This analysis was originally published in the Vanuatu Daily Post.
Vanuatu, amongst its Pacific neighbours, is trying its best to be optimistic but is also bracing itself against any changes rippling from the decision of Australia’s Coalition Government to slash $4.5b in foreign aid, first epitomized with the resignation of AusAID Director General Peter Baxter three days ago.
AusAID is reeling after newly-elected Australian prime minister Tony Abbot advised that Australia’s $5billion official aid program will be integrated into the Department of Foreign Affairs and Trade.
Change was inevitable as the writing was on the wall, spelled out in the Coalition’s Policy for Foreign Affairs (September 2013) plan, ‘The Coalition will restrict the growth in overseas development assistance to increases in the consumer price index over the forward estimates,’ and another, ‘The Coalition will adopt a ‘no surprises’ policy based on a commitment to undertake adequate consultation about policy matters that impact on our regional partners.
‘It is designed to protect and project our reputation as a strong and prosperous nation and our values as an open liberal democracy, and will be focused on ‘economic diplomacy’ with the various operations within the Department of Foreign Affairs and Trade better aligned in support of that policy across government.’
Australia and New Zealand are Vanuatu’s traditional biggest aid donors, and with the financial assistance Australia is investing in different sectors of the economy, the new changes raise the question of how Vanuatu will be affected.
Australia’s High Commissioner to Vanuatu Jeremy Bruer declined to comment on what the changes bode for the Vanuatu AusAID office and its assistance to Vanuatu, advising of his unavailability yesterday.
Financial assistance in the defence sector is another significant area and the head of the Vanuatu Police Force, Commissioner Arthur Caulton, who is leaving for Australia this weekend said at this stage, ‘No major change is expected to the existing support through Australia’s Police project with Vanuatu’ but that will be determined when the new Coalition government released its policies concerning Vanuatu.
While this is not an agenda on the program he is attending in Australia he told Daily Post, ‘I will meet with the Foreign Affairs and AFP so if there [are] any changes in future support to Vanuatu Police it will be indicated then.’
Through the Vanuatu Australia Police project priority areas of support were identified, resulting in vehicles, training, refurbished police buildings in Port Vila, Santo and Tanna, new police sub posts, communication systems, 10 specially outfitted small boats, the patrol vessel RVS Turoroa, the Australian Federal Police and so on.
The Coalition’s Policy for Foreign Affairs plan on Improved Foreign Aid noted:
‘The Coalition remains committed to a target of an overseas development assistance budget equivalent to 0.5 per cent of Gross National Income (GNI).
‘However, it is not possible to commit to a date given the current state of the federal budget after six years of Labor debt and deficit.
‘We are concerned about the rapid increase in foreign aid, described in the 2011 Independent Review into Aid Effectiveness as ‘steep and challenging’, in light of real concerns about the ability of AusAID and other agencies to manage such a programme efficiently and effectively.
‘The Coalition will restrict the growth in overseas development assistance to increases in the consumer price index over the forward estimates. Our commitment will see annual increases in nominal funding in the aid budget and will ensure that Australians can be confident aid will be delivered more efficiently and effectively.’
The 2011 Independent Review of Aid Effectiveness noted that the ‘scale-up of the aid program to 0.5 per cent of GNI should be subject to the progressive achievement of predetermined hurdles…failure to achieve a hurdle, or fully achieve it, must have consequences. For example the government could reduce the rate of increase or withhold all or part of the funding unless and until the hurdle is achieved’.
Consistent with these benchmarks, the Coalition remains committed to increasing the foreign aid programme toward 0.5 per cent of GNI but said it is not satisfy with either the quality of governance of the programme, nor the strategic priorities, which were skewed by Labor’s campaign for the UN Security Council seat.
The Coalition also stated, ‘We also do not believe that the Australian community is entirely comfortable with the Government’s doubling of an already large overseas development assistance budget rapidly and without robust performance benchmarks .
‘The Coalition will review the priorities within the existing foreign aid budget to consolidate our aid efforts on the Asia Pacific-Indian Ocean region and to focus on the quality and rigorous administration of that effort.
‘Papua New Guinea, as historically the largest destination for Australian aid, will remain a particular priority.
‘We will focus on capacity building in Indonesia, PNG and the Pacific and explore the use of secondment between officials at local, state and national level. Afghanistan and Pakistan, where Australia has enduring interests, will remain key areas of focus.’
And positive news for Vanuatu and its Pacific neighbors:
‘Promoting our reach and influence in the region also means looking at ways we can use Australia’s domestic market to support private-sector development in the Pacific over the long-term.
‘This includes considering opportunities under Australia’s existing guest worker programme for a greater number of Pacific Islanders to undertake seasonal work.
‘The goodwill this programme creates in the region should not be underestimated.
‘While there are significant obstacles to improving Australia’s current pilot programme, the prospect of placing Pacific Island economies on a more stable and diverse footing should be seriously considered and the Coalition commits to examining the case for the expansion of this programme.’
Time will determine the implications on least developed countries from the changes wrought by the Coalition government to control its foreign aid spending.
But it would appear at this stage that any implication of the foreign aid budget slashes and AusAID integration, if it does affect Vanuatu-would be minimal.
On the other hand, this should also catalyst a renewed investment by the Vanuatu Government in its productive sector to build a robust economic base for the long term.