FEATURE: Good neighbours

The Australian Government says it will end direct aid to China and India but continue to focus aid efforts on close neighbours in the Asia-Pacific region.

It made the announcement as it released the first independent review of Australia's aid program in 15 years.

Foreign Minister Kevin Rudd announced a series of reforms that he says will ensure aid spending is strategic, more transparent and gets real results.

The panel behind the report, Independent Review of Aid Effectiveness, made 39 recommendations and the government has accepted in principle all but one of them.

Last Updated: Thu, 7 Jul 2011 18:15:00 +1000

In announcing Australia's new aid direction, Mr Rudd said countries in the Asia-Pacific would remain key recipients of Australian aid.

"The Asia-Pacific . . . currently occupies over 75 per cent of our development assistance budget," he said.

"It will remain as the key. Remember, two-thirds of the world's poor live within the Asia-Pacific region. That is why we will continue to maintain our emphasis there - Indonesia, PNG, East Timor and elsewhere."

However, the panel and the government seemed at odds about the amount of aid that should be issued to some Pacific nations.

The panel questioned the effectiveness of Australia's aid program in some parts of the Pacific and recommended only a small expansion of aid to Papua New Guinea, Solomon Islands and East Timor.

It said aid is undermined by poor governance in these countries.

By contrast, it said Vanuatu and Samoa should qualify for a significant boost in funding because of the strong performance of their aid programs.

But Australia's parliamentary secretary for Pacific affairs, Richard Marles, said aid funding levels will be decided in the next national budget.

"We do see that there will be expansion in relation to Solomon Islands, PNG AND East Timor," he said.

Mr Rudd said moves to make Australian aid programs more effective were already underway.

"We have already made a good start... by reducing the number of technical advisors by 25 per cent over the next two years and further reducing unreasonable remuneration levels for ongoing advisers, so we get maximum return for our aid dollars spent."

The panel also called for a doubling of funding to the Pacific micro-states of Nauru, Kiribati and Tuvalu.

Opposition reaction

The Australian Opposition says it will be closely monitoring how the aid program performs as it expands over the coming years.

The deputy leader of the Australian opposition Liberal Party and foreign affairs spokeswoman Julie Bishop says the aid budget has been spread too thinly under the Labor government.

She has welcomed the decision to re-focus on the Asia Pacific region and says she will hold the government to account for all of its aid spending.

"I certainly want to see our aid program targeted towards the Asia-Pacific and I'll continue to criticise the government and particularly Kevin Rudd for using our aid budget to pursue his campaign for a temporary seat on the United Nations Security Council," she said.

"That is, trying to buy support from countries that are not in our region."

Phasing out

Mr Rudd said Australia would phase out direct aid to India and China, which now have significant economies in their own right.

"One is the second largest economy in the world, the other is the sixth largest in the world," he said.

Australia rates as the world's 13th largest economy, according to the International Monetary Fund.


Foreign Minister Kevin Rudd's full speech can be viewed here.

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