In a federal budget in which Joe Hockey carefully minimised the number of bitter pills handed out, one aspect of the Treasurer's fiscal deliberations stood out for its severity and harshness. Overseas aid was cut from $5.03 billion in 2014-15, to $4.05 billion in 2015-16, a reduction of around 20 per cent. Further cuts are scheduled to follow until 2017-18, by which time Australia's aid budget relative to gross national income will have sunk to 0.21 percent, its lowest level since overseas assistance was formalised in the post-war period. It will also be substantially below what Australia's more prosperous OECD partners allocate.
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Tuesday's cuts will not be applied uniformly across the regions targeted by Australia's aid program: financial support to the Pacific island countries as well as Nepal and Cambodia will remain relatively untouched. Those nations to Australia's immediate north – Indonesia, the Philippines and Vietnam – will have their aid cut by 40 per cent. The countries of sub-Saharan and north Africa, and of the Middle East, are worst off. Their aid allocations is to be cut by 70 per cent.
The cuts are not completely unexpected. In December, the government flagged cuts of $1 billion in a single year, to be followed by smaller cuts later on. And Mr Hockey defended the cuts on Tuesday saying they were part of the government's plan to put the budget on a more sustainable footing, and that there was no specific targeting of any country.
That rationale is unlikely to cut any ice in Indonesia, which, because it is one of the larger recipients of Australian direct aid, will lose most in dollar terms. Indonesians who recall Tony Abbott linking 2004 tsunami aid to the fate of the Bali nine may be forgiven for seeing the reduction (from $605 million last financial year to $366 million in 2015-16) as pay-back for last month's executions of Andrew Chan and Myuran Sukumaran. The reaction from Africa may be similarly negative, since the Coalition is arguing that the expansion of aid to African countries only occurred because the Rudd government wanted to shore up its bid for a seat on United Nations Security Council.
Back then, in 2012, both major parties had given commitments to lift foreign aid to 0.5 per cent of gross national income. And, before the 2013 election, Mr Abbott specifically undertook to spare the foreign aid budget from cuts by a future Coalition government.
Cutting foreign aid is one of the easiest things any government can undertake, playing as it does to the populist argument that we should tackle problems at home before we spend money abroad. However, aid is not simply an exercise in soft power or a means of buying the acquiescence of neighbours. It is proven means of accelerating economic growth and social development in countries vital to Australia's strategic interest. Even altruistic aid sent to seemingly faraway places serves a purpose, both in preserving good government and preventing the rise of extremism. These threaten us all – a fact that regrettably seems to have escaped the government's thinking.
