Australia’s Aid Problem

The recent release of data by the Organization for Economic Cooperation and Development (OECD) on Overseas Development Assistance (ODA) hasn’t been positive for Australia. The OECD data shows that Australia’s aid, as a proportion of the country’s Gross National Income (GNI), fell by 16 percent in the past year. Australia’s ODA now accounts for just 0.23 percent of the country’s GNI, well underneath the United Nations recommendation of 0.7 percent for developed countries. This is the third year in a row Australia’s ODA has fallen.

The release of this data comes as Australia is grappling with a new strategic competitor in the South Pacific, Australia’s traditional area of influence and the region where the vast majority of its development assistance goes. China’s increased activity in the region is seen as a challenge to the most fundamental concept within Australian strategic doctrine – the exclusion of any unaligned military powers from the South Pacific.

Yet even as this concept remains central to Australia’s foreign policy, the country’s minister for international development and the Pacific, Concetta Fierravanti-Well, delivered a speech at the Overseas Development Institute in London on the sidelines of April’s Commonwealth Heads of Government Meeting (CHOGM), indicating there was little public support for Australia increasing the aid budget. Justifying Australia’s approach toward aid with domestic politics nevertheless fails to connect the country’s regional engagement to its wider security strategy.

Indeed senior defense analysts in Australia have found the government’s ambivalence toward foreign aid to be perplexing. John Blaxland, Professor of Intelligence Studies and International Security at the Australian National University, stated, “I'm struggling to think of a good reason why you would cut the aid budget. We live in an increasingly contested strategic environment. That means if Australia does not provide a particular project then someone else will and this is unlikely to work in our favor.”  Allan Gyngell, the former head of the Office of National Assessments, concurred that he was “certainly convinced that further cuts to aid will diminish Australia's capacity to influence the region.”

For China, the South Pacific is a relatively cheap place to engage. Not much money gets China a lot. While China emphasizes that it pursues a values-free international development policy, this is not entirely true. While internal governance may not interest Beijing the way it does Canberra or other Western capitals, international relations certainly does. While diplomatic recognition of Beijing over Taipei could be deemed a reasonable request to make for development assistance, increasingly China is seeking allies for its claims in the South China Sea. Vanuatu recently joined the handful of countries – mostly in Africa – which support China’s maritime claims. This will undoubtedly embolen China to seek similar support from other Pacific Island states.

For Australia to realize its security interests in both the South Pacific, and the wider Indo-Pacific region, it requires engagement with Pacific Island countries that can produce impactful results; results that can negate Chinese influence and earn Canberra the respect of Pacific leaders. Australia has been criticized in the past for engaging in “boomerang aid,” where money delivered in foreign aid ends up funding Australian companies and consultants, rather than producing direct and positive outcomes in recipient countries. Presently, significant sums of Australian aid are being earmarked for the “harmonizing” of Pacific legal systems for the implementation of the PACER Plus free trade agreement, an agreement most signatories have only begrudgingly accepted with the hope of gaining greater labor market access to Australia.

Shifting Australia’s aid delivery mindset away from these self-serving initiatives toward the realities facing Pacific Island countries would do Australia’s regional reputation a great amount of good. With the geographical isolation of Pacific states, containing small and dispersed populations that make service delivery difficult and expensive, Australia can increase its role in capacity building. This is particularly important due to the Pacific’s vulnerability to disasters and the impacts of climate change. That elements within Australia’s government still do not take this phenomenon seriously continues to cause much disturbance among Pacific Island leaders.

The negative and burdensome implications of the often used “Arc of Instability” (a phrase that Pacific leaders detest) concept of the South Pacific needs to be reimagined.

Graeme Dobell of the Australian Strategic Policy Institute has suggested the conceptual framework of an “Arc of Responsibility” instead. This lens recognizes the role of Australia as the power with the greatest responsibility in the region with a more positive and proud engagement.

Australia’s recent foreign policy White Paper highlighted the need for Australia to increase its interaction in the South Pacific in order to maintain and enhance its traditional influence. However, the OECD development assistance data demonstrates that Canberra continues to be reluctant to fully embrace this approach. Australia seems to have a vision of itself as a major global player, dealing with issues much greater than those of the seemingly inconsequential South Pacific. As a wealthy middle power Australia does have some global clout, but this clout is weakened if it sees itself as too important to engage in its own neighborhood and take its regional responsibilities seriously.