In my most recent podcast - Letter from The Cape Podcast – Episode 14 -…
Neoliberal governments and their supporters have a habit of spruiking gee whiz solutions to the world’s problems, where gee whiz means make it easier for corporations to make profits and harder for workers to get pay rises, claiming that the destiny of individuals is in their own hands (denying systemic failures), and reducing regulations that ensure equity is enhanced. Australia added another dimension to that list (which is not exhaustive) – being mean spirited when it comes to the less well-off nations in the world. The problem with this approach is that it does not live up to promise – it certainly enriches those who are already well-off – but when the rest of us realise something is wrong, the horse has already bolted and picking up the pieces becomes more ‘costly’ than before. In the last few weeks, our government has been bellowing again about China. China is a threat, China is a crook, China is this, China is that. The trigger point this time is the revelation that China’s external strategy has come to the Solomon Islands and the anti-China paranoid gang within the Australian government has a problem. The Solomon Islands are less than 1,700 kms from our mainland and the fear that China will establish a military base there is sending shivers up the spines (euphemism) of our conservative government. Perhaps if we had have been more generous to this region, the Chinese would not have so easily been able to invest there.
1. Australia’s Overseas Aid cuts reveal a nation that has lost its spirit (May 15, 2017).
2. Australians have plenty of reasons to be ashamed – ODA is one of them (December 29, 2016).
3. Australia’s generosity to other nations is collapsing (April 9, 2015).
4. Advanced countries should invest in fair trade ventures (without ownership claims) (March 22, 2022).
I have written about the way the privatisation of the water utilities in the UK have brought poor results.
1. British floods demonstrate the myopia of fiscal austerity (January 4, 2016).
2. The myopia of fiscal austerity (June 10, 2015).
I have written about how the privatisation of the electricity generating and retailing system in Australia has been destructive:
1. Market manipulation and electricity blackouts (February 13, 2017).
2. Welcome to the world of privatised electricity and canned music (October 3, 2012).
I am currently working on a large project about aviation firefighting services which are under attack again from the Australian government, who is trying to cut investment and let the ‘market’ work.
Next stop: a major aviation disaster!
There are countless examples from the last several decades of where privatisation, outsourcing, funding cuts, imposing so-called ‘contestability’, etc has been a disaster.
And the cuts in foreign aid are another example.
One of the ways the Australian government has attempted to cover its tracks on the ODA front has been to divert ODA funding from hospitals, education, infrastructure etc and pump it into maintaining the privatised prisons on Manus Island and Nauru, where we have been sending people seeking refugee protection.
We lock these people up indefinitely without rights and then say that the ODA budget is rising.
For Australia, running prison camps is ODA!
China’s foreign policy exposing our lack of generosity
Reportedly, China is about to sign a treaty of some sort with the Solomon Islands, the details of which I am not privy to.
There is some evidence that these sort of treaties that China has been establishing with materially poorer nations have been somewhat problematic for those nations.
But equally, there is evidence they have improved material prosperity for the citizens.
So the jury is out I would think on whether the – Belt and Road Initiative – has been a sound development strategy.
The Solomon Islands joined the Belt and Road Initiative in 2019, which signalled the Chinese government’s growing involvement in the Pacific (Kiribati also joined the initiative around then).
Australia, of course, likes to think of itself as the king pin in the region – bullying nations that helped us during the Second World War against the Japanese aggression in the region.
The way we have treated Timor-Leste in the last several decades, for example, has been a disgrace (geographical note – TL is not in the Pacific but it is still a close neighbour).
Our own global obligations
In 1970, the 25th Session of the General Assembly of the United Nations passed a – Resolution on Financial resources for development – (Paragraph 43) that said:
… Each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum net amount of 0.7 percent of its gross national product at market prices by the middle of the decade.
The commitment was not met by many advanced nations, including Australia.
Thirty-two years later the UN reaffirmed the goals – Report of the International Conference on Financing for Development – at the Monterrey meetings (March 18-22, 2002) stating:
… we urge developed countries that have not done so to make concrete efforts towards the target of 0.7 per cent of gross national product (GNP) as ODA to developing countries …
The – The 0.7% ODA/GNI target – a history – is worth reading (short).
The ODA/GNI ratio tells us how much the government of any country is allocating to ODA relative to the size of the economy (the nation’s total income).
The latest OECD – Development Co-operation Report 2021 – tells us that Australia’s:
… official development assistance (ODA) as a share of gross national income (GNI) has declined in the past decade
The OECD publishes fairly reliable data on ODA.
The next graph shows the movements in the ODA/GNI ratios between 2000 (red triangles) and 2020 (blue columns) for selected (advanced) OECD nations.
The dotted line represents the 0.7 per cent target.
In 1970, when Australia signed up to the 0.7 per cent target, we devoted 0.37 of GNI to ODA and we were a considerably poorer nation in material terms then (1970).
The following graph shows Australia’s ODA/GNI ratio history since data was first collected in 1960 by the OECD.
Since the mid-1970s, which is when the fiscal deficit paranoia really began in Australia we have progressive cut the proportion of GNI that we devote to foreign aid.
It is now at record lows and successive governments have shown no inclination to reverse the downward trend.
Australia likes to claim it “punches above it weight” when it is winning some sporting event but when it comes to something important (and I love sport) like feeding starving children we largely ignore our international responsibilities and commitments.
We can always seem to find $A millions to buy military equipment and invade nations with the US though.
The following graph uses data from the ANU Development Policy Centre’s – Australian Aid Tracker – which was first published in 2016 and provides an invaluable source of data “about the state of Australia’s aid efforts”.
The raw data is from the Commonwealth – Department of Foreign Affairs and Trade.
In terms of the Asia-Pacific region – Australia’s immediate neighbourhood – “the vast majority of Australia’s bilateral aid goes to countries in East Asia and the Pacific region.”
You can also explore an excellent visual resource – HERE.
The following graph shows Australia’s total aid to the Asia-Pacific region in constant $A millions.
After the GFC, the ODA budget took a hit.
There was some temporary injections during the early stages of the pandemic but that has ended.
So not only is Australia failing to meet its UN obligations in terms of the ODA/GNI pledge, it is also cutting its ODA in level terms on an inflation-adjusted basic.
The next graph shows the real ODA from Australia for the Solomon Islands.
It replicates the pattern in the previous graph.
In real terms, our ODA to the Solomon Islands has fallen from a peak of $A342 million in 2009-10 to a projected $A161.1 million in 2022-23, a decline of 52.9 per cent.
In 2010, the population of the Solomon Islands was 527,861.
So in per capita terms, the Australia ODA was equal to $A649 (per person).
In 2020, the population had grown to 686,878 and the per capital Australia ODA outlays in real terms had fallen to $A268.
By 2022-23, with the estimated population growth, the per capital Australian ODA outlays in real terms will fall further to $A217 per person.
Stingy is not the word.
And remember, the Solomon Islands were a major theatre of conflict during the Second World War (between 1942 and 1943) as the Japanese Imperial forces attempted to protect their Southern exposure and set up to invade Australia (Source).
The islands were significantly destroyed during the conflict and many civilians lost their lives as the attempt to invade Australia was defeated.
My own father was involved in that conflict.
Many civilians died protecting Australian soldiers.
Gratitude is not something the Australian government seems to remember.
And so, with the void left by the withdrawal of Australian ODA and a growing population, the Chinese government obviously saw an opportunity.
While the investment that China is making is shifting from ODA to loans, the fact remains that if Australia had been more generous, it is probable the Chinese government would have had less chance to enter these deals with the Solomon Islands governments.
There is a lot of shady stuff going on between China and the Solomon Islands MPs (alleged) but Australia only has itself to blame for its declining influence in the Pacific.
Another negative fall out from the neoliberal austerity mindset when applied to fiscal policy design.
That is enough for today!
(c) Copyright 2022 William Mitchell. All Rights Reserved.