In the biggest savings measure in the 2014 budget, the Australian Government is cutting the country’s foreign aid spending by $7.6 billion over the next five years.
The chief executive of Oxfam Australia, Dr Helen Szoke, says it is a broken election promise.
“It is a complete abandonment of an aid promise,” she said.
“The Abbott Government has torn up its promise to increase aid.”
Tying aid to the rate of inflation removes the decades old practice of measuring aid as a percentage of Gross National Income.
But the foreign aid figures for most recipient countries are steady.
Australian foreign aid will be capped at $5 billion over the next two financial years, 2014-15 and 2015-16.
In a surprise move, $2 billion has been removed from the projected foreign aid budget in the 2017-18 financial year.
In 2016-17, foreign aid will grow in line with the Consumer Price Index.
Professor Stephen Howes from the Australian National University says this is a different outcome from what the government took to the election.
“It is fairly significant cut that is going to happen over several years, basically, as inflation erodes the value of the aid budget,” he said.
Foreign aid ‘going backwards’
The Abbott Government says Australia’s aid budget will be spent where it can make the most difference.
There has been an increase to aid to Papua New Guinea in return for hosting the Manus Island immigration processing centre.
Professor Howes says, overall, Australia’s aid is going backwards.
“We are going to be looking at a 10 per cent reduction in our aid by the time we get to 2015-16,” he said, starting his calculations from the last Labor budget in 2012-13.
Impact on ‘world’s most vulnerable people’
Oxfam’s Dr Helen Szoke says Australia’s aid budget had already endured enough cuts. She says there will be an impact on the ground.
“What we know is that the Asia-Pacific region faces a perfect storm of complex challenges,” she said.
“We have poor people going hungry. We have the impact of climate change. We have the issues that women face in our region in the broader Asia Pacific region.
“If Australia reduces its work in this area, then it reduces its investment in stabilising the region and helping some of the world’s most vulnerable people.”
Australia has international obligations under the Millennium Development Goals to spend 0.7 per cent of its Gross National Income (GNI) on effective foreign aid by 2020.
Prior to this budget, there was bipartisan support to lift aid levels to 0.5 per cent of Gross National Income (GNI).
Tim Costello from World Vision Australia says Australia can choose to offer more help to vulnerable people in the region.
“When you look at other things, we can find $12 billion for a joint strike air force fighter jet. We can find money for things that we choose,” he said.
“This is devastating because there is a disproportionate impact on those who are most vulnerable.”
Professor Howes says there is now no chance for Australia to ever meet its obligations under the Millenium Development Goals.
“Over the forward estimates does fall back to about 0.3 per cent of GNI and that is where we were back in 2005-06 when the Howard Government first announced we would increase aid to four billion dollars,” he said.
“We are now in a different environment. We are now heading away from a MDG type target rather than towards it.
“It has gone. Even when we had a bipartisan agreement to it we were not able to achieve it.”
After the budget, performance benchmarks will be brought in to the Australian aid program.
Aid recipients will be expected to show results and value for Australian money.