Academic says Coalition's budget is policy on the run | Pacific Beat

Academic says Coalition's budget is policy on the run

Academic says Coalition's budget is policy on the run

Updated 6 September 2013, 11:42 AEST

Australian National University's Development Policy Centre has been looking at the Coalition's foreign aid figures.

The director, Stephen Howes believes this will have a major impact on the current plans for Australian aid.

He says the first target to cut $600 million out of the aid budget immediately will be very damaging to the effectiveness of the aid program.

Presenter: Geraldine Coutts

Speaker: Stephen Howes, Director of the Australian National University's Develpment Policy Centre

HOWES: This is not just a release of costing of a policy, this is actually the release of the Coalition's aid policy and to have such a big shift in policy released right at the last minute, on the second last day of the campaign, I think it's very unfortunate. I mean there are a lot of people concerned about foreign aid, not just in, not just overseas, the recipients, a lot of people in Australia who follow the foreign aid  budget and who actually might even base their vote on aid policy. So this is very radical shift the Coalition has announced. I mean there's been rumours before that it would cut the aid budget, but it didn't come out until the very last minute and actually released its aid policy.
 
COUTTS: Well, what do we know about it. For instance, will the aid cuts be reflected in Papua New Guinea and Nauru, the asylum seeker detention centres?
 
HOWES: Ah, we know very little about the aid cuts, but we do know they're going to start straight away. So in fact, there's some $600 million targeted to be taken out of the aid budget and in fact if you look at the Coalition costing table, it's the largest single cut for this year is in aid. We don't know where or how it's going to be made, but to cut the aid budget in the current year, after budgets have been drawn up, plans have been made. We know that the aid program is fully committed, in fact, the aid program is under additional stress, because of the new deal with Papua New Guinea. So I think it will be very damaging to the effectiveness of the aid program to have to rip 600 million out of it immediately, if the Coalition is elected.
 
COUTTS: But they wouldn't even say on TV last night what countries would be affected. They only said they're interested in Asia-Pacific, but wouldn't actually nominate where the cuts would be made?
 
HOWES: No, in fact, if you note the other thing, I heard Joe Hockey say twice that they're going to take funds away from multilaterals and give it Australian NGOs. But then when Julie Bishop released her foreign aid policy, because that also happened yesterday in a separate event, there was no mention of this transfer of funds from multilaterals to NGOs. So you really feel that they haven't thought this policy through, haven't worked out its implications and it does seem like policymaking on the run.
 
COUTTS: And that's what they've accused the Labor Party of. Well, again, what's your feeling, because we're hearing a lot of unhappiness from the aid, not just the donors, but the people, the large organisations like this, the Australian OXFAM, who run a lot of aid programs, saying that it's going to have a big impact on their programs. Are you able to guess the extent of this?
 
HOWES: Well, they've said, Joe Hockey said that NGOs are going to actually receive additional funding, but I think yeah the entire aid sector which has experienced strong growth over the last decade is now going to be in for a pretty tough time, that will start with AusAID, but the ramifications will be felt well beyond AusAID, and despite the assurances of Joe Hockey, it's hard to see how NGOs will escape from these cuts.
 
I mean I think we have entered a new era, we've talked about the end of the aid boom worldwide with the global financial crisis. Australia has somewhat defied that trend  But although Labor has pushed out this point-five target, I think this is different, because I think under Labor, we were overtime going up towards point-five. I think when Labor took office, aid was .21, this year it reached .37. Our analysis says with these cuts, by 2016, we're going to be back at .32. So we're going away from .5. So it's very hard to say - I mean the .5 target wasn't that credible under Labor, but certainly if you say you're going for .5, you're actually heading in the opposite direction, it just doesn't make sense.
 
COUTTS: And, adjusting for inflation, this isn't going to be factored in either?
 
HOWES: Ah well, that's right. That is the Coalition policy that aid will only keep up with inflation and that's what we see,so we see that by 2016, aid will be at about $ billion and that's what it was,adjusting for inflation,last year, so that's they're target. But if you're only keeping up with inflation, then you're not keeping up with economic growth and if you're not keeping up with economic growth and youraid is going to fall, as the percentage of GNI, and if your aid falls as a percentage of GNI, you can't say well, actually I'm committed to increase aid as a percentage of GNI, let alone increase it to .5.
 
COUTTS: How do you think this will go with the Australian voters, a $4.5 billion dollar cut, because the trade-off they're saying is that the roads will better?
 
HOWES: Yeah, I know that aid is not a big election issue for most Australians. There are a number of campaigning groups, especially youth groups, for whom it is a big issue. But I think even for those who are not strong supporters of aid, I don't think people will buy the argument, well we're going to cut our aid budget, so that we can build more roads for ourselves. I mean it just doesn't make sense. I think we all accept that we're a very rich nation, we have an obligation to help others, we might debate how much help we should provide. But I think very few people would accept the argument that we need to cut aid to build roads.
 
COUTTS: Stephen, how's anything else that strikes you about this announcement of a $4.5 billion cut?
 
HOWES: Ah no, I think if the Coalition does come to office, then the aid program is really going to be in a very difficult position immediately, sort of, come Monday morning.
 
We saw something like this happen last year, when Labor took $375 million out of the aid program to fund costs of asylum seekers in Australia. So now this is an amount almost twice that level that is going to be taken out of the aid budget, sort of, almost getting towards mid-year and I just emphasise the fact, that it's going to be a crisis situation and you're going to see delays in the aid program. even if the attempts to avoid signing contract that have already been committed to - they'll have to look to see whether they can get out of contracts they've entered into.
 
The aid program had already come under a lot of pressure because of the delays in ramping up that Labor had put in place. So I think all the fat, all the flexibility from the aid program have been taken away. So in that sort of context to take out about $600 million immediately, just is going to do very bad things for aid effectiveness and it doesn't seem at all like a well-considered policy.
 
COUTTS: We may well see breach of contracts law suits coming up?
 
HOWES: Ah well, I'm sure they'll do their best to avoid that. But yeah, you will certainly see a lot of aid partners complaining about delay and unable to move things forward. And that at the end of the day is a waste of resources and taxpayers money.
 

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