There are problems with foreign aid, but Bishop has solved none of them

Foreign Minister Julie Bishop has promised to deliver a dramatically different “new aid paradigm”. But it’s little more than an ideological repackaging of Labor-era aid programs that provides a questionable boost to the private sector. It blatantly aligns aid with Australia’s commercial interests at the expense of genuine poverty eradication measures.

Ultimately, it fails to address the hard questions on aid effectiveness.

Bishop’s policy, unveiled last week, is based on heavy involvement from the private sector, facilitating public-private partnerships, and creating a favourable environment for business. Bishop has also prioritised the Indo-Pacific region. This represents little change from the past, with countries like PNG and Indonesia long being primary aid recipients (though there’s a significant reduction on aid to sub-Saharan Africa).

These developments are hardly surprising after the government last year abolished AusAID as an executive agency and folded it into the Department of Foreign Affairs and Trade. The greater policy coherence the government is aiming for has proven to be a euphemism for aid becoming subservient to foreign policy objectives.

The Government’s linguistic somersaulting has led to Bishop’s critical assessment of PNG’s “failure” to meet development targets attributed to past aid policy that didn’t work. Her solution? A “new approach” that continues along the well-worn path of using Australian aid to push economic growth and private sector investment.

Bishop’s increase in “aid for trade” funding — projected to reach 20% of the total aid budget by 2020 — has been billed as new. It isn’t. It was introduced under the Howard government — and is controversial overseas due to the disproportionate benefit for the donor country.

Increased “aid for trade” funding reflects an ideological commitment to economic growth as a panacea for poverty. Yet, as Bishop notes, most of the world’s extremely poor people now live in middle-income countries. A report by the United Nations Development Program cites increases in inequality as being mainly due to trade and financial globalisation. There is a correlation between sharp increases in economic growth and income inequality in China and India. Most households in developing countries — more than 75% — are living in societies where income is more unequally distributed today than it was in the 90s.

“This aid policy isn’t an overhaul, it’s business as usual.”

“Aid for trade” paves a way to further Australia’s commitment to trade liberalisation in the Pacific region. The PACER-Plus free trade agreement is presented as a helping hand to Pacific island countries. The reality is Australia is aggressively pursuing an agreement that sees Australia and New Zealand overwhelmingly gain, with nothing of value for Pacific island countries on the table. Except aid.

Bishop’s “new” policy elevates the role of the private sector to that of benevolent development partner; a “force for good”. The private sector has long benefitted from the aid budget through “boomerang aid” — private contractors and companies overwhelmingly win. The Australian Extractives industry is bolstered, using foreign aid to subsidise the cost of their corporate welfare programs and whitewash their image through the promotion of “sustainable mining”. The aid-funded Cambodia Railways Project that led to forced evictions and further impoverishment of over 4000 families directly benefitted an Australian company.

Such an uncritical approach to business suggests a failure to adequately negotiate the role that many corporations have played in human rights abuse, breaching labour standards, and environmental degradation.

This is the role of big business that is most readily identified by those on the receiving end of foreign investment. Many have pointed out that the most important role big business can play is ensuring that the private sector conducts itself in accordance with human rights and environmental standards. And the most important role the government can play is holding them to account for their penchant for breaching these standards.

The language of economic partnership and mutual obligation, along with a stronger focus on Australia’s national interest, and stringent performance benchmarks, signal a return to tied aid. Programs deemed ineffective can be cut after one year. Tied aid is a controversial tool that is often used to advance the interests of the donor country by making aid conditional.

Aid was formally untied in 2006 though it continues to be a bargaining chip. Need to build a lock-up for refugees on Manus Island? Offer PNG an increase in aid allocation amidst widespread cuts.

Australia is a signatory to the Paris Declaration of Aid Effectiveness which acknowledges that aid should not be driven by donor priorities; so aid policy shouldn’t be based on Australia’s commercial or domestic considerations.

Given the government’s focus on the Indo-Pacific, the complete omission of action on climate change is out of step. The very existence of many Pacific island nations is threatened by climate change. Climate aid funding was cut months ago and hasn’t been reinstated.

This omission is in stark contrast to the addition of a focus on girls and women across 80% of the aid budget. This development has been largely welcomed, though there has been little indication on how this will translate to effective programs targeting gender inequality. More likely this will signal a token acknowledgement of the experiences of women in programming, known as “gender mainstreaming”.

The government’s ideological repackaging of a substantially similar aid policy means that there is little space to have a meaningful debate about what isn’t working. There is no engagement with questions about the global economic and political structures that perpetuate poverty. Unjust trade rules, the wealth disparity that arises from unfettered economic growth, the devastation of local industry and cultural practices through foreign investment — these are just some examples of the issues that impact on the persistence of poverty which are not taken into account.

This aid policy isn’t an overhaul, it’s business as usual.

* Thulsi Narayanasamy is the Director of AID/WATCH, Australia’s independent monitor of foreign aid and trade