the 2019 aid budget breakfast -...
TRANSCRIPT
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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
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In general, other countries are increasing aid
Source: OECD DAC
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The global generosity index at a relative high
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Source: OECD DAC
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Record number of countries giving generously
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Source: OECD DAC
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The recent increase is not just about in-country refugee costs
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Source: OECD DAC
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Goodbye to deficits
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-60-50-40-30-20-10
0102030
$ bi
llion
, cur
rent
pric
es
Underlying cash balance
Budget 2019-20 Actual
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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
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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)
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Details
• This year and next (2018-19 and 2019-20) kept the same in total but about $150 brought forward in multilateral payments, presumably to enhance the 2019-20 surplus.
• The nominal aid freeze lifted in 2022-23, as foreshadowed in last year’s aid budget.
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The new Coalition aid trajectory
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After inflation, 27% cut by 2019, with more to come
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Aid ($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%
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ODA/GNI will hit 0.2% next budget
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The 0.2% club
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Australia will hit 0.2% in 2020-21; GDP per capita is $44,000
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Aid has not been cut as a result of fiscal austerity
• From 2012-13 to 2021-23 aid falls by 31%; everything else increases by 34%
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Aid Non-aid Aid Non-aid($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%
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It is rather much further down the priority list
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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
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Countries, sectors, partners & performance
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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.
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Pacific > Asia
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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
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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
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Winners and losers in this year’s budget by country/regional program
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-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
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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.
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A longer term perspective
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0
1
2
3
4
5
6
1974
-75
1975
-76
1976
-77
1977
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1978
-79
1979
-80
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1983
-84
1984
-85
1985
-86
1986
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1987
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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
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-11
2011
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2012
-13
2013
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2014
-15
2015
-16
2016
-17
2017
-18
2018
-19
2019
-20
Billi
ons
PNG Pacific Asia Africa and Middle East Global/other
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Some recovery in health spending
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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.
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DFAT finding it increasingly expensive to administer the aid budget
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Source: AusAID/DFAT departmental costs relative to AusAID/DFAT ODA (excluding departmental costs)
5% cap announced
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Delivery partner changes
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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
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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
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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)
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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
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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.
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Labor’s position• Prior to last election, Labor
committed an additional $800 million over the forward estimates, or $200 million a year.
• This time, “At Labor’s National Conference in December, the party adopted an amendment to our Platform to commit to increasing Official Development Assistance as a percentage of Gross National Income every year that we are in office, starting with our first Budget....”
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ODA in the next budget?
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0
1,000
2,000
3,000
4,000
5,000
6,000
2020-21 2021-22 2022-23 2023-24
A$ m
illio
n
Coalition ALP-min ALP-strict
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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
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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
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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”
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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.”
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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
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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
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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
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Relative to population, Coalition promising average intake; Labor
promising a historic high
0.05%
0.10%Humanitarian intake/population
Historical Coalition ALP
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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)
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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
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Aid Tracker
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