Predictably, the aid community has savaged the Abbott government's decision to cap Australia's overseas development assistance (ODA) at $5 billion per annum for the next two financial years.
World Vision Australia chief executive Tim Costello called the move 'devastating,' while UNICEF Australia spokesperson Tim O'Connor claimed that it was tantamount to a 'broken promise to the world's poorest.'
These assessments are inaccurate and unfair.
Although Australia's aid spending is now stagnant, it remains substantial and can produce large development dividends at its current level.
Australia's ODA as a percentage of Gross National Income (GNI) is likely to fall slightly while aid spending is kept at $5 billion per annum, and is expected to stabilise once the aid budget is pegged to the consumer price index in 2016-17.
However, at roughly 0.34% of GNI, Australia's aid spending compares well to the 0.3% of GNI that the OECD's 28 leading bilateral aid donors collectively spend on ODA.
Moreover, Australia is the tenth largest aid donor in dollar terms among the world's wealthy industrialised nations, while the majority of the countries that give more than Australia have far larger tax bases and GDPs.
Criticisms of the government's decision to scale back ODA also overlook the crucial question of the effectiveness of aid spending.
Big aid budgets make countries look charitable, but they reveal little about the real contribution made to poverty alleviation and economic development.
The government was therefore wise to launch a consultation process earlier this year to develop performance benchmarks to improve the effectiveness of Australia's ODA.
Using ODA to assist aid-recipient countries implement necessary domestic policy reforms would be a particularly effective means of improving the return that developing nations and Australian taxpayers alike receive from overseas aid.
As the experiences of India, China and other emerging economies illustrate, and as AusAID acknowledged in 2012, aid is much less important for development than a country's domestic policies.
Consider, for example, how collective land ownership in Papua New Guinea, the Solomon Islands, and other Pacific nations stifles economic growth by sapping individual incentives to efficiently use land.
By subjecting ODA to performance benchmarks that prioritise necessary domestic policy reforms in aid-recipient nations, Australia may well be able to do much more for the world's poor for much less.
Dr Benjamin Herscovitch is a Beijing-based Research Fellow at The Centre for Independent Studies.
Home > Commentary > Opinion > More aid bang with fewer taxpayers’ bucks?
More aid bang with fewer taxpayers’ bucks?
World Vision Australia chief executive Tim Costello called the move 'devastating,' while UNICEF Australia spokesperson Tim O'Connor claimed that it was tantamount to a 'broken promise to the world's poorest.'
These assessments are inaccurate and unfair.
Although Australia's aid spending is now stagnant, it remains substantial and can produce large development dividends at its current level.
Australia's ODA as a percentage of Gross National Income (GNI) is likely to fall slightly while aid spending is kept at $5 billion per annum, and is expected to stabilise once the aid budget is pegged to the consumer price index in 2016-17.
However, at roughly 0.34% of GNI, Australia's aid spending compares well to the 0.3% of GNI that the OECD's 28 leading bilateral aid donors collectively spend on ODA.
Moreover, Australia is the tenth largest aid donor in dollar terms among the world's wealthy industrialised nations, while the majority of the countries that give more than Australia have far larger tax bases and GDPs.
Criticisms of the government's decision to scale back ODA also overlook the crucial question of the effectiveness of aid spending.
Big aid budgets make countries look charitable, but they reveal little about the real contribution made to poverty alleviation and economic development.
The government was therefore wise to launch a consultation process earlier this year to develop performance benchmarks to improve the effectiveness of Australia's ODA.
Using ODA to assist aid-recipient countries implement necessary domestic policy reforms would be a particularly effective means of improving the return that developing nations and Australian taxpayers alike receive from overseas aid.
As the experiences of India, China and other emerging economies illustrate, and as AusAID acknowledged in 2012, aid is much less important for development than a country's domestic policies.
Consider, for example, how collective land ownership in Papua New Guinea, the Solomon Islands, and other Pacific nations stifles economic growth by sapping individual incentives to efficiently use land.
By subjecting ODA to performance benchmarks that prioritise necessary domestic policy reforms in aid-recipient nations, Australia may well be able to do much more for the world's poor for much less.
Dr Benjamin Herscovitch is a Beijing-based Research Fellow at The Centre for Independent Studies.
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