Australia's overseas aid set for shake-up as Pacific power balance shifts

Australia’s aid policy is set to be recast for a rapidly changing global order, with international development minister Alex Hawke forecasting a new aid plan for the country “in the near future”.

Speaking on the Good Will Hunters podcast, Hawke said since Australia’s “new aid paradigm” was launched under Julie Bishop in 2014, the world had changed dramatically. New issues and players were emerging in Australia’s region, and it was time for a “new aid plan”.

“The way the world is progressing today things move a lot faster, obviously things have changed a lot in the last six years and the government is very aware of that,” Hawke said.

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“We have already started the conversation about our aid program and the objectives that it has, the strategy behind it, the plans beneath it and the need to refresh and also look at how often we will be refreshing and updating those plans.”

Australia’s aid budget has shrunk dramatically and consistently since the Coalition came to power in 2013, falling from $5.05bn in 2013 to $4.04bn this financial year.

It is now just 0.21% of gross national income, the lowest level in Australia’s history, and far below the 0.7% threshold agreed to at the UN General Assembly in 1970, but which Australia has never reached.

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Aid accounts for 0.82% of Australia’s budget, the lowest ever level, and is forecast to fall even lower.

The aid budget is heavily weighted towards the Pacific, where Australia has historically been, and remains, the dominant aid provider, but where China has a markedly growing presence.

Hawke also confirmed that the $500m Australia announced at the Pacific Islands Forum to fight climate change in the Pacific was not new money, but funds reallocated from the existing Pacific aid budget.

Several Pacific Islands leaders questioned the proposal, saying they were being asked to move money from health and education programs to address climate change.

“It’s not new money obviously, it’s within the existing envelope,” Hawke said. “However, we are spending more in the Pacific than before, you do have a bigger amount going to the Pacific – $1.4bn – [and] $500m is within that on climate adaptation and climate resilience. That’s a recognition that more and more of the aid budget is related to climate, in infrastructure or outcomes.”

Hawke said the narrative that Australia was not doing enough to address climate change was false, and the $500m was the largest committed to climate change measures by any country in the Pacific.

“That’s just recognition that we understand climate is the number one issue … in the Pacific.”

The Morrison government has faced consistent criticism that it is failing to address climate change domestically, and has been condemned by climate-vulnerable Pacific neighbours for its perceived paternalistic attitude.

Several Pacific nations, including the Solomon Islands and Kiribati, have begun a diplomatic pivot to China, which has pledged billions of dollars in infrastructure funding through its global Belt and Road Initiative.

Tim Costello, the Executive Director of Micah Australia, said the aid review was needed, and represented a chance to restore Australia’s influence and reputation in the region.

“Soft-power and trust and relationships are critical,” he said. “Defence is the last resort, our soft power is the first resort, and that’s what we’ve been cutting.”

Costello said that Australia’s aid pivot to the Pacific – while important – needed to engage with issues critical to the developing island states in the region.

“We’ve got to show it’s not just fear of China, and we must hear their existential cry about climate change,” he said.

He said that with the aid budget slashed, the Pacific focus had come at the expense of other parts of the world. “We cut Africa, virtually totally, we cut Nepal, Pakistan, Myanmar, Bangladesh and it really did damage our reputation in Asia.”