Spain v Australia: comparing international aid budgets

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Guest writer: Celeste Ward

Spain’s commitment to increasing it’s foreign aid in the 2000s was incredible. Spain was itself a recipient of international aid until the late 1970s before becoming the worlds sixth largest bilateral aid donor, increasing it’s aid from less than $2 billion to almost $7 billion in only six years.

In crossing this boundary, from aid receiver to giver, Spain entered a period of prosperity. The country secured a status and place in ‘The west,’ strengthened its links with Latin America and established new connections with Sub Saharan Africa. In 2004, 21% of Spain’s gross bilateral aid went to Africa, this rose to 27% in 2008, but Latin America received the majority; with 44% in 2004 and 49% in 2008.

Spain followed international trends for budgetary and programming aid, specifically focusing on the fight against hunger as outlined in the millennium development goals (MDGs) developed by the UN. The Organisation for Economic Cooperation and Development (OECD) praised Spain for “remarkable progress” in improving both the quantity and quality of it’s aid, but said it could ensure greater impact by giving to fewer countries and focusing on their poorest people.

When the global economic crisis hit, foreign aid was cut drastically in many countries – Spain fell to just over $4 billion in 2011 and is currently sitting at less than $2.5 billion. Comparatively, while Spain decreased foreign aid by almost 50% in 2012, Australia increased aid by 9.1%.

In 2013, Spain made the valiant effort to increase aid by 3.7% due to debt relief operations in Sub Saharan Africa, while Australia decreased by 4.5% as it delayed expenditure due to reprioritisation of its aid program to focus on the Indo-Pacific region. Australia’s aid remained stable and on track for an estimated expenditure of $5 billion in 2013-14. However, in 2014 both Australia and Spain were among the countries with the greatest decline in aid – $5.51 billion and $2.48 billion respectively.

The Abbott government’s foreign aid budget cuts of $11.7 billion are the biggest ever implemented in Australia, representing a third of all cuts made in last years budget. The cuts will continue until 2016-17, by which time aid will be 33% less than it was relative to Labors final year of aid spending in 2012-13.

While Australia will remain the 10th largest donor in the OECD in 2015-16, we will drop from 13th to 19th in the level of generosity compared to other industrial nations. This is measured by the ratio of how much aid we give divided by how rich we are (GNI). The highest we have reached in recent years is 0.35% in 2012-13. We are currently at 0.32% and by 2016-17 we will drop to 0.22% – the lowest index ever reached. To put that in context, Sweden gives 1.1% and the UK brought in laws to ensure a foreign aid budget of at least 0.7% – the UN target.

One optimistic outlook of the resulting cuts in foreign aid is the opportunity and necessity for innovative and targeted sustainable development. Spain has been leading the way during this time of austerity by rethinking and efficiently managing aid strategies.

The Spanish government is focusing on the full range of ways in which the country impacts positively or negatively on development efforts. A potential new strategy, as presented by the CIECODE, highlighted the importance of considering multiple issues and their interrelation with foreign aid, rather than focusing on development alone as a separate and isolated entity.

Additionally, the OECD identified the risk of losing public backing in the current economic crisis back in 2012 and unfortunately, in both Spain and Australia these drastic cuts in foreign aid have not created public backlash or outrage. In fact, polls suggested slashing foreign aid was the most widely supported measure of a generally unpopular budget – even among Greens voters. Thus “raising awareness and fostering a culture of global solidarity are priorities in the current masterplan [for development]” of the OECD.

What now for Australia?

Australian Aid groups have launched The Campaign for Australian Aid which is an alliance of organisations and individuals rallying to support continued and increased investment in international aid. Save Australian Aid – sponsored by the charity foundation of Microsoft billionaire Bill Gates to raise public awareness on the significance of foreign aid.

Creating new era of foreign aid and sustainable development and the formation of an effective public communications strategy are two areas that Australia can focus on – in light of these deep cuts.

Reducing foreign aid is not only a question of solidarity, it’s also a matter of how this affects the way we are perceived by the rest of the world. 22 cents of every $100 of national income to foreign aid – half of what the coalition government spent 40 years ago – will damage our relations abroad and undermine our national interest.

What do you think?

Should Australia increase our commitment to international aid?
Should we adopt a minimum / target?
How have other countries changed their foreign aid budgets in times of uncertainty and financial stress?