18 May 2011 – Topic: foreign aid
Michael Rowland: The debate for foreign aid has increased significantly over the past year due to a big rise in national disasters and global political unrest.
Beverley O’Connor: By 2015 Australia’s foreign aid budget is expected to double to $8 billion. Some experts believe Australia needs to take a very targeted when it comes to aid spending. Dr Andrew Leigh will be talking about this topic a little later on. He’s the Federal Member for Fraser in the ACT, and he joins us now from Canberra. Many thanks for your time this morning. First of all, let’s start with the size of the budget doubling by 2015 – do you think that is too much for a country like Australia?
Andrew Leigh: Well Beverley, it is important to remember where we start off. Australia, compared to other developed countries is in the bottom third of donors and by the time we get to 2015-2016 we’ll be giving 50c out of every $100 that Australia earns and that will put us at the rich country average. So no, I think that is an appropriate scaling up that recognises the good Australia can do in the region and the benefits that being generous brings back to us, in terms of a more secure region and in terms of more trade in the future, which is good for our businesses.
Beverley O’Connor: So when you’re talking about that, you’re talking about aid with the idea of getting something back in return. If that is the approach, where critically do you think the aid should be targeted?
Andrew Leigh: Beverley, I’m giving a speech at the Lowy Institute today, and I’ll be arguing that Australia’s foreign aid has been extraordinarily effective and that one of the things we should do in the future as we scale up is to think about what Australia’s comparative advantage is, what we do better than other countries. I’ll be arguing that there are three of those areas where we should focus on. One is on natural resources – we’re a developed country with a lot of natural resources, so that’s a natural area to think about how we can help developing countries. The second is dry land farming and the third is dealing with fragile states. We’ve had a bit of experience with East Timor and the Solomon Islands and fragile states, so I think that’s something Australia does pretty well as well.
Beverley O’Connor: Can we take up that last point first though, we’ve seen Kevin Rudd just last week – the Foreign Minister – cutting back funding programs to some parts of the Pacific, because even though you may argue that they are fragile states, there is often abuse of the aid.
Andrew Leigh: Look we’ve got to absolutely make sure that our aid dollars are always being well spent. Fraud in the AusAID program is extraordinarily low, a small fraction of 1%, so I don’t think we need to be concerned that Australian aid dollars are being misspent, but we should always be vigilant about it. But in general, we have had some pretty good successes there. Our East Timor intervention and Solomon Islands stabilisation mission haven’t produced perfect states but we’ve done a lot of good in that area and that’s a real challenge, particularly in Africa now. If you look at places like Sudan and Congo, the world really needs expertise on how to stabilise countries. It’s that social policy being delivered with a rifle in one hand, which requires a mix of military, policing and aid assistance. We’re doing some of that work in Uruzgan Province in Afghanistan and the more we do, the better we get at that balancing act of maintaining security while providing basic services to the local population.
Beverley O’Connor: In terms of the other points you make, in terms of the expertise we have, are you thinking that more of our actual expertise and funding people to go over and assist, for example in countries that are developing resources, or in terms of as you were talking about that dry farming. Are you looking more at expertise being funded by Australia so that we can keep track of that money or just simply providing the funds for them to then do it themselves?
Andrew Leigh: That’s a good question, Beverley, and it’s a balancing act in foreign aid, the extent to which you want to send your people over training people in developing countries. Australia actually does a lot of training through our scholarships program, bringing people from developing countries to Australia to learn skills, and some of that is indeed in natural resource management and dry land farming. So I think it’s important to build that capacity and important to recognise that management, particularly of natural resources, is a really difficult balancing act. It turns out there’s this thing called the ‘resource curse’ in developing countries, that a country’s more likely to experience slow growth and violence if it finds natural resources. We need to turn that around – turn a ‘resource curse’ into a ‘resource blessing’, because the developing world has huge amounts of natural assets. There’s $3.5 trillion of sub-soil assets in Africa, most likely. We need to encourage developing countries to make the most of their natural resources as Australia has done.
Beverley O’Connor: How open are these other countries to us coming in, sort of the ‘Big Brother’, to show the way?
Andrew Leigh: I think there’s a lot of openness to think about how to work effectively with natural resources. One of the things I think is being increasingly discussed is how to best sell off the mining licenses. It’s really important to sell of the mining licenses in a transparent way so taxpayers can follow the funds that flow from mining companies through the governments. It’s also important to sell them through auctions, to make sure taxpayers get the best deal from mining leases. It’s really important for voters and governments to know what’s under the soil, to do some basic geological surveys first. These may sound a bit technical but they’re absolutely critical to making sure that people in developing countries get that flow of resources that benefits everyone. Mining employees relatively few people, so people in developing countries will really only benefit from sub-soil assets if governments manage them well.
Beverley O’Connor: Andrew Leigh, thank you very much for joining us this morning.
Andrew Leigh: Pleasure, Beverley.