, but not less money).

    The environment cuts reek of ideology over anything to do with aid effectiveness.

  • Stephen what is your take on the almost halving of spending for governance as a cross regional item? Also, the Minister made no mention in her release on aid-for-trade? What’s your view on the significance of that, giver her numerous previous statements about the importance of aid-for-trade?

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