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Asean Affairs   April 9, 2014

Australian Aid and the Asia Pacific: How Much Will Change?

By Ashlee Betteridge

Countries in the Asia Pacific have been the biggest beneficiaries of the doubling of Australia’s aid budget in the past decade. However the change of government last year, from the Labor Party to a Liberal-National coalition, has brought this unprecedented growth to a grinding halt. Two days before the elections last September, the Coalition announced its long-awaited budget proposal, which would cut $4.15 billion in aid over the forward estimates to 2016-17, including some $605 million of cuts from the aid budget for the current year.

The current year’s cuts, which represent about 12 percent of the $5.3 billion the previous government had allocated for 2013-14, were not announced until mid-January, more than halfway through the financial year. Details on cuts to specific programs are still not public as we edge toward the next budget year. Aid has fallen to just over $4.6 billion for 2013-14, from $4.8 billion in 2012-13, and is expected to stay at that level in the future.

This unexpected slash was not the only shock to Australia’s aid program. The standalone executive agency responsible for delivering Australia’s aid, AusAID, was abolished in October and “integrated” into the Department of Foreign Affairs and Trade (DFAT), following in the footsteps of Canada and New Zealand. No clear rationale has been given for this, and there is a risk many of the program’s most experienced staff would leave.

What does this all mean for countries in Asia and the Pacific?

Cuts and restructuring aside, the government appears committed to supporting development in the region. While Prime Minister Tony Abbott himself has remained fairly quiet on aid (save for a handful of quizzical remarks last December), Foreign Minister Julie Bishop has been on the forefront, visiting recipient countries and recently delivering a comprehensive speech at an aid conference at the Australian National University.

Without a comprehensive aid framework, statements from Foreign Minister Bishop provide us a better idea of the future trajectory of Australian aid.

The new government has been focusing on improving aid effectiveness, while ensuring stability and predictability. Mutual accountability for partner governments is an area of particular emphasis, as is the introduction of performance benchmarks to shift funding toward better-performing projects.

The government has long stressed its focus on the Indo-Pacific in the areas of aid and foreign policy, and any consolidation of the aid program is expected to only further sharpen this regional focus. For instance, it was quick to emphasize efforts to “shield” Australia’s neighbors from the current year’s cuts, the brunt of which were felt by programs in Africa and the Caribbean.

Whereas the previous government prioritized education and poverty reduction, the new government advocates “economic diplomacy” and “aid-for-trade,” as well as a stronger focus on Australian aid serving Australia’s national interest.

Yet there are many areas where we will likely see continuity. Gender equality and women’s economic empowerment are one such area, as Bishop recently highlighted on the occasion of International Women’s Day. Recent announcements on funding for education sector support in the Philippines suggest Australia is not moving away from this space, and the government recently reaffirmed its backing of agricultural research for development, which also had strong support under the Labor government.

The next opportunity to find out which programs or countries will be most affected over the longer term will come in May, when the government lays down its budget for the next financial year. In Canberra, there have been rumors about the 2014-15 aid budget being a “blank slate.”

Whatever happens in May, aid to Southeast Asia and the broader Asia Pacific is unlikely to drastically drop. There may even be new opportunities for Australia’s aid community to work with the private sector in a more innovative manner.

Another field to keep an eye on is climate change and the environment. In its cuts, the government has not allowed any funding for global environment programs and has reduced funding for cross-regional environment programs to only $461,000. Observers do not know if or how this government will finance climate change adaptation or mitigation, or whether funding for climate change will come from aid.

There is also the question of whether Australia will seek to resettle refugees in Cambodia or elsewhere in Southeast Asia, which has recently been speculated about in the media. The controversial offshore refugee processing and detention policy introduced by the previous government saw the emergence of arrangements with countries in the Pacific such as Nauru and Papua New Guinea in exchange for increased aid. While we do know more on the future of Australian aid than we did last year, a number of areas remain unclear. But if the aid budget remains steady and the integration with DFAT is made to work, we can expect a sound, stable Australian aid program that continues to deliver in the Asia Pacific.

Courtesy: This post originally appeared on the Center for Strategic and International Studies, Washington D.C. cogitASIA blog

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