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Submission to the inquiry into Australian aid strategic effectiveness

On 28 March 2018, the Joint Standing Committee on Foreign Affairs, Defence and Trade was asked to inquire into and report on the strategic effectiveness and outcomes of Australia’s aid program in the Indo-Pacific and its role in supporting Australia’s regional interests.

Our key concerns

RCOA’s submission focuses on the following areas identified in the terms of reference of the Inquiry:

  • The implementation and efficacy of innovation in Australia’s aid program (Recommendations 2, 6)
  • Australia’s aid program in terms of strategic and development goals (Recommendations 1, 2, 3), and
  • Australia’s aid program in fostering confidence, stability, sustainability, capacity, community-determined goals and best outcomes, particularly by utilising local procurement and smaller/local entities (Recommendations 1, 4, 5, 6).

Restoring Australian aid

Australia’s total overseas development aid budget for 2018–19 is $4.16 billion. According to the Australian Council for International Development, over four years to 2017–18, Australia’s aid budget has been cut by $3.7 billion, the equivalent of a quarter of Australia’s Overseas Development Assistance (ODA), and the recent budget will result in cuts of $141 million over the forward estimates. Our current aid contribution of 0.22% of Gross National Income in 2017–18 (already our lowest share) will drop to 0.19% by 2021–22.

This decline reflects a decline in ODA globally. In 2017, the Organisation for Economic Cooperation and Development recorded a 0.6% decrease in global aid. This brings the global average to just 0.31% of GNI spending on ODA assistance, with just five countries meeting the 0.7% target set by the UN (Sweden, Luxembourg, Norway, Denmark and the United Kingdom).

These cuts come at a time of increasing global instability. The UN estimates that over 128 million people will need humanitarian assistance and protection in 2018, with conflict and natural disasters being the top drivers of these needs. $25.3 billion in aid from the international community will be needed to provide assistance and protection, with 105 million people estimated to benefit from aid initiatives.

Stronger commitment from States is needed to achieve these targets. The 2017 target received less than half of the required funding by the end of the year ($11.9 billion was received, against a need for $23.5 billion), and the 2018 targets face similar global aid fatigue. Currently, only $7 billion has been funded, with an overwhelming $18.3 billion unmet.

Failing to meet these needs poses serious risks to Australia and beyond. Internationally, global aid assists in managing the risks of displacement, as well as addressing economic and social factors that contribute to forced displacement. Moreover, providing financial assistance to projects that mitigate the effects of climate change can reduce global instability, a reality that is particularly pertinent to the Indo-Pacific region. Australia’s pledge to reorient $1 billion of existing aid to climate change initiatives falls far below budgets set by other donors.

Regionally, Australia provides 60% of total aid to the Pacific region. However, other aid providers, notably China, have started to increase their involvement in the area. The Chinese government has recently announced their intention to strengthen links between diplomacy and aid, leading to an approach where diplomatic interests may drive aid provision. If Australia is to remain a strong partner focused on addressing vulnerabilities and leading on the promotion of human security in the Indo-Pacific region, we must continue to assist our island neighbours through a targeted and effective approach. Australia’s capacity to play this role requires a greater commitment to and investment in overseas aid.

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