Right: AusAid, Australia's foreign aid authority, is about to undergo changes in aims and funding under the new Abbott government.
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Arguments in favour of Australia reducing its foreign aid
1. Australia is not proposing to decrease its aid; rather it will halt the rate of growth
Supporters in of the change to Australia's level of foreign aid announced by the Coalition argue that it does not represent a reduction from current levels of assistance.
The reductions anticipated are cutbacks on the promised rate of growth, not reductions to the level of foreign aid currently being given.
What Australia has done is renege on a promise made by former Prime Minister, Kevin Rudd, to increase foreign aid from the current 0.37% of gross domestic product to 0.5%. Australia had also made a commitment- along with other countries that comprise the Organisation for Economic Co-operation and Development's development assistance committee (OECD DAC) - to increase aid spending to 0.7% of GNI.
It is only the growth in aid recurred to meet these increased levels of commitment that have been put on hold.
2. Australia has to put its own economic interests first
The Coalition has claimed that Australia is not sufficiently economically secure to increase its level of foreign aid.
The new federal treasurer, Joe Hockey, has stated, 'We can only be a more generous nation to the rest of the world if we have a strong Australian economy. And so we are reducing the growth in foreign aid by $4.5 billion over the forward estimates to fund essential infrastructure here in Australia.'
Mr Hockey further stated, 'We can't continue to fund a massive increase in foreign aid at the expense of investment in the Australian economy to get the Australian economy to grow at trend and hopefully above trend growth. So we have to cut the growth in foreign aid to fund Australian infrastructure, because the stronger the Australian economy, the more generous we can be in the future.'
The same point has been made by Australia's newly elected prime minister, Tony Abbott. Mr Abbott has stated, 'The best thing we can do for our country and ultimately the best thing we can do for people around the world is to strengthen our economy.'
According to this line of argument, Australia has to put its own economic wellbeing first, because only when our economy is very robust will we be able to afford to give more foreign aid.
While still in opposition, the Coalition indicated the money that would be saved through not increasing foreign aid would be spent on infrastructure projects, including $1.5 billion on Melbourne's East West Link, $1.5 billion on Sydney's WestConnex and another $1 billion on an upgrade to Brisbane's Gateway Motorway.
The finance minister, Andrew Rob, has stated, 'You'll see that we're front-end loading a lot of the infrastructure spend so we get projects up and away.'
3. Integrating AusAID into the Department of Foreign Affairs and Trade will make the agency more efficient
One of the first announcements made by the newly elected Abbott government was that it will have AusAID subsumed within the Department of Foreign Affairs and Trade. The Prime Minister, Tony Abbott, has claimed that this will enable 'the aid and diplomatic arms of Australia's international policy agenda to be more closely aligned.' This is in accord with statements made by Australia's new foreign affairs minister, Julie Bishop, before and after the election, which indicate that Australia's administration of foreign aid will be brought more clearly into line with Australia's regional strategic objectives.
It has been estimated that up to 1,400 employees may be retrenched or be lost to attrition as part of this efficiency bid over the next three years. Mr Abbott has stated, 'We do intend to trim the size of the commonwealth public sector by 12,000 through natural attrition over the next three years.' Mr Abbott has indicated that one of the consequences of improved efficiencies brought about by the merger of AusAID within the Department of Foreign Affairs and Trade is that some staff currently within AusAID will not have their contracts renewed or will not be replaced when they retire or resign.
The new head of AusAID, Secretary of the Department of Foreign Affairs and Trade, Peter Varghese, has told DFAT and AusAID workers, 'We are at the beginning of what will be a lengthy and complex process, which we will approach logically and strategically, in a considered and transparent way.'
The effect of mergers and job reductions across the public service is meant to be increased efficiency and significant budget savings. Prior to the election the Coalition indicated that one of its principal measures for returning the budget to surplus, over time, would be increased government efficiency.
4. Increases in foreign aid are not the only way to advance Australia's interests in the region
Australia's incoming government argues that there are better ways than foreign aid to advance Australia's interests in our region. According to this line of argument, economic, defence and other strategic initiatives are of primary significance and foreign aid should be deployed within this larger regional policy framework.
Australia's new foreign minister, Julie Bishop, has stated, 'Our focus will be on economic diplomacy, with the various operations within the Department of Foreign Affairs and Trade better aligned in support of that policy across government. This will mean that DFAT will have a clear focus on promoting the economic interests of the Australian people and Australian businesses in its international engagement.'
Ms Bishop has further stated, 'Australia needs a focussed and effective, practical and principled overarching strategic framework designed to deepen our strategic, defence, trade, investment and diplomatic engagement throughout the region... Greater levels of aid do not necessarily correlate to better outcomes, nor does it inevitably lead to closer and more meaningful relationships.'
Julie Bishop has argued that rather than increasing the level of foreign aid we give, Australia needs to ensure that the recipients of our aid recognise where it comes from so that our standing in these countries is advanced.
Ms Bishop argues that Australia needs to become better at self-promotion, rather than increase its level of aid.
In a speech given on June 20, 2012, Ms Bishop stated, 'I recently attended the 50th anniversary of Samoa's independence. The official day was marked by celebrations, including a parade in which school children, community groups, and public servants all participated with undisguised enthusiasm and pride.
Dozens of United States Peace Corps members dressed in red, white and blue danced through the parade in a spectacular display, there were US marines, a US navy band no less, all joined in the celebrations. New Zealand was represented by their Governor-General and together with the United States, Japan, and China they were all strongly represented with large flags and banners on display.
Yet, despite being the single largest aid donor to Samoa, Australia's participation was barely noticeable.'
5. Some of Australia's foreign aid is misdirected
It has been claimed that some of those in receipt of Australia's foreign aid do not require it and that anomalies of this sort should be removed before any further increases in aid are made.
In an article published in The Australian on September 21, 2013, Greg Sheridan cited a number of areas to which he believes Australian foreign aid is inappropriately directed.
Mr Sheridan stated, 'For reasons that are completely baffling, the Australian taxpayer is liable for $150,000 of the cost of a statue in New York commemorating campaigns against slavery in Africa and the Caribbean. Spot the Australian connection?'
Mr Sheridan went on to note, 'Then there are the millions of dollars Australian taxpayers have generously stumped up for the Palestinian Union of Agricultural Works Committees. A number of the board members and office-holders of this group are intimately associated with the Popular Front for the Liberation of Palestine, one of the key progenitors of terrorism against Western targets, pioneering especially attacks on passenger aeroplanes...
Then there is the subvention given to Gareth Evans's old think tank, the International Crisis Group. The ICG does some good work, but how exactly is a rich think tank in Brussels the responsibility of the Australian taxpayer through the foreign aid budget?'
Mr Sheridan further observed, 'There are still aid programs delivered from Australia to China, though China has international reserves of more than $US3 trillion ($3.15 trillion).'
Finally Mr Sheridan was critical of the manner in which Australian foreign aid was being diverted to the Australian Immigration Department. Mr Sheridan noted, 'The Australian Immigration Department... is the third-largest recipient of Australia's foreign aid budget.'
Mr Sheridan explained that the Rudd government was using part of the foreign aid budget to fund the processing of asylum seekers. He argues that this is illegitimate. 'A technicality meant the government could spend money on asylum-seeker processing within Australia and still label it foreign aid - I suppose because the people being processed were foreigners - so in order to maintain the illusion it was approaching the GNI target, it made the Australian government the third largest recipient of Australian foreign aid.'