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Aid-for-trade program not what the doctor ordered

The federal budget's disappointing cuts to the foreign aid program come as no surprise, given Foreign Minister Julie Bishop’s announcement of a cap on the aid budget just last month. However, the cuts, combined with the mantra of aid for trade, are short-sighted and contrary to Australia’s national interest to promote economic growth in the Asia-Pacific region.

Aid for trade ignores the fact that three-quarters of the world's extreme poor – those living on less than US$1.25 ($1.33) per day – now live in middle-income countries, many of which are Australia’s neighbours and future trading partners. The world’s poor are not benefiting from the region’s rapid economic growth, nor are they contributing to it. Instead, they are trapped in a cycle of poverty and disease, often perpetuated by easily-treatable neglected tropical diseases (NTDs), and parasitic and bacterial infections that include intestinal worms, trachoma and lymphatic filariasis.

If left untreated, tropical diseases cause malnutrition, blindness and other disabilities, which prevent children from attending school and adults from working. An individual with chronic lymphatic filariasis infection is estimated to lose 70 days of work per year. Trachoma, a blinding disease that persists among Australia’s indigenous communities, is estimated to contribute to US$5.3 billion in global economic losses.

Treating these diseases is one of the cheapest health interventions available today. Nearly all the medicines needed are donated by pharmaceutical companies, reducing the annual cost of treatment to less than 50¢ per person. The financial effect that comes from freeing the region’s poor from such preventable diseases is directly linked to unleashing the untapped market growth in low and middle-income countries of the Asia-Pacific region.

 For Australia’s aid-for-trade program to be effective, it must first lay the foundation for inclusive and sustainable economic growth and development across the region. The best way to do this is to invest in health, including the control and elimination of tropical diseases by 2020. This is a global goal that is endorsed by the London Declaration, an unprecedented public-private partnership, with clear benchmarks and tangible targets.

To set the stage for long-term economic growth in the Asia-Pacific region, I recommend three concrete actions for Australia’s foreign aid program.


First, Australia should leverage one of its greatest regional public goods: its research institutions. These represent the country remarkably well and should be crucial players in its “economic diplomacy”.

In my own country of Timor-Leste, Australian aid has enabled a strong partnership between the University of Sydney and the Ministry of Health, training the next generation of health professionals and leaders.

Second, the aid program should prioritise health as an “enabler” of economic growth and development. The government can help lay the foundation for health institutions that will contribute to the creation of a more productive labour force and expand the market for Australian goods and services.

Third, co-investment in regional health should be encouraged. Australia has already set the stage for this by spearheading the Asia-Pacific Leaders Malaria Alliance and investing in the Asia Development Bank’s Regional Malaria and Other Communicable Diseases Trust Fund. Investing together in tangible goals promotes health, alleviates poverty, and establishes platforms for future cooperation and trade. Australia is uniquely positioned to help expand partnerships and attract new investments across the region.

Traditional aid-for-trade programs have had some success in accelerating economic development. However, without an investment in programs that directly target the health of those living in poverty, the rampant inequality that exists across Asia and the Pacific will continue to persist and may even become a threat to Australia’s security. Programs that help eliminate neglected tropical diseases are simple, cost-effective and help to address the underlying causes of inequitable growth. They should be given equal billing with traditional aid-for-trade programs.

Dr. José Ramos-Horta is a Nobel peace laureate (1996) and former president of Timor-Leste (2007-2012).


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