The latest budgetary and structural reforms of AusAID will alter Australia's overseas development assistance program. Of significant note is the Foreign Affairs Minister, Julie Bishop's, announcement of a $600 million cut to this year's foreign aid budget and the limitation of further foreign aid investment over the next 4 years of forward estimates. This totals $4.5 billion in cuts over 4 years, which will see a fall in aid spending of up to 0.31% of gross national income (GNI): different from the former government's target of having foreign aid grow to 0.5% GNI.
Questions have been raised over the implications of the spending cuts. As former Foreign Minister Bob Carr commented, one aim of foreign aid has been to alleviate conditions exploited by extremist militant groups. Will the cuts to foreign aid indirectly affect Australia's regional security?
Combined with the funding cuts, the Coalition has also announced the integration of AusAID into the Department of Foreign Affairs and Trade (DFAT) and the abolition of a dedicated cabinet portfolio for international development.
While the long-term effect of the integration of AusAID with DFAT are so far unclear, we trust it will strengthen aid effectiveness of continuing development programs, and involve NGO's in an increased role in program implementation to cover any gaps caused by staffing cuts to AusAID.
It is likely that AusAID staff will now be reporting to the deputy secretary of DFAT in a down-scaled, and arguably more cost-efficient administrative structure. The integration of AusAID and DFAT has been welcomed by some who see the merger as a means of strategically aligning foreign aid with Australia's trade, development and diplomatic objectives around the world. But others have cautioned that the integration could in fact signal the disintegration of a government agency that has played a specialised role in driving Australia's foreign aid policy and outcomes.
The cuts have been justified as economically rational given the serious slump in revenue and the still volatile global economy, although several NGOs have criticised the new government for targeting the foreign aid budget to make savings.
In an open letter to the Prime Minister CEO of CARE Australia, Julia Howes and World Vision CEO, Tim Costello have criticised the aid cuts.
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