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Aid Work: 2022 – Development Policy Center Devpolicy Blog

While the Labor Party has abandoned some of the policies that proved unpopular in the last election, it has so far retained its international development policy. According to ALP Platform 2021, “The work will, over time, achieve a funding goal for the international development program of at least 0.5% of gross national income. Labor will increase aid as a percentage of gross national income each year we are in office from our first budget.

This is identical language to that used in the 2019 election campaign. It remains to be seen whether this same language will feature in this year’s election platform (as opposed to the party platform), but it did so in the last election, when it was converted into a quantified aid/GNI stabilization pledge.

Here we look again at the numbers to compare what aid might look like after the next election, depending on who wins it.

Forward budget estimates to 2024-25 are taken from the latest (February) Senate Estimates and Additional Portfolio Estimatessimilar to those presented in the Budget 2021-22. Thereafter, aid is assumed not to include temporary measures and to grow as part of the coalition at the same rate as CPI inflation.

If the PLA wins the next election, the proposed policies are expected to impact the 2022-23 budget first. (In its last election, Labor offered to increase aid from the current year.) We look at three different scenarios out to 2027-28, i.e. over a period of two terms (six years): the GNI is stabilized (as in the last election); (b) the aid/GNI ratio is increased by 0.01 percentage point per year, which is in line with the party platform; and (c) aid/GNI declines from its current level of around 0.2% of GNI to 0.3% over the projection period to bring Australia back to around the world average.

Figure 1 summarizes the differences we find. Each of the three Labor pledges would make a big difference, with even the most modest resulting in a $1 billion increase in pledges at current prices by the end of the projection period.

Last campaign, Labor pledged to commit $1.66 billion in additional funding to the aid package over forecast estimates to stabilize the aid-to-GNI ratio, and the same amount this time would see hard to achieve the same goal. Most of this amount is needed just so that aid increases with inflation. The Coalition currently plans to reduce aid when its temporary COVID-19 measures expire, but whether this actually materializes in the current budget remains to be seen. It is hard to believe that will be the case.

Ahead of the latest budget, Senator Penny Wong, shadow Labor Foreign Secretary urged the Coalition to “end the cut to Australia’s foreign aid budget and announce a permanent increase in spending”. Labor’s election costs will be an opportunity to take the senator’s advice. It will be surprising if Labor exceeds the minimum needed to shed light between itself and the coalition on aid volumes, but even a commitment to stabilizing the aid-to-GNI ratio would make far more aid available.

Note: The data used in this blog is available in this Excel spreadsheet. We include Ukraine’s two commitments (now at AU$65m) in addition to the core ODA of AU$4bn and temporary measures of AU$329m to achieve a total ODA of AU$4.394bn Australian dollars for the 2021-22 budget.

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This research was undertaken with support from the Bill & Melinda Gates Foundation. The views represent those of the authors only.