Labor delays billions extra for foreign aid

In a move likely to anger the international aid lobby, Labor will seek to delay the timing of its original campaign policy.

Opposition foreign affairs spokeswoman Penny Wong. Picture: Shae Beplate

Labor will move to a longer term rollout of its pledge to double foreign aid amid claims by the government that to reach its target over a 10-year horizon would require an additional $68 billion.

In a move likely to anger the international aid lobby, Labor has still not put a timetable on its policy target to increase foreign aid to 0.5 per cent of Gross National Income and will seek a “longer” trajectory to reach it.

This means any significant increase in spending on Official Development Assistance (foreign aid), currently at historical lows, would begin well beyond the four-year forward estimates of Labor’s first budget if it were to be elected, despite the goal being adopted as an election commitment to begin in the first budget of a Labor ­government.

A Labor source said there was “no rush” to achieving the goal, which was written into the ALP national policy platform at the ­national conference in December and committed Labor to increasing spending every year from the year it took office. The pledge was backed up at the time by Bill Shorten and foreign affairs spokeswoman Penny Wong.

Government analysis of the Labor commitment suggests that to achieve the 0.5 per cent goal over a 10-year horizon would see a total of up to $116bn spent over the next decade.

The analysis based on GNI projections would require $68.3bn more than would be spent by the Coalition, which has continuously cut spending in the foreign aid budget and has frozen spending at $4bn a year until 2022-23, when indexation would recommence.

The estimated spend by the Coalition over the same period is forecast at $47.8bn.

The Australian understands that while Labor was still committed to the goal, it would not seek to make it a key priority. A source claimed a timetable to achieve the 0.5 per cent target could be pushed well into the future.

While this would significantly reduce the impact on the budget, the source acknowledged aid groups, which had welcomed the initial Labor announcement, may not be happy with the outcome.

Senator Wong, in a foreign policy speech to the Lowy Institute on Wednesday, made no mention of the commitment, having hailed the adoption of the goal at the national conference last year.

The resolution at the conference said: “Labor will, over time, achieve a funding target for the international development program of at least 0.5 per cent of Gross National Income.

“Labor will increase aid as a percentage of Gross National Income every year that we are in ­office starting with our first ­budget,” it said.

Finance Minister Mathias Cormann said if Labor were to make good on its commitment, the entire $57bn to be raised from Labor’s abolition of franking credit ­refunds would be needed to pay for it.

“Labor are taking from retirees with one hand and giving money to overseas countries with the other,” Senator Cormann said.

“We have to do our bit on the international stage but it shouldn’t come at the expense of retirees.

“Labor know they can’t manage money, which is why they are going after retirees.”

Under the former Labor government, Australia’s development assistance budget reached 0.35 per cent of GNI.

The Abbott government made significant cuts, with Labor estimating that more than $11bn was slashed from the aid budget, pushing the relative spend to just 0.22 per cent of GNI.

It claimed this was the lowest level on record, had damaged Australia’s reputation internationally and stripped billions of dollars from some of the world’s poorest countries.

Former foreign minister Julie Bishop had accused Labor of mishandling the aid budget when it was last in office and directed money to “pet projects”, including a rhinoceros program in Sumatra.

The most recent performance report for Australia’s biggest aid country program, in Papua New Guinea, shows the Department of Foreign Affairs and Trade is already struggling to make progress in key areas with a $541 million-a-year budget. A 2017-18 assessment found the PNG aid program’s performance in “promoting effective governance” and “enhancing human development” were falling short of expectations.

The performance of the $180m Pacific regional program is also falling short of expectations, ­according to the latest DFAT ­review.

A majority of respondents to a recent Australian National University survey of Australian aid stakeholders said increasing use of large privately run “facilities” to deliver development programs was reducing the effectiveness of Australian aid and adding to transaction costs.

Additional reporting: Ben Packham