In 2010-2011 the Australian Government will spend $4.3 billion on foreign aid. Aid spending is often seen as a selfless and philanthropic exercise for the benefit of people in less wealthy countries. In reality, aid is often driven by Australia’s national strategic and commercial interests.
Not all aid money is poverty-focused
Australia follows the OECD guidelines for defi ning Official Development Assistance (ODA) – another term for aid. This loose set of guidelines allows donors like Australia to artificially inflate the amount of aid they give by including expenditure that is not aimed at alleviating poverty. In recent years Australian aid figures have been inflated by the inclusion of spending on:
- controlling ‘irregular’ immigration and upgrading of detention facilities in Indonesia;
- training Burmese intelligence officers and counter-terrorism workshops;
- cancellation of debt, which is contrary to international agreements.
These seeming irregularities in the spending of aid money flow directly from the overaching objective of Australia’s aid program, which is “to assist developing countries reduce poverty and achieve sustainable development, in line with national interest.”
The reality of Australian aid
The amount of aid that the Australian Government gives is low by international standards, as demonstrated by the following graph.
Concerns have been raised not only over the amount of aid Australia gives, but also the quality and effectiveness of aid. In particular, concerns have been raised about:
- the corporatisation of aid, that results in aid money going into the pockets of Australian companies, consultants and advisers instead of the people who need it most;
- unfair conditions on aid money that privilege Australian companies and national priorities at
- the expense of local self-determination;
- aid facilitating a trade liberalisation agenda often at the expense of local livelihoods;
- securitisation of aid, which has seen increased Australian police presence in the Pacific in the name of good governance. This has been motivated by Australia’s national security interests rather than the relief of poverty.
Key issues with Australian aid
International research has shown that the tying of aid is costlier and less effective than untied aid. The tying of aid is a practice which privileges Australian companies and national priorities in the aid program. Aid is tied in three ways:
1. Nationally-tied – aid money is provided on the condition that the receiving country buys goods and services from the donor country;
2. Project or program-tied – aid which must be spent on specific projects or sectoral programs determined by Australia; or
3. Performance or condition-tied – aid tied to particular performance outcomes or conditions. While in 2006 Australia officially untied its aid program from national procurement (nationally-tied aid), the informal tying of aid continues with Australian companies receiving the majority of aid contracts.
While in 2006 Australia officially untied its aid program from national procurement (nationally-tied aid), the informal tying of aid continues with Australian companies receiving the majority of aid contracts.
Corporatisation of Aid
Private companies play a significant role in delivering Australian aid. A 2009 report by the Australian National Audit Office notes that 20 of Australia’s largest managing contractors “were together responsible for delivering 70 per cent of Australia’s bilateral aid program expenditure.” This kind of ‘aid’ – money paid to private companies out of the aid budget that gets returned to Australia as profit – is called ‘boomerang’ aid. It bypasses the people that need it most and instead funds Australian companies, consultants, advisers and goods and services. Such arrangements reduce the transparency and accountability of the Australian aid program as many of the contracts are covered by commercial-in-confidence agreements.
Technical Assistance (TA) funding often goes to experts (usually from Australia) to assist people in developing countries develop skills in particular areas – known as ‘capacity building’. This includes research, advisory and consultancy services. TA accounts for 40-50% of the Australian foreign aid budget, twice the average of other OECD countries. Internationally, TA has been a source of considerable criticism due to its high cost and lack of effectiveness in developing capacity.
A review commissioned by the governments of Australia and Papua New Guinea (PNG) highlights the ineffectiveness of TA, noting that “[t]he emphasis on technical assistance for capacity building and the lack of much to show for it is at the heart of the political difficulties the Australian aid program to PNG is facing.” Furthermore, Australia’s emphasis on TA has diverted funds away from the delivery of essential services. As then Prime Minister Kevin Rudd, said in 2009, “too much [aid] money has been consumed by consultants and not enough money was actually delivered to essential assistance in teaching, in infrastructure, in health services on the ground, in the villages.”
AusAid has recently announced changes to the aid program to both PNG and East Timor, with over one third of advisor positions in each nation to be phased out over the next two years.
‘Aiding’ Climate Change
Unchecked global warming is already having a devastating impact. It is felt most harshly by the poor worldwide, and not least in the Pacific Islands. Yet Australia’s additional climate aid is zero.
The $160 million to be spent on climate aid during 2010-11 is from previously announced commitments. Australia double-counts this money as both United Nations Framework Convention on Climate Change (UNFCCC) financing and as ODA, breaking UN requirements that climate finance be additional to ODA. The World Bank estimates that at least US $70 billion is needed annually to help developing countries adapt to the effects of climate change. Australia’s current contribution of $160 million is 0.002% of the amount World Bank says is needed.
Not only is climate aid inadequate and in breach of UN commitments, but a large proportion is being misspent. $200 million of Australia’s climate aid is funding a government campaign for the recognition of forest carbon credits at the UN, as a way of off setting Australian emissions. The money is being spent on ‘Reduced Emissions from Deforestation and Forest Degradation’ (REDD) in Indonesia and PNG, to demonstrate the off sets are viable. Many NGOs and indigenous people’s organisations argue REDD off set schemes are ineffective in reducing overall emissions, undermine the livelihood of subsistence farmers and displace forest-dwelling indigenous peoples.
Want to know more?
Visit Where is your aid money going?, AID/WATCH’s online guide to Australian aid. The guide reveals the complex web of Australian government aid spending, giving you information on where your aid money goes and tools for action.
If you are in Sydney and want to learn more about this topic, come to the launch of Where is your aid money going? on Tuesday the 16th of November at the Darlington Centre, Sydney Uni, from 6pm. Speakers include:
- Alex Oates, Policy Advisor, Australian Council for International Development (ACFID)
- Lee Rhiannon: Greens Senator-elect & co-founder of AID/WATCH
- Teguh Surya: Campaigns Director at WALHI, the largest and oldest environmental advocacy group in Indonesia
- Muliadi: Secretary General of ARPAG, a 7000-strong collective of peasants, fisherfolks, rattan handcrafters and rubber collectors, who live adjacent to the Australian Government-funded REDD project in Indonesia
If you are not in Sydney, check out AID/WATCH’s website for more details on how you can become involved in campaigning for change in Australia’s aid policies and practices.
This article was authored by a team of activists and campaigners at AID/WATCH, including Claire Parfitt, Gary Lee and Nishan Disanayake.
 Organisation for Economic Cooperation and Development (2008) Is it ODA? Fact Sheet http://www.oecd.org/dataoecd/21/21/34086975.pdf
 Australian Government, Budget 2010-2011, Budget Paper No. 2, Immigration and Citizenship. http://www.budget.gov.au/2010-11/content/bp2/html/bp2_expense-15.htm
 Goodman, J. (2007) The Australian aid program: Aiding the Burmese Intelligence systems. AID/WATCH, Sydney.
 United Nations (2003) Monterrey Consensus of the International Conference on Financing for Development, p10. http://www.un.org/esa/ff d/monterrey/MonterreyConsensus.pdf
 See for example, Clay, E. J., B. Riley and I. Urey (2005), The Development Eff ectiveness of Food Aid: Does Tying Matter? OECD, Paris; OECD DAC (2005). Final Report of the OECD Development Assistance Committee Development Partnership Forum on Improving Donor Eff ectiveness in Combating Corruption, 9–10 December; United Nations (2005) Human Development Report: International Cooperation at a Crossroads: Aid, Trade and Security in an Unequal World (New York).
 Australian National Audit Offi ce (2009) AusAID’s Management of the Expanding Australian Aid Program, ANAO Audit Report No. 15 2009-10, p.87.
 ActionAid (2006) Real Aid 2: Making Technical Assistance Work. http://www.actionaid.org.uk/doc_lib/real_aid2.pdf
 Review of the PNG-Australia Development Cooperation Treaty (1999), 19 April 2010, p 26. http://www.ausaid.gov.au/publications/pdf/PNGAustralianAidReview.pdf
 Tougher audit for Australian aid to PNG, ABC Radio, PM, 28 April 2009, http://www.abc.net.au/pm/content/2008/s2555219.html
 World Bank (2010) The Economics of Adaptation to Climate Change, A Synthesis Report, Final Consultation Draft (August), World Bank, Washington, p 10. http://siteresources.worldbank.org/EXTCC/Resources/EACC_FinalSynthesisReport0803_2010.pdf
 Goodman, J. and Roberts, E. (2010) Australian REDD Aid to Indonesia – Ineff ective and Unjust. In Reality of Aid 2010, Aid and Development Eff ectiveness: Towards Human Rights, Social Justice and Democracy, Reality of Aid, Manila, pp 53-60. http://www.realityofaid.org/roa-reports/index/secid/375/part/1