Region gets 30% of development assistance budget which remains frozen for another four years

The Pacific will get the lion’s share of a straitened aid budget, as Australia seeks to counter China’s growing influence in the region.

Australia’s total aid budget will remain frozen at $4.2bn per year – with indexation not to recommence for another four years.

But $1.3bn will be dedicated to the Pacific region, including $200m for high-speed communication cables for Papua New Guinea and the Solomon Islands, $300m over five years for the Indo-Pacific centre for health security, and a new diplomatic mission in Tuvalu.

The government said the Pacific budget was its highest ever commitment to the region.But Australia’s aid is at its lowest ever level as a proportion of the budget: 0.23% of gross national income. In 1974-75 that figure was 0.47%. Aid spending rose during the 2000s but has declined since 2013.

The director of the Development Policy Centre at the Australian National University, Prof Stephen Howes, said on Wednesday morning the budget presented “a fairly bleak outlook” for Australia’s aid budget.

“Australia is getting richer, but as a nation, we are becoming less generous,” he said “What we’re seeing in Australia is not symptomatic of a broader trend. The rest of the world is moving in the other direction. The rest of the world is growing more generous; Australia is becoming less.”

Howes said the rationale for cutting aid spending could not be justified economically. From 2012 to 2021, the aid budget fell by 32%. All other non-aid spending, increased by 31%.

“The old rationale for aid cuts has been the debt and deficit,” Howes said. “But this rationale doesn’t really make a lot of sense, because the fiscal situation is improving. We should have seen some respite for aid, if that really was the rationale.”

The minister for international development and the Pacific, Concetta Fierravanti-Wells, argued last month that the government’s aid budget could not be increased while a majority of Australians opposed higher spending on developing nations.



Howes did welcome the budget’s renewed emphasis on labour mobility – such as the seasonal worker program and the Pacific labour scheme.

The World Bank recently recommended that Australia scrap its regional work requirement for backpackers in favour of getting more seasonal workers from the Pacific to work in the horticultural industry.



The remittances earned by seasonal workers have been shown to be effective in increasing household budgets, improving education and healthcare for children, and benefiting broader communities.

Aid budgets to nations outside the Pacific have been cut deeply. East Asia has faced massive aid cuts over successive years, while other regions, such as Sub-Saharan Africa, the Middle East and North Africa, have also lost funding.

Australia’s role in the Pacific, where it has traditionally been the dominant power, is under increasing threat. China has poured up to $1.7bn in aid into the region over a decade, still far behind Australia’s $7bn over the same time. But China’s growing interest has been followed by reports of plans to build military bases in countries such as Vanuatu and its assertiveness in militarising atolls in the South China Sea is seen as a template for increased military influence.

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An OECD report in March said Australia’s diminishing aid commitment was impairing its efforts to foster development in fragile small-island states and reduce the risks and impacts of natural disasters.

“The decline in [Australian aid flow], despite steady economic growth, has affected the scope of development and humanitarian programmes” OECD development assistance committee chair Charlotte Petri Gornitzka said.

Four countries have met the OECD target of budgeting aid spending at 0.7% of GNI, while another three are above 0.5%, compared with Australia’s 0.23%.

In New Zealand, foreign affairs minister Winston Peters announced a NZ$714m (A$670m) funding boost in aid for Pacific Island nations over the next four years, aimed at tackling climate change and increasing New Zealand’s commitment to the region.

Spending on the Pacific accounts for more than 60% of New Zealand’s aid budget.



“The South Pacific has become an increasingly contested strategic space,” Peters said Peters in a speech on Tuesday night, ahead of the New Zealand budget.



“Our voice has been weakened during the past decade at the same time as Pacific nations face a myriad of challenges they are not, in many cases, well equipped to tackle. The wider Asia Pacific region is also showing signs of strain at the very time when regional stability has never been more critical to maintaining New Zealand’s security and prosperity.

“First and foremost, our identity is anchored in the Pacific and it is fitting and proper that we foster our fraternal bonds with our Pacific neighbours. What is good for them is good for us.”