# Appl Ex 10aa

## Application Exercise 10aa: Where Australia’s official aid (ODA) goes, and why:

1. What percentage of GNI does the Australian government commit currently (2022/23) to ODA?

As of the 2022/23 Budget, Australia was committing 0.2% of Gross National Income to ODA.

1. How does the current percentage of GNI committed to ODA compare to the percentage in 2011/12? And the forecast level of 2023/24?

Australia’s ODA in 2011/12 was 0.33% of GNI and it forecast to fall to 0.18% of GNI in 2023-24, so the most recent figures represent a longer-term cut to foreign aid in both monetary terms and as a proportion of national income.

1. Consider an individual whose gross annual income was \$100,000. Calculate how much money that individual would be donating to charity each year if they gave the same proportion of their income as the government plans to give in 2022/23.

If an individual was earning \$100,000 per annum before tax, and they gave 0.2% of their income to charity, that would be a donation of \$200.

1. Based on your answer to Question 3 above, do you consider the current ODA budget for Australia a sufficient amount? Obviously there is no right or wrong answer here, but provide reasons for your

As noted in the question, there is no right or wrong answer here, but students may come up with a number of different answers and a few are suggested here.

Some arguments in favour of it being sufficient are:

• This is a ‘gift’ and Australia does not get anything in return, therefore whatever we give is ‘enough’ – it’s our choice as a country how much we choose to donate
• We should focus on issues at home (i.e. domestic issues) before we help those overseas (e.g. poor people in Australia, social issues domestically etc.)
• Much foreign aid is ‘wasted’ – how do we know it’s being used properly?
• We can’t afford it because our government is running a deficit

Some arguments against it being sufficient are:

• Australia is a wealthy country, and it is a moral obligation to help those in need
• Australians have ‘enough’ and we ‘should’ support others who are worse off
• Australia benefits from a more stable and prosperous world – both socially and political in terms of geopolitical stability, and economically in terms of the potential for trade with countries that are more prosperous.
• Australia stepping back from being a foreign aid provider leaves room for other countries with potentially less ‘benign’ objectives (e.g. China) to step in and create dependencies in local less developed countries.
• Even without cuts to foreign aid, the government would still be running a deficit

1. Examine the allocation of aid in the table. Based on this information:
1. Indicate which country was the largest recipient of Australian aid in 2012/13 and the country that will be the largest recipient of Australian aid in 2022/23.

The largest recipient of Australian aid in 2012/13 was Indonesia (\$578.4 million)

The largest recipient of Australian aid in 2022/23 will be Papua New Guinea (\$479.2 million)

1. Identify the region of the world where most of the major recipients of Australian aid are located. Provide evidence to support your

The region of the world where most of the major recipients of Australian aid are located is the Pacific and South East Asia. Australia’s largest recipient (PNG) is in the Pacific, as is the third largest recipient Solomon Islands. The remaining major recipients are in Asia (Indonesia, Vietnam, The Philippines, Pakistan and Afghanistan) or between Asia and the Pacific (Timor-Leste).

1. What is meant by the newly-introduced focus on the Pacific Step-Up. Outline how recent Chinese behaviour in the region has contributed to the change of focus of the Australian government.

The Pacific Step-Up refers to the Australian Government initiative to provide extra support to the Pacific region. It included the launch of a \$2 billion infrastructure bank for the Pacific, extra embassies in the region, and a defence force training team focused on the Pacific. It also increased ‘labour mobility’ – to open up possibilities for Pacific islanders to fill gaps in Australia’s labour markets (which the government suggests will reduce poverty via increased remittances to those countries).

The recent actions of China in the region include its rising influence. As part of its ‘One Belt, One Road’ initiative, often shortened to just Belt and Road, China has been focusing on extending its economic influence globally through providing infrastructure support to developing countries – with a notable focus on pacific island nations. In 2017, China spent US\$4 billion on aid to Pacific countries for the year. This has since fallen, but the country continues to focus on funding infrastructure such as ports, airports and roads. Concern over this influence has been at the core of Australia’s Pacific Step-Up.

1. Consider whether Australia’s national interest (benefits of aid to Australia) should be taken into consideration in the allocation of

For aid to be considered in Australia’s national interest means it is given with the hope that it will provide a benefit to Australia (in addition to any benefits gained by the recipients.) These benefits could be economic, political, social or cultural.

While student responses to this question will be highly variable, some may state that it is important that Australia ‘gains something back’ from providing aid, but only so long as the aid achieves it purpose of providing a benefit to those who receive it. They may also content that gaining a benefit for Australia shouldn’t skew decisions away from providing aid to those who need it most.

Students may also cite the evidence that Australia benefits from giving ODA – that by promoting development and good governance in its neighbours, Australia helps to protect itself from the impact of disease, instability and violence that can occur as result of extreme poverty. Economically, Australia earns an estimated \$130 billion in exports from countries that receive our aid.

1. Reflecting on the data you have examined in this task, give two examples of allocations of aid that Australia makes that would be in Australia’s ‘national interest’.

One example of an allocation of aid that would be in Australia’s ‘national interest’ is immunisation programmes in Pacific island nations. This is because if communicable diseases spread widely in the Pacific, this can lead to high rates of transmission in Australia as well. (Particularly since Australia draws heavily on the Pacific Worker Programme to bring in short-term labour for agricultural industries on a regular basis.)

A second example of an allocation of aid that would be in Australia’s ‘natinal interst’ is improving policing and national security in Papua New Guinea. As our nearest neighbour (and a former colony of Australia – between the end of World War 1 and the mid-1970s), maintaining political stability in PNG is in Australia’s national interest. As noted previously, by promoting good governance in its neighbours, Australia helps to protect itself from the impact of instability and violence that can occur otherwise..

1. Examine the changes in the allocation of aid between 2012/13 and 2022/23 in the Describe the changes and explain some reasons why these changes may have happened.

Over the last 10 years (between 2012/13 and 2022/23) Australia has redirected much of its aid away from other regions of the world, and moved to focus almost exclusively on the Pacific and South-East and East Asia. For example, ten years ago, Australia provided nearly half a billion dollars in aid to Africa and the Middle East, and as of 2022/23 it allocated less than \$100 million there. Similarly, Australia previously provided over \$40 million in aid to Latin America and the Caribbean, but now provides only \$1.5 million there. Although it has reduced the overall amount of aid directed to the Pacific and South East and East Asia in dollar terms, the proportion of spending directed to those regions has increased.

There are numerous reasons contributing to this change in focus. The first is that the countries of Latin America and the Caribbean are very remote from Australia, and not part of the ‘pacific focus’ which has become Australia’s driving concern. Consequently they are relatively unimportant to Australia in geopolitical terms, compared to the countries of the Pacific and Southeast and East Asia.

Additionally, some of the countries and regions from which Australia has withdrawn aid (China, Indonesia, Latin America) have developed rapidly over the last few decades, shifting them out of the category of lower income countries that are in (more) need of international aid.

The rise of China’s geopolitical power and strength has also been discussed in detail in previous answers and is a factor in the focus on the Pacific and Southeast and East Asia regions. Australia has also withdrawn its military (and the related aid) presence from Afghanistan, reducing the flow of money to that country.

1. Australia announced in 2016/17 that it would phase out bilateral aid to China. Based on what you know about recent Chinese economic history, explain why you think Australia has phased out aid to China over the last four years.

The rise of China both economically and geopolitically has been one of the main stories for the last few decades. China’s economic growth rate in recent decades has been exceptionally strong, and the country is set eclipse the USA as the largest global economy. As a result, China generally no longer needs Australian aid. In addition, China’s geopolitical tactics in the South China sea have made it less popular in terms of global support, and this may have been a factor in Australia withdrawing aid. China remains a significant (the most significant) trading partner for Australia, but is no longer in need of our support in terms of ODA.