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China: the Surprising Solution to Australia's Foreign Aid Budget Cuts

The recently released Australian Budget for 2016-17 maintained the downward trend in Australian foreign aid expenditure by confirming previous reductions made by the Abbott-Hockey Government. The Government revealed that they would persist with the $224 million cut. This follows Hockeyʼs earlier cuts to the program, the biggest on record, of $1 billion 12 months ago. These actions bring Australiaʼs foreign aid contributions to its lowest in history.

The finalised cuts reflect the trend of orienting our aid towards the Pacific region over the past few budgets. Myanmar, Bangladesh, and Afghanistan have seen reductions to aid spending by 40%. There has been an 82% reduction to the Middle East and North Africa. Aid to Sub-Saharan African has been cut by 70%. On the other hand contributions to the Pacific have remained relatively stable, with Papua New Guinea registering a slight increase, to $558.3 million (although this may increase heavily if PNG and Australia come to an arrangement regarding the Manus Island detention facility). Either way, PNG remains the largest recipient of Australian aid.

At the same time, China has continued to invest heavily in the Pacific region, particularly in Papua New Guinea. The Lowy Instituteʼs Interactive Chinese Aid Map reveals that Chinaʼs total aid to the Pacific, cumulative from 2006 to 2013 is approximated at US$1479.3 million. In that time, US$440.3 million was provided to Papua New Guinea, compared to Australiaʼs US$3016.73 million. In numerical terms Australia is still well ahead. Although dominance has come at the expense of broader aid programs.

With the current refugee crisis leaving millions of people displaced and with no end in sight to the various disputes across the Middle East, there is arguably no greater time for Australian aid to be directed further abroad. Yet the continued geographical, rather than needs based, deliverance of Australian aid highlights the use of the aid program as part of broader geopolitical and strategic concerns. Programs are used to keep the Pacific Islands well within Australiaʼs ʻsphere of influenceʼ or ʻarc of responsibilityʼ. Chinaʼs rising involvement is a potential source of competition for Australia.

Despite this viewpoint, New Zealand and the Cook Islands partnered with China for the ʻTe Mato Projectʼ. With a total cost of NZ$60 million the project aims to provide clean water across the main island of Rarotonga by 2017. The importance of this project for the region, and aid deliverance in general, cannot be understated. It was Chinaʼs first multilateral aid project with traditional donors and it chose New Zealand and it chose the Pacific. It is more than just an example of ʻtrust-buildingʼ between China and other nations. It is the new blueprint for aid in the region.

Not to be outdone by our younger sibling, Australia and China have indeed partnered together in Papua New Guinea, albeit in a much smaller way. They have commenced work on a trilateral project aimed at reducing malaria infection rates across PNG. Since beginning in 2015, China and Australia have started to provide financial support and technical experts to work at the PNG Institute of Medical Research. The PNG government will facilitate the operation of the project. Australiaʼs financial contribution to the project stands at just AU$4 million.

But isolated projects are simply not enough and Chinaʼs recent Foreign NGO Activities Law suggests that they may well be one-off occurrences. As China increases its influence and investment in the region, particularly in Papua New Guinea, a multilateral approach could solve Australiaʼs current fiscal restraint in the context of foreign aid. The Australian Government needs to take leadership on this issue, encouraging greater collaboration and cooperation with China. China should not be viewed solely as competition. Partnering with China on more projects could free up Australian financial support for areas of global concern such as Africa and the Middle East without losing face in our immediate region. The Pacific may be Australiaʼs ʻspecial patchʼ but it may be time we reconsider the patriarchal approach we have had so far. Australia cannot just be a Pacific leader. It needs to be a world leader. And perhaps surprisingly, it is China that can help make this happen.

William Flowers is a recent graduate of the University of Sydney.

This article can be republished with attribution under a Creative Commons Licence. Please email with any questions or for more information.

Image Credits: DFAT (Flickr: Creative Commons)

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