Fact check: Does Australians' spending on pets show how little the nation spends on foreign aid?

Fact check: Does Australians' spending on pets show how little the nation spends on foreign aid?

Fact check: Does Australians' spending on pets show how little the nation spends on foreign aid?

Updated 11 September 2017, 7:40 AEST

Does the amount that Australian consumers spend on their pets show how little Australia spends on foreign aid?

The claim

Labor senator Sam Dastyari has tweeted about pets and foreign aid.

"I was just told that 'As a county [sic] we spent 3 x more on our pets last year than we did on foreign aid.' So I did a check. Yep — that's true," Senator Dastyari said on Twitter.

Ten minutes later, he added: "Obviously no relation. It does highlight just how small overall expenditure on aid is — despite the oft outcry. (And with 2 [dog emoji] 2 [cat emoji] of my own)."

Does the amount that Australian consumers spend on their pets show how little Australia spends on foreign aid? RMIT ABC Fact Check sniffs out the answer.

The verdict

Senator Dastyari's comparison suffers from faulty reasoning.

It might make for a good headline, but comparing Australia's aid contribution to that of comparable OECD countries provides a fairer yardstick.

In 2015-16, the Australian Government spent $4.03 billion on official development assistance, or foreign aid.

Meanwhile, research by industry group Animal Medicines Australia suggests that Australians spent $12.2 billion on their pets in the 12 months to April 2016 — three times Canberra's foreign aid contribution.

While figures drawn from other research organisations do not correlate exactly with AMA's estimates, they do appear to support the notion of greater compassion for Australia's pets than for the people of needy nations.

Experts acknowledge the difficulty in explaining to the public the importance of foreign aid and in assessing whether it is fair and reasonable, generous or stingy. But Senator Dastyari's comparison, in itself, does not demonstrate that Australia's foreign aid spend is ungenerous.

For a start, the foreign aid budgets of governments worldwide are typically small when compared to aggregate private spending, whether it be on pets or any other economic component. Australians spent $14 billion a year on alcohol in 2012, for example.

Overall, Australia's household spending in that year was almost double that of government spending.

More tellingly, data indicates that Australia's foreign aid spending is low when compared to that of other countries. Australia ranks poorly in the accepted measure of official development assistance as a proportion of gross national income (ODA/GNI).

Australia's ratio for 2015-16 was 0.25 per cent, which puts it 17th among the 29 countries on the OECD's Development Assistance Committee and well below the UN target of 0.7 per cent and DAC average of 0.32 per cent.

This comparison is arguably more apposite for showing that Australia's foreign aid budget is "small", rather than a comparison with private spending on pets.

Pet expenditure

Fact Check contacted Senator Dastyari to ask him for the source of his claim.

In an email, the senator provided two links to news articles to back up his claim — one to an article from April 2017 in The Australian about pet expenditure, and another to an SBS article from May 2017 about the Government's temporary freeze on foreign aid.

The former does not attribute its claim that "Australians are spending $12 billion a year" on their pets to any particular source, but it does seem to correlate with research done by Animal Medicines Australia, which describes itself as the "peak body representing the leading animal health companies of Australia".

In 2016, AMA commissioned a report on pet ownership, with research carried out by Newgate Research. The survey was conducted in April of that year on a sample of 2022 pet owners of various ages across Australia, including owners of dogs, cats, fish, birds, reptiles and small mammals.

Data from the 2011 census was used to correct for sampling bias.

The report asked respondents to estimate: "Approximately how much has been spent on each of these items in the past year for your dog(s)/cat(s)/fish/bird(s)/reptile(s)/small mammal(s)?"

Based on the survey answers, the report estimated that $12.2 billion had been spent on pet products and services over the previous 12 months, broken into the following categories:

Other data

Fact Check also contacted two international market research companies, Euromonitor and IBISWorld, which supplied figures for pet product spending in Australia in 2016.

A report supplied to Fact Check by Euromonitor said that Australians spent $3.7 billion on pet care in 2016. This included pet food, cat litter, healthcare, dietary supplements and other pet products, but not veterinary services, grooming, boarding/minding, insurance, competitions/memberships, training, transport, alternative healthcare treatments, walking or other.

Meanwhile, a spokeswoman for IBISWorld told Fact Check that it had calculated that Australians spent $6.8 billion on pet food, healthcare products, services, veterinary fees and other products and services in 2015-16. But this excluded grooming, minding, insurance, memberships, training, transport, alternative healthcare treatments, walking and other.

The Australian Bureau of Statistics also publishes statistics on pet expenditure.

In a feature article on electricity prices and the consumer price index published in March 2017, it listed average weekly household spending on pets and related products at $5.40, and for veterinary and other services for pets at $6.69. The figures are a weighted average for capital cities only.

Using ABS estimates of the number of capital city households in 2017, Fact Check has calculated total spending on pets and related products to be around $1.7 billion, while the total spend on veterinary and other services for pets would be between $2.1 billion and $2.2 billion. All up, spending would be around $3.9 billion.

As the eight capital cities account for around two-thirds of all households in Australia, according to the ABS, this would suggest overall spending on pets of almost $6 billion -- again, well short of the Animal Medicines Australia estimates.

However, it is difficult to say which categories in these three organisations' estimates overlap correctly with those published by AMA — they may or may not include different products or services, which could alter the estimates.

For this reason, and due to the differing methodologies, Fact Check is unable to say definitively how much Australians are spending on their pets.

Foreign aid

The SBS article that Senator Dastyari supplied to Fact Check for the basis of his claim states that Australia's foreign aid expenditure, which was $3.8 billion in 2016-17, would peak at "$4.01 billion in mid-2018 and [will] remain static until indexation resumes in 2021-2022."

According to the Department of Foreign Affairs and Trade, the Government spent $4.03 billion dollars on official development assistance, or foreign aid, in 2015-16.

Whilst the data on pet expenditure is not definitive, Fact Check accepts that it is likely to be at least equal to or greater than what the Government spends on foreign aid.

A valid comparison?

Andrew Rosser, a professor in south-east Asian studies at the University of Melbourne, told Fact Check that the comparison might be valid for making a political point, rather than for carrying out "rigorous academic analysis".

"Foreign aid budgets are typically tiny compared to aggregate private spending," he said.

Indeed, in 2012, the Australian Securities and Investments Commission, as part of its MoneySmart program, estimated that Australian households "will have spent a total of $642 billion on general living costs".

This is around 1.7 times the figures recorded for total government expenditure in 2011-12 ($378 billion) and 2012-13 ($382.6 billion) in the 2012-13 final budget outcome.

ASIC also estimated household spending on a number of other categories, many of which dwarfed Australia's foreign aid spending.

Fact Check has charted these categories (below), comparing them to Australia''s foreign aid budget for the years 2011-12 and 2012-13.

Apples and apples

Jonathan Pryke, a research fellow at the Lowy Institute, says that a more relevant comparison to make would be the difference between private giving and household expenditure on pets.

"Per capita, Australia gives roughly $40 to development NGOs (non-government organisations) per year. Per capita, Australia gives roughly $100 to veterinarian services per year (coffee is about $350 a year per capita)," he said.

Meanwhile, Stephen Howes, director of the Development Policy Centre at Australian National University, described Senator Dastyari's comparison as "fair".

He had made a similar comparison in a blog post in 2013, writing:

"Annual donations to development NGOs per person have more than doubled in real terms since 1999/2000 and are now at about $40 per person. This is a small amount relative to other expenses: less than half of the amount we spend on pet vet services, but a big improvement on where we were a decade ago."

The implication is clear: Australians, privately, spend far less on foreign giving than they do on their pets, although this does not address Senator Dastyari's point about the generosity or otherwise of Australia's public commitment to foreign aid.

Mr Pryke and Professor Rosser both told Fact Check that the best way of assessing the generosity of Australia's foreign aid budget, otherwise known as official development assistance (ODA), was to measure it as a proportion of gross national income.

The OECD defines gross national income (GNI) as "gross domestic product, plus net receipts from abroad of wages and salaries and of property income, plus net taxes and subsidies receivable from abroad".

Mr Pryke said that the ODA/GNI ratio "allows us to make comparisons of generosity across countries of different GDP and government expenditure sizes".

Professor Rosser said that "the conventional way to measure the adequacy of a country's spending on foreign aid is to compare that country's ODA/GNI ratio with either the UN target [for aid] or the OECD Development Assistance Committee (DAC) average. The UN target is 0.7 per cent of GNI while the DAC average was estimated at 0.32 per cent of GNI in 2016."

The graph below compares the ODA to GNI ratio of the OECD's Development Assistance Committee countries, including Australia.

Australia's ratio of 0.25 per cent in 2016 sits below both the UN target and the DAC average, ranking Australia 17th among DAC countries.

Mr Pryke told Fact Check that this year, Australia's ODI/GNI ratio was expected to fall to 0.22 per cent.

"This puts Australia in the bottom third of developed nations despite the fact that we have had almost three decades of uninterrupted economic growth," he said.

Professor Howes said that Australians had "little understanding of how much is spent on aid", with many people believing the country spent much more than was the case.

"Most Australians do support the giving of some aid for humanitarian reasons, but are not supporters of more aid," he said.

Mr Pryke agreed, adding that spending on foreign aid across the region was in Australia's national interest so as "to have both a secure and prosperous immediate region".

"And we do that through our aid program and robust trade relationships," he said.

"The problem is that aid delivery is so complex that many advocates get stuck in the detail. Bottom line: advocates for Australian aid are just bad at delivering a simple message as to why it is important."

Sources