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Whether growing or shrinking, aid program needs a plan

Whether growing or shrinking, aid program needs a plan
Published 17 Sep 2013 

A former director general* of Australia's agency for international development used to liken the aid program to the mighty ocean liner, the Queen Mary. Once it is heading in one direction, it takes a lot of energy, money and time to turn it around.

The aid program, like the Queen Mary, doesn't have a tight turning curve. And that's not due to a lack of skill on the part of the captain or the director-general; it's simply the nature of mighty ships and big aid programs. Of course, changing destination mid-course can be done. That's why ship captains and AusAID directors general are well paid. But it comes at a heavy cost, and those costs are likely to be threefold.

First, there is the cost associated with cutting programs and activities already underway. Stephen Howes of the Development Policy Centre has detailed those costs well.

Then there is the cost of wasting already expended aid resources as significant but fragile development gains disappear for want of a little more time and funding to turn them into robust achievements. [fold]

And then there is the international reputational cost to an aid program which has been steadily growing since Prime Minister Howard promised in 2005 to double the aid budget by 2010 and his successor, Kevin Rudd, promised to have it reach 0.5% of GNI by 2015. The first promise was met, ironically, by Prime Minister Rudd. The second promise wasn't met and won't be. But the intellectual, diplomatic, policy and human investments needed to have an effective expanding aid program have been made. And like all investments, their value lies in what they produce. If they are prevented from producing, then a substantial portion of that investment is lost.

To return to the ocean liner analogy, the course for the growing aid program was set first by the 2006 White Paper on the Australian aid program and then revised through the 2011 Review of the program. The Canberra agencies responsible for implementing the policies and the program were under pressure to meet the expanding ambitions of both Coalition and Labor governments, with the over-riding instruction of 'full-steam ahead and be fast about it'.

It’s hard work to grow an aid program but it helps when there is a framework that sets out the vision, goals and objectives. True, it took three years to get that framework for Rudd's 0.5% approach, but at least AusAID had the White Paper (which was respected on both sides of parliament) to guide it in the interim.

Now the days of growth have come to a sudden and unplanned halt, and the aid program has to strip $656 million off its budget three months into a financial year. It's not necessarily a Titanic moment for the aid program but this uncharted and submerged shoal raises the question: is it fiscally responsible, in light of the taxpayer money already invested to ensure the aid program is ship shape?

The point here is not to debate whether it is wrong or immoral to stop, slow down or even reverse aid budget growth. The new government has been given a clear mandate to make budget decisions and that includes the aid program. The point is to suggest that the cost of this stripping will be higher than the proposed savings precisely because it is unplanned and urgent. 

What is the strategic purpose of this significant reduction? What does the new government want to achieve with the aid program apart from some instant savings? Even after the money is taken away, the aid program still represents a substantial element of government spending. It needs a clear and accountable framework and stripping it of 12% of this year’s budget (effective immediately) without that framework is arguably a false economy.

The aid program also represents a very important contribution to Australia's international standing. The cuts, coming at a time of significant global aid shrinkage, will be interpreted less as a domestic budget matter and more as an international retreat by Australia.

Perhaps this is intended, but it's not clear, and as Australia enters into a busy international calendar of events where it is taking a leading role (including the presidency of the Security Council and next year’s presidency of the G20), clarity is vital. And as Australia's most important development partners are also our neighbours, it would be strategically sensible and the good neighbourly thing to do to make it clear pretty quickly what the new government wants the new svelte aid program to achieve.

* I worked for four AusAID directors-general, but I won't reveal which one was responsible for the Queen Mary reference.

Photo by Flickr user Australian Civil-Military Centre.

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