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Wednesday, 16 August 1989
Page: 140


Senator MACKLIN —My question is directed to the Minister for Foreign Affairs and Trade. Does the cut in real terms of 8 per cent in the international aid budget mean that the Government has totally rejected the recent recommendation of the Joint Committee on Foreign Affairs, Defence and Trade that the foreign aid budget rise to 0.5 per cent of gross domestic product by 1992? Secondly, does the Minister agree that the Budget allocations will send confusing signals about Australia's foreign policy interests because, while we are committing $50m to nuclear weapon capable countries such as India and Pakistan, the Government has refused in the Budget to renew funding to the International Fund for Agricultural Development (IFAD), which focuses on increasing food production in the poorest agricultural countries? Lastly, does the Minister agree that this cut in the aid budget-and, indeed, the lowest allocation in 30 years-will adversely affect Australia's standing in the international community?


Senator GARETH EVANS —As the Budget Papers, particularly Budget related Paper No. 4, make very clear, the cut in this year's Budget aid allocation, both in real percentage terms and as a proportion of gross national product (GNP), is really more apparent than real. I say that because of the particular circumstance which is explained in the Budget Papers whereby in round figures $100m of expenditure that would in the normal course have had to be incurred this financial year, 1989-90, was in the last weeks of the last financial year brought back into the 1988-89 figures. In particular I am referring to some contributions that were due to the World Bank and the Asian Development Bank about which there was some flexibility of timing and it was, in fact, because of the constraints that I knew would be applicable in going better than the Forward Estimates so far as this year's Budget was concerned, and because of the very real problems I knew would be experienced in getting an additional $100m into this year's allocation to cover those additional imposts which were falling due in one way and another this year, that when the opportunity arose to bring forward that expenditure, as it did last year, I grabbed it-to be frank-with both hands with the result that last year's figure is inflated beyond that which was in the Budget projections. It is really a very respectable outcome indeed but by contrast this year's allocation does not look so good. It represents a decline in real terms and further decline in the ratio which would not have occurred had that $100m in fact been spent not last year but this year.

So in terms of the substantive programs themselves, the bilateral programs, the contributions to multilateral agencies and all the rest of the targets for our aid that Senator Macklin feels strongly about-and I assure him that I feel strongly about them too-we have effectively been able in all those areas to maintain the real value of our contributions or, where not entirely the real value, as is the case with some multilateral contributions, at least the nominal value and very often very close to the real value. So it is really a steady as you go outcome.

Some of the more extravagant claims that have been made about the aid budget, in particular from the spokesman from the Australian Council for Overseas Aid to the effect that there was a $20m cut in the aid program to Indonesia, are totally misconceived. In fact, as the Budget Papers make clear, there has been an increase in programmable aid to Indonesia from $45.4m to $48.3m this year. In terms of the International Fund for Agricultural Development, no further contribution is in fact due by Australia this financial year pursuant to our existing obligations and, as I have made clear publicly on a number of occasions, I am actively reviewing-and the Government, through the Cabinet, will very shortly be in the process of actively reviewing-the decision that was made previously to withdraw from IFAD. I cannot say any more about that at the moment but I acknowledge the force of the submissions that have been made to me from a very large number of people and organisations that IFAD is an organisation that delivers soundly targeted and effective aid and that Australia's position on that ought to be reconsidered.

It remains the case that if we look at the Budget in the way that I have said in fairness it should be looked at, we have in effect, for all practical purposes, maintained the ratio at around the 0.36 level, taking into account that $100m which was brought forward by a few weeks. That is still better than the average for developed countries in terms of their contribution but falls a long way short of the 0.7 per cent target as a proportion of overseas development assistance to GNP that we would very much like to be able to meet. It certainly falls short of my own private aspiration which I perhaps unwisely communicated publicly on a number of occasions. I would like to get that back up to around 0.4 per cent as soon as possible. But the difficulty remains that when we are in straitened budgetary and economic circumstances of the kind that this country is in, we cannot always realise our expenditure aspirations and to be able to maintain programs of this kind effectively in real terms is in all the circumstances probably the best we can do.