After an array of commitments from the ALP in the lead up to this year’s election, the development sector has been keen to get their eyes on the October Budget to see which of these promises have translated to financial commitments.
With Tuesday’s Budget now delivered, we asked the experts what they make of it.
The new Government has started strong, with an additional $375 million (totalling $1.4 billion over the next four years) to start revitalising the ODA program – especially only five months in. This exceeds their election commitments on additional ODA (but does not yet advance the promise to increase ODA/GNI every year in office). We are particularly pleased to see the Temporary and Targeted measures folded onto the base to place the ODA budget on more secure footing, and the announcement of $30 million to go to the Australian NGO Cooperation Program. This signals a reset for Australian development. That said, the challenges remain vast, and we will be watching closely for more detail to see how this matches all of the Government’s stated priorities.
So what will we be watching?
First, how the process of writing a new development policy meaningfully addresses the development priorities of our neighbours. This includes climate, gender, health and humanitarian – and we expect to see this captured in the May 2023 Budget. Second, climate spending. While the Budget highlights a range of climate measures which is encouraging, it remains unclear how much will be spent. Given this is named as a priority by all our Pacific partners, it should be resolved quickly – and more should be done on mitigation and adaptation in the Pacific and beyond. Third, the effectiveness of the AIFFP. We’re concerned that the Government is locking in significant funding from a limited ODA budget to a facility which has a geostrategic rationale – a review for its development impact is in order. And fourth, transparency. The additional information in Tuesday’s budget is a useful step, which we appreciate – but more should be done, including publishing forward estimates for ODA spending.
As we wait to see how this week’s commitments are shaped by the upcoming consultations and substantial policy planning, the more immediate action for the Government is to respond to the full scale of global hunger and consider how we can build resilience to food insecurity for the future. There is enormous unmet and urgent need not addressed in this week’s Budget.
Overall, it’s a positive first step for the new Government seeking to reset the development program.
Jess has recently burst back onto the Australian scene after a few years working in development off-shore. At the Lab, we’re stoked to collaborate a lot with Jess and her colleagues. Smart, fierce and flamboyant — she’s one to watch out for.
“Foreign aid will continue to fall under Labor. Not by as much as it would have under the Coalition, but it is disappointing nevertheless.” – Stephen Howes
This week’s budget showed that Labor is actually increasing aid by more than the $1 billion it promised during the election. But the outlook for aid thereafter is still pretty grim. Adjusting for inflation, aid is set to fall every year from 2022-23 to 2025-26. The total reduction by 2025-26 is 5%, which is a lot less than the 14% cut under the Coalition’s March budget (using the latest inflation numbers), but nevertheless a real cut.
Not surprisingly, the major beneficiary of the extra $1.43 billion is the Pacific ($900 million), which is already the most aid-dependent region in the world, but which, bipartisan wisdom dictates, just can’t be given enough aid.
Despite the multiple global crises currently playing out, there is no increase in the humanitarian budget. The aid budget summary boasts about the $5 million Australia gave in response to the Pakistan floods, and $15 million for the African food crisis – peanuts. One would surely have expected a more international, global-oriented aid budget from a new Labor government.
On transparency, there is some additional information in this year’s budget summary, including sectoral estimates. This is welcome given the deterioration in transparency under the Coalition.
If you are an optimist, you will be grateful that Labor has boosted aid relative to the Coalition, and think that our new government will build on this budget in subsequent ones. In that best-case scenario, we would see an end to the aid cuts that have been underway since 2013. If you are a pessimist, you might think that without any aid targets, and given other spending pressures, the future of Australian aid is bleak. If that is the case, aid will continue to fall.
“Ultimately, as part of its new development strategy, Australia needs a clear policy on aid volume: whether it’s indexation, stabilising ODA/GNI, or increasing ODA/GNI. If we don’t, aid will continue to decline over the medium term.” – Cameron Hill
Part of the above is drawn from this Devpolicy blog by Cameron Hill, Stephen Howes and Huiyuan Liu published on October 26, 2022.
This team has been taking a close look at the Federal Budget. Cam is one of Australia’s foremost researchers on the Australian aid program, turning his hand to research, analysis, and practice with equal skill. Stephen is a leading development economist who started the Development Policy Centre in 2010 and his analysis is second-to-none. Huiyuan recently completed a Masters at ANU and specialises in development economics and China’s foreign policy in her role at Devpol.
What happens on Budget night matters. After all, development strategy is equal parts conception and execution and it’s clear that ambitious rhetoric about our role in the region is no good without matched resources. But for the first time in years, the reception to this week’s Budget from the development community has been mixed. So, what should we make of this?
Embrace the debate - Budget night is a contact sport and those with thin skins may wilt with concern that development community responses were not harmonious. But most should recognise that in the long-run, a better environment for robust development debate is what’s needed. The development community is diversifying in its knowledge and worldview – space for solid analysis, new stakeholders and emerging approaches will be vital for Albanese Government development reform in the coming years.
Keep it real – few were genuinely expecting a game-changing budget. With a development finance review, development policy process and capability assessment all underway, let alone the known challenges of DFAT delivery capacity, most would have been pleasantly surprised. But this shouldn’t be confused with this Budget being the sort of result the region deserves, or Australia is capable of going forward.
Recognise the political leadership at play - the Albanese Government is active in the region, prepared to speak about development and they’ve put it on the National Security Council agenda. It was only two years ago that in order to increase an aid budget, Government had to do rhetorical gymnastics to get temporary extra cash over the line.
Strap in for the long-game - we shouldn’t expect a decade of degraded development capability to be fixed overnight. But maybe, just maybe, a steady step in the right direction is ok for now - and the true test will be in May 2023 and beyond. This Budget has put Government on notice that many are watching their every move on development, are prepared to back their ambition, and want the practical proof that rhetoric will translate into reality.
Bridi is the CEO and Founder at the Lab and Maddie is our Senior Analyst and Intel Editor. Together, they inspire the team to collaborate, innovate and sense-make. The Lab loves Maddie’s unique combination of research skill and design flair. She’s known by her peers for her meticulous standards on quality and commitment to gender justice. Bridi’s recently returned from Washington DC where she was a Fulbright Visiting Fellow at the Center for Strategic International Studies. Her bright ideas and ability to expertly gather different perspectives on issues and working in collaboration to tackle development challenges that lie ahead are loved by the Lab.
