Australian foreign aid: friend or farce?



Australia is vocal in its commitment to foreign aid and sustainable development, and yet successive budgets reveal a different reality, where reductions in such investments have become the norm over a number of years. But Australia needs to take a strategic approach to aid as a critical tool in its foreign policy repertoire.

There is significant criticism directed towards the Chinese aid program given the lack of long-term sustainability delivered to receiving countries, and there is evidence to warrant such critiques. Earlier this year, International Development Minister Concetta Fierravanti-Wells alleged that Chinese foreign aid administered through its Pacific programs were unsustainable and were developing "roads to nowhere". Although the critique is not unheard of, and not completely disregarded by Foreign Minister Julie Bishop during her prompt conciliatory message, it was a bold move that attracted significant political heat for the Turnbull government.

Unsurprisingly, both China and Samoa formally protested against the comments, criticising Australia for not considering the "facts", and for ‘"insulting" numerous Pacific leaders. Bishop’s decision to clarify Australia’s position, but not apologise for the comments, is particularly indicative of the view the Australian government holds on foreign aid.

Several Australian political leaders have previously alluded to concerns over foreign aid programs that do not appear to be sustainable. However, fears of the potential political repercussions of making such statements have largely silenced criticism on the topic. But as China’s presence and influence in the region continues to grow, it is paramount that Australia reassess its relationship with foreign aid.

There are numerous existing arguments against the sustainability of the financial aid programs being rolled out by China, including its ‘One Belt, One Road Initiative’ that provides the framework for strengthening a China-centre trading system. Although it seems as though Minister Fierravanti-Wells’ comments were made without real consideration of how the delivery would be received, there is certainly a growing discourse that highlights the problematic nature of the loan system set up by the Chinese.

However, the diplomatic row exposes more than just the fine diplomatic balance that is required in the region to assuage the PRC. It also highlights the significant failures of Australia’s own foreign aid program, and the ramifications this is beginning to have on Australia’s regional influence. The Samoan Prime Minister argued in favour of Chinese foreign aid, declaring that the Chinese were far better positioned to support the financial needs of his country than Australia.

Extensive cuts to foreign aid under former Prime Minister Tony Abbott have become a trend for successive budgets. Despite numerous claims regarding Australia’s commitment to overseas development, including in the most recent DFAT Foreign Policy White Paper, Australia now spends only 0.22% of GNI on foreign aid (as announced in the 2017 Federal Budget). Australia’s capacity to demonstrate itself as a leader and collaborator in the region continues to deteriorate as a result. A diplomatic incident such as this only further exacerbates the divide between Australia and its neighbours, exposing its failure to make an impact on development in these countries.

The ongoing trend to reduce foreign aid is now a blatant fund reprioritisation that diminishes the effectiveness of one of Australia’s core foreign policy tools. Australia may never have the capability to compete with economic powerhouses like China or America, but targeted aid could contribute to the formation of key strategic alliances.

Given the significant wealth being invested in the ‘Belt and Road Initiative', China has forged itself a strategic and economic pathway to achieving political influence that may become unstoppable. Australia has an opportunity in the region to continue leveraging key partnerships to position itself as a leader — but in order to do so it must accommodate the new international order that accompanies China’s disruptive methods. The ‘Belt and Road Initiative' is an unconventional approach, whereby China utilises its financial power in a strategic manner to achieve political influence and increase economic integration within the surrounding region. Such a technique further entrenches China’s position as the core component from a business, trade and diplomatic sense.

Recognising the importance and significant value of foreign aid is vital, as it has now been demonstrated that there are countries prepared to significantly invest in the Pacific and the region more broadly. If Australia is unable to reach similar levels of engagement and support, it will impede its own capacity to achieve the respect and political influence required for it to act as a regional leader.

The current international political climate is ripe for Australia to advance its bilateral and regional partnerships, not only from a regional perspective with China’s growing influence, but also the significant ambiguity of American foreign policy. Australia has an opportunity to present itself as an alternative partner: a powerful, Western country that advocates for, and financially supports, sustainable development. This narrative has long been neglected, for fear of being considered a neo-colonialist approach. However, ensuring that Australia has a broad and equitable distribution of foreign aid can circumvent such concerns.

The longer Australia distances itself from a sustainable and impactful foreign aid program, the greater damage it does to its reputation and its bilateral relationships. With a wealthy benefactor such as China eager to distribute overseas development assistance, Australia risks losing the edge in its most important strategic relationships in the region.

Kate Jennings is the Australian Foreign Policy Fellow for Young Australians in International Affairs.

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