the 2019 aid budget breakfast -...

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The 2019 Aid Budget Breakfast

#aidbudget2019

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Structure

Global contextBudget context

Aid volumesCountries, sectors, partners and performance

Party policies

2



Global context



In general, other countries are increasing aid

Source: OECD DAC

4



The global generosity index at a relative high

5

Source: OECD DAC



Record number of countries giving generously

6

Source: OECD DAC



The recent increase is not just about in-country refugee costs

7

Source: OECD DAC



Budget context



Goodbye to deficits

9

-60-50-40-30-20-10

0102030

$ bi

llion

, cur

rent

pric

es

Underlying cash balance

Budget 2019-20 Actual



On the back mainly of better revenue performance

10

20

21

22

23

24

25

26

27

perc

ent o

f GD

P

Expenditure Revenue



Changed budgetary position should be relevant for foreign aid

– “[O]ur aid budget is under pressure because we have a massive debt and deficit situation” (14 Feb 2015)

– “The official rationale for cuts to ODA is the need to control the deficit and improve fiscal discipline to achieve a budget surplus.” (2018 DAC Review, p.53)

11


https://foreignminister.gov.au/transcripts/Pages/2015/jb_tr_150218c.aspx


Aid quantities



Details

• This year and next (2018-19 and 2019-20) kept the same in total but about $150 brought forward in multilateral payments, presumably to enhance the 2019-20 surplus.

• The nominal aid freeze lifted in 2022-23, as foreshadowed in last year’s aid budget.

13


https://www.budget.gov.au/2018-19/bp2/bp2.pdf


The new Coalition aid trajectory

14



After inflation, 27% cut by 2019, with more to come

15

Aid ($m) Cumulative change ($) Cumulative change (%)

Current prices

2018-19 prices

Current prices 2018-19 prices Current prices 2018-19 prices

2012-13 4,856 5,5402013-14 5,052 5,594 195 54 4.0% 1.0%2014-15 5,054 5,514 198 -27 4.1% -0.5%2015-16 4,210 4,546 -647 -995 -13.3% -18.0%2016-17 4,034 4,273 -823 -1,267 -16.9% -22.9%2017-18 4,077 4,231 -779 -1,309 -16.0% -23.6%2018-19 4,329 4,427 -527 -1,114 -10.9% -20.1%2019-20 4,044 4,044 -812 -1,496 -16.7% -27.0%2020-21 4,000 3,902 -856 -1,638 -17.6% -29.6%2021-22 4,000 3,807 -856 -1,733 -17.6% -31.3%2022-23 4,100 3,807 -756 -1,733 -15.6% -31.3%



The long view

16



ODA/GNI will hit 0.2% next budget

17



The 0.2% club

18

Australia will hit 0.2% in 2020-21; GDP per capita is $44,000



Aid has not been cut as a result of fiscal austerity

• From 2012-13 to 2021-23 aid falls by 31%; everything else increases by 34%

19

Aid Non-aid Aid Non-aid($b, 2018-19 prices) Cumulative change (%)

2012-2013 5.54 4132013-2014 5.59 401 1.0% -2.9%2014-2015 5.51 407 -0.5% -1.5%2015-2016 4.55 419 -18.0% 1.4%2016-2017 4.27 435 -22.9% 5.3%2017-2018 4.23 456 -23.6% 10.3%2018-2019 4.43 478 -20.1% 15.7%2019-2020 4.04 489 -27.0% 18.4%2020-2021 3.90 507 -29.6% 22.7%2021-2022 3.81 529 -31.3% 28.0%2022-2023 3.81 554 -31.3% 33.9%



It is rather much further down the priority list

20



Defence to aid now at 9:1

21Source: World Bank and budget documents

Defence/GNI up from 1.6% in 2012-13 to 1.95% in 2019-20



Countries, sectors, partners & performance



Winners and losers

• Pacific regional up from $278 to $336• DFAT aid programs cut to Bangladesh,

Cambodia, Indonesia, Nepal, Pakistan, and South-West Asia Regional– Pakistan DFAT program: $39 million to $19

million.– Nepal: $16 to $9 million.

23



Pacific > Asia

24

0

500

1000

1500

2000

2500

PNG and the Pacific Asia Africa and the Middle East

$A m

illio

n (2

019

pric

es)

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20



Winners and losers in this year’s budget by major region

25

-60

-40

-20

0

20

40

60

80

PNG and the Pacific East Asia South, West and Other Asia

$A m

illio

n

Total ODA in 2019-20 budget minus 2018-19 estimated outcome



Winners and losers in this year’s budget by country/regional program

26

-40

-30

-20

-10

0

10

20

30

40

50

60

70

Paci

fic R

egio

nal

Papu

a N

ew G

uine

aBa

ngla

desh Fiji

Tim

or-L

este

East

Asia

Reg

iona

lVa

nuat

uAf

ghan

istan

Mya

nmar

Niu

e an

d To

kela

uCo

ok Is

land

sTu

valu

Viet

nam

Oth

er P

acifi

cO

ther

Eas

t Asia

Mal

dive

sO

ther

Asia Ira

qPa

lest

ine

ME/

NAR

egio

nal

Oth

er A

fric

a Re

gion

alKi

ribat

iBh

utan

Nau

ruN

orth

Pac

ific

Sri L

anka

Sam

oaM

ongo

liaSu

b-Sa

hara

n Af

rica

Tong

aPh

ilipp

ines

Sout

h an

d W

est A

sia R

egio

nal

Laos

Nep

alCa

mbo

dia

Paki

stan

Solo

mon

Isla

nds

Indo

nesia

$ m

illio

n

Total ODA in 2019-20 budget minus 2018-19 estimated outcome



Incoherence• Little attempt to justify the continued cutting of Asia

to fund the Pacific – PM: we’ll cut multilaterals– FM: South East Asia countries “transition[ing] from

developing countries”• The problem will continue as the step-up unfolds. • With no fiscal constraint on the aid budget, would

make far more sense to fund the Pacific step-up with new aid money. Alternatively, a much clearer justification and trajectory for declining aid to Asia needed.

27



A longer term perspective

28

0

1

2

3

4

5

6

1974

-75

1975

-76

1976

-77

1977

-78

1978

-79

1979

-80

1980

-81

1981

-82

1982

-83

1983

-84

1984

-85

1985

-86

1986

-87

1987

-88

1988

-89

1989

-90

1990

-199

119

91-9

219

92-9

319

93-9

419

94-9

519

95-9

619

96-9

719

97-9

819

98-9

919

99-2

000

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

Billi

ons

PNG Pacific Asia Africa and Middle East Global/other



Some recovery in health spending

29

0

200

400

600

800

1000

1200

Infrastructure Agriculture Governance Education Health Resilience General

$A m

illio

n

2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Humanitarian up from $400 to $450 million.



DFAT finding it increasingly expensive to administer the aid budget

30

Source: AusAID/DFAT departmental costs relative to AusAID/DFAT ODA (excluding departmental costs)

5% cap announced



Delivery partner changes

31

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Multilateral Commercial NGOs Universities Developingcountries

Other

ODA by partner (%)

2013-14 2014-15 2015-16 2016-17 2017-18



Contractors

32



Multilaterals

33



NGOs

34



Public donations heading south

35

0

200

400

600

800

1000

1200

$A m

illio

ns

Actual donations Donations adjusted for inflation (2017 prices)

Asian tsunami Nepal earthquake and Cyclone Pam



Public generosity in decline

36

10

15

20

25

30

35

40

45

50

55

60

0.00%

0.01%

0.02%

0.03%

0.04%

0.05%

0.06%

0.07%

0.08%

0.09%

0.10%

$ do

nate

d pe

r per

son

(201

7 pr

ices

)

Dona

tions

as p

erce

ntag

e of

GN

I

NGO donations/GNI (LHS) NGO donations per capita (RHS)



Performance

37

0.00.10.20.30.40.50.60.70.80.91.0

Bang

lade

shEa

st A

sia R

egio

nal

Indo

nesia

Kirib

ati

Pale

stin

ian

Terr

itorie

sCa

mbo

dia

Sout

h an

d W

est A

sia…

Vanu

atu

Solo

mon

Isla

nds

Nep

alSr

i Lan

kaAf

ghan

istan Fi

jiLa

osN

auru

Paki

stan

Phili

ppin

esVi

etna

mTi

mor

-Les

teAf

rica

Regi

onal

Paci

fic R

egio

nal

Burm

a/M

yanm

arSa

moa

Tong

aPN

G

Proportion of objectives met, 2017-18

No refresh of strategic targets



Election policies



Aid volumes

• Coalition: As per forward estimates• ALP: New position adopted at national

party. Aid/GNI to increase over time.• Greens: 0.7% GNI by 2030.

39



Labor’s position• Prior to last election, Labor

committed an additional $800 million over the forward estimates, or $200 million a year.

• This time, “At Labor’s National Conference in December, the party adopted an amendment to our Platform to commit to increasing Official Development Assistance as a percentage of Gross National Income every year that we are in office, starting with our first Budget....”

40


https://www.pennywong.com.au/speeches/rebuilding-australias-international-development-program-for-a-time-of-disruption-2019-annual-lecture-in-political-science-and-international-studies-university-of-queensland/


ODA in the next budget?

41

0

1,000

2,000

3,000

4,000

5,000

6,000

2020-21 2021-22 2022-23 2023-24

A$ m

illio

n

Coalition ALP-min ALP-strict



Either way, significant additional funds

42

0

200

400

600

800

1,000

1,200

1,400

1,600

2020-21 2021-22 2022-23 2023-24

A$ m

illio

n

Extra aid under Labor relative to Coalition

ALP-min ALP-strict



Possible future trajectories for aid

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000$A

mill

ion

(201

9-20

pric

es)

Historical and budget Coalition ALP-min ALP-strict



Beyond aid volumes: LaborAnalysis based on Penny Wong’s two speeches, this year and last:• Fresh approach to PNG

– Also called for by Julie Bishop in 2015• Recognise importance of aid to middle-income countries• Priority themes: health, education, gender, climate change,

and, more recently, infrastructure• Abolish the innovationXchange?

– “Unconvinced”, operating in “relative isolation”• Reform the Health Security Initiative

– “looks bureaucratic and disconnected”

44


https://www.pennywong.com.au/speeches/rebuilding-australias-international-development-program-for-a-time-of-disruption-2019-annual-lecture-in-political-science-and-international-studies-university-of-queensland/

https://www.pennywong.com.au/speeches/development-assistance-in-a-time-of-disruption-labors-approach-2018-australasian-aid-conference-canberra/


Beyond aid volumes: Labor (cont.)• DFAT reforms

– “structural inadequacies, management failings, …growing dependence on managing contractors, … expertise and skills in decline”

– “We want to rebuild and reward aid and development skills within the Department, encouraging and attracting people with development skills – those who have expertise in specific sectors or thematic areas – and who understand what works in low- and middle-income countries.”

• [Ensure] transparency standards are sufficient … providing project-level information for all projects and programs above $1 million.””

• “We will also better communicate results of Australia’s investment in international development to the Australian public.”

45



Beyond aid: Refugee/humanitarian intake left behind in the migration

boom

46

0

50,000

100,000

150,000

200,000

Total permanent migration (excl. hum.) Humanitarian intake



Humanitarian intake never above one in one thousand

0%5%

10%15%20%25%

1984

–85

1988

–89

1992

–93

1996

–97

2000

–01

2004

–05

2008

–09

2012

–13

2016

–17

Humanitarian intake/ total permanent

migrants

0.00%0.02%0.04%0.06%0.08%0.10%

1984

–85

1988

–89

1992

–93

1996

–97

2000

–01

2004

–05

2008

–09

2012

–13

2016

–17

Humanitarian intake/population



Parties promising different humanitarian intakes

10,000

15,000

20,000

25,000

1988 to1197

1998 to2007

2008 to2017

2018-192019-202020-212021-222022-232023-242024-25

Historical Coalition ALP



Relative to population, Coalition promising average intake; Labor

promising a historic high

0.05%

0.10%Humanitarian intake/population

Historical Coalition ALP



Climate change: Australian emissions targets

50

300

350

400

450

500

550

600

650

Emis

sion

s (M

t

Coalition target with "Kyoto

Coalition target without "Kyoto carryover"

ALP target (with international purchases)



Conclusion



Conclusion• High level of continuity with earlier budgets• No respite for aid in the budget, despite

surplus.• Continued Pacific step-up, Asia step-down

makes for an incoherent aid program.• A lot to play for in the elections, with

development policies becoming increasingly partisan– Aid and humanitarian intake bipartisan till around

2012.– Climate change targets bipartisan till 2015

52



Thank you



Aid Tracker

54

www.devpolicy.org/aidtracker


the 2019 aid budget breakfast -...

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