Winners, losers and prospects from the 2018-19 Budget

parliament house

When I was travelling to Canberra on Tuesday 8 May for the release of the Federal Budget, I overheard several media reporters also travelling to Canberra talking about what they were expecting, and one reporter who was planning an article on infrastructure commitments said “I think I can prepare an article with almost the same wording as last year, and just update the numbers.”

Writing about the Budget for the Australian Aid program can be a similar task – the overall narrative is similar to the last few years, and even the overall numbers are not changing dramatically.  In fact, the lack of an increase in aid when the overall Budget position is expected to improve from a deficit of $18 billion in 2017-18 to a surplus of nearly $17 billion in 2021-22 is the most significant message about the low priority aid is receiving.  

Looking at the detail of the aid program for 2018-19 does reveal some significant changes in funding for some countries and programs, and some challenges for future budgets.     

The winners – new and increased initiatives

Speaking simply about aid:  The introduction to the Australian Aid Budget Summary 2018-19 incorporates DFAT’s explanation of why Australia provides official development assistance, how we provide aid and what the aid program achieves.  This is part of an attempt to build public support for the aid program, although as Professor Stephen Howes from the Development Policy Centre noted, this effort would be more credible if the Government were backing the argument with increased funding.  

Country and regional programs for the Pacific:  The largest increase in 2018-19 is for Australia’s country programs for Papua-New Guinea and the Solomon Islands, and for Pacific Regional Programs.  The increase for Papua-New Guinea and the Solomon Islands is mostly for constructing new undersea telecommunications cables to both countries, and the largest other initiative for the region is the Pacific Labour Mobility Program, which will allow people from the Pacific to work in Australia for up to 3 years.  This will allow workers from the Pacific countries to send significant amounts in remittances to their home countries, which can be a valuable supplement to family incomes.

Humanitarian Assistance:  The Foreign Policy White Paper had committed to an increase in humanitarian assistance to $500 million per year.  The 2018-19 Budget contains a modest increase of $10 million (taking humanitarian funding to $410 million), suggesting that the next few budgets will include more significant increases to reach the $500 million target.

The losers – reduced or static programs

Country programs for South-East Asia:  The increase for the Pacific is partly at the expense of aid to Indonesia and Cambodia, each of which has a 10% cut in its country program in 2018-19.  For Indonesia in particular, the reduction reflects a review that the country has made enough economic progress to require less aid.

Multilateral development banks:   Australia maintains strong support for the World Bank and Asian Development Bank, but contributions have dipped by $30 million in 2018-19.  This suggests contributions to these institutions will increase in the next few years, for Australia to meet its commitments to both institutions.

Multilateral Health and Education Initiatives:   Funding for the Global Fund to Fight AIDS, TB and Malaria, Gavi – The Vaccine Alliance and the Global Partnership for Education all remain at the same level in 2018-19 as in 2017-18.   As the Government has said repeatedly it will meet multilateral pledges in full, this implies that contributions to each of these agencies will need to increase significantly in 2019-20.

The Challenge for Future Budgets

In the next few years, annual Australian contributions to the Global Fund, Gavi and the GPE will need to increase by a combined amount of more than $100 million, humanitarian assistance will increase by $90 million, the measures in the Indo-Pacific Health Security Initiative will build up, and aid to the Pacific would be maintained at a higher level.      

If the aid program does not increase in dollar terms, these increases will be at the expense of other components of the aid program.  Would this lead to further reductions in aid to South-East Asia or other regions, or to other multilateral initiatives?

What needs to happen is for the Government to use the improvement in the overall budget situation to provide extra funding for the aid program to accommodate these commitments without cutting other important programs.  However, this increase will only happen, if we as advocates, explain to MPs that at a minimum we need hundreds of million of dollars over the next few years to meet the current commitments. We also need to inspire them to call for larger increases so we can contribute significantly to agreed global goals to end TB, immunise all children and ensure all children have access to a quality education.     

Mark Rice

Policy and Advocacy Manager