Foreign Aid. We Can Be Better Than Average

When in Cambodia fifteen months back I visited a remote community where the organisation I work for, Baptist World Aid Australia, was funding a community development project. The project will make a huge difference in the lives of the villagers through things like improved crop yields and better nutritional practices.

But there are limits to what that community can achieve through grassroots development projects  alone. The road into the village was the worst I have ever crossed. It took a couple of hours to traverse what on a decent road would have only taken 15 minutes. In the wet season the road is unpassable. The terrible condition of the road means villagers can’t get produce to markets and sick children to hospital. It places a ceiling on their capacity to improve their lives.

Road construction, sewerage systems, electricity, the health system, and more are large scale public goods that are beyond the capacity of non-government-organisations to provide. For these things you need governments. And this is why I think foreign aid is so important. It can work with the Cambodian Government to fund roads, schools, hospitals, electricity and the like. There are challenges in this – funds can be diverted from their intended purpose and the powerful can fund infrastructure that serves their interests at the expense of the poor. But done carefully these dangers can be avoided.

In other words, aid works best when you have grassroots development projects of the sort funded by Australian NGOs working hand in hand with large scale development projects of the sort funded by Australia’s Government aid program.

And this is where Australia’s track record is encouraging and disappointing. In the last decade we have built one of the finest aid programs in the world in terms of our goals and the things we fund to achieve those goals. The latest budget notes that:

[quote]Over the next four years, Australia will help 4 million children from poor families to enrol in school, vaccinate more than 10 million children and provide over 2 million poor people with access to financial services. We will also provide 30 million vulnerable people living in conflict and crisis situations with life-saving humanitarian assistance[/quote]

That’s pretty remarkable. The problem is we could be doing a whole lot more remarkable things. We have been increasing the volume of our aid. This year’s aid budget of $5.2 billion dollars is double what it was a few years back and it is a lot of money. Some will say that we are already giving enough.

So how do we determine how much aid to give? Way back in the 1960s the nations of the world agreed on a benchmark, that each affluent nation should give 0.7% of it’s national income in aid. That’s less than one cent for every dollar we earn. It remains the internationally agreed target. It’s not much in percentage terms, but because the world’s industrialised nations are so rich it amounts to a lot of money in dollar terms, enough to help poorer nations eradicate extreme poverty.

At present Australia gives half the agreed target. Our national income is around $1,600 billion a year and the Government’s take of that is just on $370 billion. So relative to what we earn our aid budget is a very small amount – less than half a cent for every dollar our nation earns and just 1.4 cents of every dollar the government spends. And that means we only place 13th out of 22 when we compare our aid volume, as a proportion of national income, to other affluent nations.

aid levels

I find it troubling that we languish in the middle. We are lauded as the miracle economy. We don’t face anything like the economic challenges of our European neighbours, yet so many of them outdo us on aid.

“Charity begins at home” I hear some people say. They may be right. Charity does begin at home, but it sure shouldn’t end there. We are prosperous enough to both care for our citizens in need and do our fair share in caring for the citizens of our wider world. After all, Australian aid is hardly breaking the bank. Achieving the international commitment to raise aid to 0.7% national income would mean we give away less than a cent in every dollar we earn and keep 99.3 cents of every dollar for ourselves. To me that leaves more than enough room for charity at home!

“It all gets wasted through corruption” others claim. Sorry, but that’s simply wrong. A year or two back an audit of Australian aid found that less than half a percent of our aid spend is lost to corruption. That’s lower than the amount Centrelink loses to corruption, yet I don’t hear many people calling for a halt to the age pension due to corruption.

“We can’t afford it” some suggest. Well, actually we can. What we choose to spend our money on is a choice. And devoting less than one percent of our national income to aid is a choice that is achievable. Especially given we are getting richer by the day. Five years ago our GDP (a measure of national income) was $1,100 billion dollars (in today’s values). This year it will be around $1,600 billion. So even if we gave 0.7%, which is about $11.2 billion, we’re still $490 billion better off than we were five years ago.

“Why should we bother?” asks another. We should bother because our borders are arbitrary political creations. The Cambodian child is a fellow human being, a bond far more basic than nationality. And we should bother because it’s in our best interests. Stable countries with economic growth sufficient to meet their needs are potential trading partners and far less likely to be the source of transborder disease, crime or conflict.

I often think back to my meeting with the leaders of that Cambodian village. I can still remember the pain in their voices as they told me that their biggest problem was the road.  It was the pain of parents who had lost a child for the simple reason they could not get her to the hospital. Australian aid can change that. It’s the decent thing to do.

At the end of the day we live in a world where children die from preventable diseases and people are hungry and we have the capacity to something to change that, to help people lead healthy and fulfilling lives. That’s why we should give aid.

Both the ALP and the Coalition have agreed to raise the aid budget to 0.5% of national income. The Government had said they would make incremental increases until the target was reached in 2015, but last year pushed the target date out by a year. The Coalition remain committed to 0.5% but will not set a date by which it should be achieved.

In the lead up to the Federal election in September the ALP and the Coalition will both be looking to make spending cuts to fund their new promises and get out of deficit as soon as possible. Let’s make sure cutting aid is not one of them. Both sides have committed to increasing aid to 0.5% of national income. Let’s hold them to it.

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