Less than 10 Foreign Aid Cents to Every Defence Dollar

by Liam Carter

At a time when the world is suffering from a global pandemic, you would think that Australia would be increasing its foreign aid spending. Think again. The 2021/22 Budget confirms that Australia has again cut Official Development Assistance (ODA) spending from $4.479 billion in last year to just $4.335 billion for 2021/22, a loss of $144 million. Of that $4.335 billion, only $4 billion is marked as ODA – with the additional $335 million being temporary support for vaccine rollouts, COVID-19 relief, and economic assistance in the Indo Pacific.

After inflation, this equates to a cut of 4.9% in 2021/22 compared to 2020/21.

In fact, for every dollar spent on Defence (page 15), Australia spends less than ten cents on foreign aid.

Australia, like most aid giving nations, has agreed in principle to spend 0.7 per cent of their Gross National Income (GNI) on foreign aid, as part of the Millennium Development Goals. To put it another way, for every $100 of income, wealthy countries should be giving at least 70 cents in aid spending.

In 2010, both Labor and the Coalition agreed to raise ODA to 0.5 per cent of GNI – or 50c per $100 of income. But promises are one thing, delivery is another – and Australia’s record is overwhelmingly dismal when it comes to these foreign aid targets, slumping to 0.19% of GNI in 2020.

The OECD provides aid data on 29 donor nations, but only 22 of those have a long history of foreign aid expenditure. Australia is now in the illustrious position of having just eight nations that give less than us as a proportion of GNI. However, as the team at ANU’s Development Policy Centre note, if you exclude nations that have only recently started giving aid, such as Korea, Australia is third last in generosity, ranking only above Portugal and Greece – both of which have been hit hard by the European economic crisis.

Foreign Aid of OECD countries (% of Gross National Income GNI)
Source: OECD (2021) Official Development Assistance, https://www.oecd.org/dac/financing-sustainable-development/development-finance-standards/official-development-assistance.htm

Six countries are currently meeting and beating the 0.7 per cent of GNI goal for aid spending. Three of these are Nordic nations, which as the Australia Institute’s Nordic Policy Centre has noted, reflects an approach to aid that prioritises providing generous foreign aid, rather than just acting transactionally in foreign policy – helping to build trust and tackle extreme poverty and inequality before those problems lead to violence and further social dislocation.

Since 1972, there have been only three foreign ministers to oversee an improvement in the rate of ODA over their term in office – Tony Street, Stephen Smith, and Kevin Rudd. As noted, Australia last year for the first time fell below 0.2 per cent of GNI in ODA spending, falling to just 0.19 per cent. This a shameful milestone and reinforces the legacy of Julie Bishop as the Minister that oversaw the largest fall in Australia’s aid spending. Ever.

Australia is on track for aid spending to stagnate, with cuts totaling 12% from 2021/22 across the forward estimates. The challenge for Minister Marise Payne is to reverse the trend begun by Julie Bishop and begin rebuilding Australia’s ODA program into the transformative and generous program it should be for a nation as wealthy as ours.

The Prime Minister noted in the Defence Strategic Update in late 2020, that Australia needs to brace for a post-COVID world “that is poorer, that is more dangerous, and that is more disorderly.”

Rather than splashing cash on advanced missile systems, the best way to make the world less poor, less dangerous, and less disorderly is by boosting foreign aid assistance to the countries and people that need it most.

Australia’s Foreign Aid over the terms of Foreign Ministers (1972-2021)

> Back to Budget Wrap 2021 

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