Federal budget redirects aid spending to Pacific, South-East Asia as region braces for Trump administration cuts
The majority of Australia's aid funding will be spent within the Indo-Pacific. (Supplied: Department of Defence)
In short:
The federal budget has revealed government plans to redirect aid to Pacific and South-East Asian nations dealing with the Trump administration's looming cuts.
Aid groups welcomed the decision to "hold the line" on aid funding in the face of global cuts, but said it was still set to fall to its "lowest level ever" as a proportion of the budget.
Foreign Minister Penny Wong said in "uncertain times" the government was sending more development assistance to regions "where Australia's interests are most at stake".
The federal government is quietly reshaping its overseas development program, cutting funding to multilateral institutions and redirecting money to Pacific and South-East Asian nations grappling with the Trump administration's sweeping aid cuts.
Labor has committed to spending $5.097 billion in foreign aid this coming financial year, with tonight's budget delivering a modest $135 million boost to development spending.
However that increase barely keeps pace with inflation, and development assistance is continuing to drop as a percentage of overall spending, coming in at just 0.18 per cent of gross national income.
The interim CEO of the Australian Council For International Development Matthew Maury said while Australia had sent "a clear signal that we are not retreating from our region" in the face of global cuts, aid was still set to fall to its "lowest level ever" as a proportion of the budget.
"While holding the line is commendable and we welcome the initial steps to fill the gap in this budget, ACFID looks to further commitments that meet the escalating needs across the world," Mr Maury said.
The government is also making some significant changes to where it's sending the money, delaying or suspending payments worth $119 million to global funds designed to fight poverty and disease — including the UN Development Program, the Global Fund to Fight HIV, Malaria and TB, and the Global Partnership for Education.
The Trump administration has moved to dismantle USAID and terminate most of its grants. (AFP: Jam Sta Rosa)
That funding will instead be ploughed into programs in the Pacific and South-East Asia which Australia funds directly, in an effort aimed at helping those countries deal with the looming US cuts to health, education, climate and refugee programs.
Foreign Minister Penny Wong said in "uncertain times" the government was "ensuring more of Australia's development assistance is going to the Pacific and South-East Asia, where Australia's interests are most at stake".
"We've had to make hard strategic decisions and focus on where our development assistance can have the greatest impact," she said.
Foreign Affairs Minister Penny Wong says the government wants to focus its aid programs on areas where they will have most impact. (ABC News: Ian Cutmore)
Minister for International Development Pat Conroy said while Australia remained "firmly committed to the multilateral system … flexibility is needed in this year's budget to protect our region's stability and prosperity and reinforce Australia's role as a trusted and reliable partner for our neighbours".
US Secretary of State Marco Rubio has already announced more than 80 per cent of USAID programs worth more than 50 billion US dollars ($79 billion) will be cut.
It's not yet clear exactly which ones will survive and which will continue, but the Trump administration has flagged it will slash assistance for climate, refugee and sexual health programs.
Many of the Australian government programs in line to receive a boost will help plug some of those gaps.
For example, the federal government has already committed $5 million to help maintain HIV programs in PNG, Fiji and the Philippines which have been hit by USAID cuts, and is delivering a broader $81 million package providing family planning, sexual health, HIV and TB programs, and maternal health throughout the Pacific and South-East Asia.
It's also committed $370 million over three years to respond to the crisis in Myanmar and support Rohingya refugees in Bangladesh, where USAID cuts have caused chaos, and $355 million over four years to provide climate change solutions across the region.
Australia's development budget also remains ever more tightly focused on the region — around 75 per cent of all aid funding will be spent within the Indo-Pacific, which is the highest it has been for four decades.
It comes as a coalition of aid groups press the government to bolster development funding, releasing figures showing that Australia now spends 10 times more on defence than it does on foreign aid.
The executive director of Micah Australia, Reverend Tim Costello, said while the budget sent a "timely and much-needed signal of regional commitment" both parties needed to go further, and commit to spending 1 per cent of the federal budget on development assistance.
"This isn't just about numbers — it's about what kind of middle-power leader Australia chooses to be,"Mr Costello said.
"We can't talk about stability in our region if we're only investing in one part of the equation."
"True security means helping our neighbours prevent crises — by building resilience before disaster or instability strikes."
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