Australia’s diminishing aid budget

Australia’s aid budget is the lowest it has been, as a proportion of GDP, since aid began. From its mid-1960s peak of 0.48 per cent of GDP, the aid budget is now less than half that, at 0.21 per cent.

The simple reason for aid cuts has been to save money to balance budgets. The underlying reasons are more complex.

Since the mid-1980s, the neo-liberal economic mantra of balancing government budgets has implied that governments should not spend any more than they receive in taxes. Where spending looks to exceed revenues, budgets are cut, usually starting in areas that have the least immediate negative impact. The aid budget is often the first targeted.  

That economic model sounds simple enough but has very rarely reflected how governments in developed countries have run economies.

Domestically, government spending cuts push service costs onto end users, which hurts in political terms, particularly the lower paid and un/underemployed. They often look at the aid budget and say: ‘charity starts at home’.

The point is, however, not that there is not enough money to fund services and have a more adequately resourced aid program. It is just that the neo-liberal economic paradigm makes it seem that way.  

This in turn fits into a wider, somewhat xenophobic narrative about ‘undeserving’ foreigners, be they in countries with corrupt or brutal leaders or seeking asylum. A common perception is that aid to outsiders – broadly conceived – is wasted, and that Australia can’t ‘afford’ foreign aid. Cutting the aid budget appeals to voters who accept that ‘anti-foreigner’ narrative and helps secure electoral victories.

If aid is understood as enlightened self-interest – that we help others in order to help make the world a safer and more prosperous place – then cutting aid is neither enlightened nor, in the larger sense, does it serve self-interest.

Already Australia has seen the gaps in its own aid program filled by powers whose larger strategic interests may not align with those of Australia. There has been a sudden shift to fill those gaps, even if by creating larger gaps elsewhere.

In short, reducing Australia’s aid makes it less of a good friend to recipient countries, reduces their capacity to grow and flourish and, from a more hard-nosed perspective, reduces Australia’s diplomatic and strategic influence.

Cutting aid is part of a larger short-term political strategy that is pulling Australia in an ungenerous, unreflective direction. The longer term costs are to our regional relations and, in many respects, the type of country and people we might otherwise like to be.