Why Australia is sliding on this vital global ranking
Idea
Imagine the federal budget is $100. More than a third of this, about $37, will be spent on social security and social assistance, including aged pensions, assistance to families and support for the disabled.
Another $16 would be spent on health care, most of which would be allocated to Medicare and the federal government’s contribution to public hospitals.
Other major items include $7 in federal education funding and $6.60 in defense. The remaining $33 is spent on other purposes. However, one item attracts attention with its stinginess: Foreign aid, only 65 cents.
Labor Party came to power with hope “Rebuilding” Australia’s aid program Following the deep cuts made by the previous Coalition government. But the share of federal spending devoted to aiding poor countries continues to decline.
When the Howard government left office in 2007, $1.12 of every $100 spent by the federal government was in overseas aid. By the time the Albanian government took office in 2022, this share had fallen to 75 cents and is predicted to be only 60 cents by the end of the decade.
A striking example of the extent of the downgrade is the contrast of overseas aid and defense spending, which speaks volumes about national priorities.
Between 1960 and 2015, defense spending was five to eight times greater than overseas aid; During this period, Australia faced the uncertainty of the Cold War and financed several major military deployments, including Vietnam, Afghanistan and Iraq.
However, in the last decade, the difference between arms and charity has turned into a chasm.
This year Australia will spend 11 times more on defense than on overseas aid, the largest disparity ever. Analysis by the Development Policy Center at the Australian National University shows. Forward-looking budget forecasts show that this figure will exceed 13 times by 2029-30.
The gap between defense and aid spending is likely to widen further as the government finances the hugely expensive AUKUS submarine programme.
Australia’s defense spending is currently around 2 per cent of gross domestic product, but if this were increased to 3 per cent, as some want, and foreign aid remained on its current course, that multiple would be 19 times or more.
An international comparison in 2023 showed Australia’s spending gap between defense and foreign aid (10.1 times that year) was much larger than many comparable countries, including Canada (3.4 times), the United Kingdom (3.9) and France (4.1).
Most voters vastly overestimate how much the Australian government spends to help developing countries. A. latest opinion poll It found that one in four assume 3 percent or more of the federal budget is devoted to foreign aid, and one in 12 think the figure is more than 10 percent. (See above, this year’s figure is 0.65 percent.)
It will likely surprise many voters that the federal government spends four times more on overseas aid to fund private schools and six times more to pay off its own debt.
Australia hasn’t always been this stingy.
Thirty years ago, we were the world’s ninth most generous aid donor, measured by the share of national income devoted to aiding poor nations. But the latest international rankings show Australia is among the West’s least generous donors.
Australia ranks 29th out of 32 countries providing overseas aid. Figures published by the Organization for Economic Co-operation and Development in 2024 (foreign aid compared to national income).
As Australia has become less generous, other nations have become much more outspoken. In the 1970s, South Korea was a recipient of foreign aid, including from Australia. But after decades of rapid economic progress, the country became an aid donor in 2010 (and has also become one of Australia’s largest trading partners).
Over the past decade, South Korea has increased its aid to low-income countries. In 2024, overseas aid spending was higher than Australia’s (measured in US dollars) even though both economies were comparable in size. South Korea has chosen to increase its foreign aid spending despite the constant military threat posed by its ultra-hostile neighbor, North Korea.
This should be an example for Australia. As one of the wealthiest nations in the world, we can afford to do much more to help poorer nations, especially those in our region.
Aid is not charity; It is a smart strategic investment. Australia faces increasing security threats and our region increasingly faces conflict. Given these challenges, it is not surprising that defense spending is increasing as a share of GDP. However, simply increasing defense spending is an inadequate response.
If we want a safer world and a better world for our neighbors and Australians, we must address risks before they become crises and prevent crises from becoming disasters.
Effective aid strengthens communities in neighboring countries and can help prevent problems that could threaten Australia’s interests before they escalate. It is also a strong demonstration of our commitment to developing countries in our region grappling with complex challenges.
Conclusion? Overseas assistance is a cost-effective response to growing security challenges and strategic competition in Southeast Asia and the Pacific.
Finance Minister Jim Chalmers will present his fifth budget in a matter of weeks amid global uncertainty and economic turmoil. That’s one reason why Labor has kept its promise to rebuild Australia’s overseas aid programme.
Advocacy group Micah Australia is calling on the Albanian government to increase overseas aid spending to 1 percent of federal spending from the current 0.65 percent.
This would be a good start.
Matt Wade is a senior economics writer. Sydney Morning Herald And Age.
Matt Wade is senior economics writer at The Sydney Morning Herald.Connect with: X or email.
