Aid and the Pacific in the Coalition’s third term

PM Scott Morrison and former Minister for International Development and the Pacific, Sen Anne Ruston visit the Asia Pacific Technical College joint training site (Credit: Flickr CC-BY 2.0)
Written by Stephen Howes

Aid hardly rated a mention during the 2019 Australian election campaign. Penny Wong talked about it, and Labor promised more aid. The Liberals eventually put out a foreign policy statement, which defends their record on aid but promises nothing new.

But will it just be business as usual? Aid is a policy domain with enormous ministerial discretion. As Ben Day has argued, it is one area where a foreign minister can actually make a difference. And the Coalition will be under pressure. Their unconvincing climate change policy will be a constant target for Pacific criticism. PNG’s ongoing economic woes, corruption scandals, and health crisis will put pressure on the government to get a better return from our biggest aid program. And Labor will likely continue their attacks on the high level of outsourcing of the aid program to private contractors, and the lack of transparency. There are a number of upcoming multilateral replenishments, ongoing humanitarian crises will continue to demand a funding response, and, sadly, there is always the risk of new humanitarian crises in our region.

What can we expect from the Coalition in its third term? While in many areas policy directions are clearly set, and ministerial appointments are yet to be finalised, here I canvas six areas where we might see positive change.

  1. Increases in aid? This might sound unrealistically optimistic, especially given One Nation’s more-than-doubling of its primary vote share and that party’s obsession with attacking foreign aid. There is also the risk of a recession. On the other hand, later-term governments are more likely to increase aid than first-term ones. This was true of the Fraser, Hawke and Howard governments. Early on, these governments were all focused on deficit reduction, as this government has been. In later terms, the respective Prime Ministers got more involved in regional and global affairs. International relations may not be Morrison’s thing, but he does have an evangelical commitment to increasing foreign aid. Australia’s aid/GNI ratio is about to head south of 0.2% of GNI. If the budget does, as predicted, move into surplus, such a low ratio will be very hard for anyone to justify, and might lead to some modest increases, especially if a crisis demands a funding response.
  1. New aid policy? Bishop began her reign as Foreign Minister with a bang, abolishing AusAID in late 2013, and introducing in 2014 a new aid policy, indeed a new aid language. But her “new aid paradigm” and “economic diplomacy” have by now completely disappeared. The White Paper hardly mentions aid. Given that the current aid policy is now five years old, and clearly out-of-date, it is hard to believe that it won’t be replaced during this term.
  1. Aid benchmarks. In 2014, as part of her new aid policy, Julie Bishop established ten benchmarks by which Australian aid effectiveness was to be judged. All except one were easily achieved, and a process was put in place long ago to refresh the benchmarks. The new set didn’t get to see the light of day before the elections, and will presumably be released fairly early on in this new term. A litmus test for their credibility is whether project-level transparency is one of the benchmarks. 
  1. Labour mobility. Although Labor started the Seasonal Worker Programme (SWP), the Coalition presided over its rapid growth, and made labour mobility a centrepiece of the Pacific step-up. Expect a lot of welcome attention to growing both the SWP and the Pacific Labor Scheme. (On the other hand, don’t expect a revisiting of the new three-year backpacker agricultural visa, which threatens to stymie the growth of the SWP.) 
  1. A development financing institution? Late in their last term, the Coalition gave the export financing agency Efic an overseas infrastructure financing role, presumably because it was something they could do quickly to respond to China’s growing influence in the Pacific. Many commentators have argued for a development financing institution. John Eyers’ report for DFAT on private sector financing options is still to be released. Presumably it will be soon, and perhaps that will be the start of a push towards an approach to private sector financing that is focused on development rather than benefits for Australia, the maximisation of which is Efic’s mandate. 
  1. International medical R&D. The Medical Research Future Fund (MRFF) was an achievement of the Coalition’s first term in office. In November last year, MRFF released a short statement of its priorities for the next three years. One of priorities is “global health and health security”. Under this is a commitment to the “[c]reation of an Australian Global Health Challenges Research Fund that can leverage contributions from other portfolios, philanthropy and global health funds to purposefully stimulate public good research that addresses global health and health security issues of relevance to Australia. This fund could work similar to the Biomedical Translation Fund but have a not-for-profit focus.” This is a very positive (ODA-eligible) initiative that will build on Australia’s growing commitment to global medical research and development, which could become a hallmark of aid under the Coalition.

To be sure, a returned Coalition government will result in a much greater emphasis on continuity than if Labor had been elected. But continuity is not the same as stasis, and positive change in a range of areas is possible over the next three years.

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Stephen Howes

Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.

3 Comments

  • I’m glad to see item 5 on this list of areas where we might see positive change, but I’d like to add a correction and two comments.
    Correction is needed because this report was not my own but a team effort. Six members from Dalberg Advisers compiled and analysed a wealth of information about potential uses in Australia’s official development-assistance program for finance in forms other than grants – that is, loans, equity stakes and guarantees. And Andrew Tyndale contributed from his extensive experience of investment banking and impact investing. I led the team and contributed particularly on the institutional issues. All of us took part in considering and endorsing the report’s recommendations.
    My first comment is that while officials in DFAT will have to decide whether to publish the report, and if so what should be deleted to protect confidential information or on other grounds, my own impression is that only a small fraction of our report’s contents would need to be deleted. Most of it draws together information which is publicly available, or opinions of others which are probably shared already in other contexts and need no protecting, and adds to that our own assessments.
    My second comment – another personal one – is that while it’s easy to recognise situations where deploying forms of finance other than grants could improve cost efficiency or effectiveness, it’s difficult to see how, in institutional terms, this could best be related in the future to the rest of the development-assistance program. That needs a good deal more of careful thought.

    • Thanks John for your comments, and the correction. We are all looking forward to the release of your (plural) report, in full.

  • Have observed the ability of PM Morrison to bond with PNG and Pacific leaders with his heavily identifiable christian credentials. It might transcend the declining direct aid budget and difficulty of obtaining aid in reasonable timeframes

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