The Liberal-National Coalition's decision to cut growth in foreign aid spending by $4.5 billion over the forward estimates has created a last-minute election debate about Australia's foreign aid commitments. Foreign Minister Bob Carr is yet to announce (at time of writing) the details of the Labor Party's foreign aid policy.*
Shadow Treasurer Joe Hockey said Australia can only be a more generous donor if it grows the Australian economy first. He was critical of the Labor Government for borrowing to maintain our foreign aid commitments and for reneging on promised commitments on an annual basis. Hockey said the Coalition remained committed to the Millennium Goal of increasing aid spending to 0.5% of gross national income but could not commit to a date Australia would reach that target.
This should not have come as a surprise. Back in 2011 Hockey was critical of the growth in Australian aid even while the Coalition maintained the bipartisan commitment to the 0.5% target.
Before calling the election, the Rudd Government had cautioned that it would defer the promised increase to the foreign aid budget of 0.5% of gross national income back to 2017-2018. As Stephen Howes points out, this was the fifth time the Government has pushed back the target since it was announced in 2008.
The 2013-14 budget set out the Australian Government's intentions for aid spending but development experts have been sceptical that Australia would meet the ambitious commitment. The target was announced by Prime Minister Rudd in more favourable domestic economic circumstances and was back-end-loaded from the outset. Small increases so far mean that an unprecedented ramp up in foreign aid spending (see graph in this post by Stephen Howes) would be required to meet the target. There are good reasons to question Australia's capacity to manage such a dramatic ramp up in spending and maintain the integrity and efficiency of the aid program.
The Coalition's new direction separates Australian aid policy from its conservative counterparts in the UK, where Prime Minister Cameron has continued to increase Britain's aid budget despite adverse domestic economic circumstances. This does not help Australia's interest in being recognised as one of the world's leading aid donors. And as Annmaree O'Keeffe suggested last year, weakening our aid commitment means weakening one of the most significant soft power tools Australia has to address threats to regional stability.
On a positive note, if the Coalition is elected to government on Saturday this policy would at least introduce more predictability in the forward estimates for the aid program than we have seen over the last few years, which is useful for our aid partners.
But have both the Government and the Opposition misjudged the public sentiment on aid? The 2011 Lowy Institute poll found that on average, Australians wanted 12% of the federal budget spent on foreign aid. Even with recent increases, aid only represents around 1% of the budget. It would seem that there is popular support for a bigger aid budget.
* Clarification (6/9/13, 11.50): Minister for International Development Melissa Parke has published an election statement of sorts through the DevPolicy blog.