Aid, the coalition
and the cuts
The Howard government’s bid to find a staggering SAB billion (SUSS.6 billion) worth of savings from the federal budget over the next two years has everyone on tenterhooks.
University fees are likely to rise dra matically, a host of government pro grammes are going to lose their fundings and tens of thousands of public service jobs are going to go, in what will be the
biggest bureaucratic down-sizing since
the second world war.
The details of the cuts are a closely guarded secret and will remain so until the budget is brought down on August 20.
What is clear, however, is that no area will be immune, and that includes Australia’s aid to the South Pacific.
Foreign Minister Alexander Downer is already sending a tougher message to the South Pacific.
At a meeting of Australia’s top diplo mats called to help prepare a major state ment on relations with the region. Downer made it clear that, while he recognises the Pacific Island countries vary in their scale and resource endowments, he wants to see a stronger culture of entrepreneurship.
“I am convinced,” he told the diplo mats, “that there is much yet to be done in the region to scale down and refocus the
public sector, develop the private sector,
and attract reputable foreign investors.”
The carriage of many of the changes will rest with the new parliamentary sec retary for foreign affairs, 35-year-old Andrew Thomson.
He has been given a major role in Australia’s SAI.S-billion (SUS 1.05-bil lion) aid programme, a third of which goes to Papua New Guinea and the Pacific Islands.
Thomson says much of the “culture of entrepreneurship” referred to by the Foreign Minister, is simply “better macro economic policy and better fiscal recti tude”.
“That is exactly what we are undergo ing here in Australia with our new gov ernment with our difficulties with this budget deficit and the reductions in spending we have to make.”
The Howard government is setting limits. In particular, Thomson says.
Australia “can’t be seen constantly as the lender of last resort because that just encourages profligacy”.
“What we are doing to ourselves is very tough and, likewise, we expect the same sort of fiscal rectitude from our
neighbours.”
Despite the tough talk, and Thomson acknowledges the Howard government is likely to be tougher on the region than its predecessor, the news for the Pacific may not be as bad as for other regions.
The first cut to the aid budget was the scrapping of the SAI24 million (SUSB7.3 million) a year DIFF (Development Import Finance Facility) scheme, a soft loan scheme for infrastructure projects.
The Pacific lost virtually nothing.
Said Thomson: “I think what we have been doing in the Pacific is not just valu able, it is vital. We have an absolute and immediate national interest in seeing that our Pacific Island neighbours are kept economically viable and that we do what we can to improve the most basic services there - the health and education services.”
Thomson says the Howard govern ment will “keep doing in the Pacific what we have been doing up till now but put a bit more focus on it”. As evidence of the government’s commitments to the region, he says he has decided to make his first official trip to Papua New Guinea and the Pacific. “The other places - Asia, Indochina and Africa - will come much later because I recognise and Mr Downer recognises that this is our first priority,
this region.”
Rumour suggests that cuts to AusAID (the Australian government aid agency) and its programmes in the August budget could be in the vicinity of SAIOO million (SUS7O million). If Thompson’s trip to the region goes ahead as planned late this month that will give Island leaders a chance to get in a last bit of lobbying before the decisions are announced.
Those outside Papua New Guinea may need to. The government’s commitment to maintain its aid to Papua New Guinea and an angry reaction from the countries already affected by the end of the DIFF scheme has severely reduced the areas on offer for big cuts. Andrew Thomson, a former investment banker and business
man who has spent most of his working life in Asia, is new to the South Pacific but he is tackling issues in the region with energy and enthusiasm.
He believes the South Pacific is vital to Australia’s national security, not in the old Cold War sense of the “Russian threat” but in shared threats such as those posed by organised crime, agricultural pests which can wipe out valuable export crops and health issues such as HIV/AIDS. This security link is enough that, when pressed, Thomson says that as decisions are being made as to what to cut he would like to see the Pacific treated “a little bit more specially than the rest of the aid budget”.
Another complicating factor for those keen to know the future shape of Australia’s aid programme is the major review of aid announced by Downer at the end of May.
The review, which will be headed by Paul Simons, a former executive chairman of Woolworths and national director of UNICEF (United Nations Children’s Emergency Fund) in Australia, is the first since the 1984 Jackson Report and will not make its recommendation until January. Simons has been given a wide brief and asked, in particular, to look at ways to give greater emphasis in Australia’s aid programme to poverty alleviation and humanitarian issues.
With the axing of the DIFF scheme, it is clear that anything seen as “welfare for business” is not acceptable to the Howard government and it is likely that payments to some United Nations agencies might also be scaled back as soon as August.
Andrew Thomson, who had been in parliament just a year when he was ele vated to the post of parliamentary secre tary, is being careful not to pre-empt either the review or the budget. His initial brashness is being tempered by a genuine willingness to listen and understand other
people’s viewpoints.
In the Pacific,Thomson will be a frank talker but he says he, and the Howard government, want to have an approach “that will never be seen as paternalistic or
too domineering”.
“We always regard quiet diplomacy as more efficacious than the public strident diplomacy.” ■