reprieve
p. 10 · Read in the full issue
Pacific gets budget reprieve
The most swinging budget cuts since the second world war, deliv ered in the first budget of the Howard government, have left foreign aid to the Pacific virtually untouched.
More significantly, they provide the
first tangible evidence that the new Liberal/National Party government places genuine importance on its Island neigh bours.
In the lead-up to the March election, Alexander Downer, now foreign minister, insisted his government would place more priority on the Pacific, pointing to his decision to abolish the junior Ministry of Pacific Island Affairs and assume respon sibility for the region himself.
At the time observers, mindful of Downer’s stumbles during his brief period as coalition leader, wondered whether the Pacific might get lost in the rush as he tried to stick by other promises, such as those to make Asia his number one prior ity and to pay more attention to relations with the United States and Europe. While the government has continued to make great play of the fact that Asia is its top priority it is, in fact, the Pacific which has done better.
In the budget handed down by Treasurer Peter Costello on August 20, aid to crucial partners in Asia - Indonesia, Thailand, Malaysia, and China - was cut substantially. Overall foreign aid was cut by 10 per cent but the Pacific, which accounts for roughly a third of the entire $A 1.45-billion (SUS 1.16-billion) alloca tion, lost only three per cent. No major area was cut and Australia’s aid emphasis remains on education, health and strength ening of capacity in the public service.
Key changes include: • A doubling of funds going to the South Pacific Policy and Management Reform (PMR) initiative to assist Island governments implement essential eco
nomic and public-sector management reforms and meet commitments in eco nomic policy made by leaders at the South Pacific Forum in Majuro last month. • A new emphasis in aid for education which will see more funds going to basic education (be it vocational education for adults or primary and secondary school ing for kids) instead of tertiary education (most of which is spent sponsoring Pacific Islanders at Australian universities). • Less money to some United Nations bodies, including a 50 per cent cut to the United Nations Development Programme and the United Nations Fund for Population Activities.
So why was the Pacific spared the worst of the budget cuts? Firstly, the gov ernment believes that if it cannot get its relations with its neighbours in the Pacific right its international credibility will be tarnished. Secondly, it concluded that while large cuts to Australian aid to coun tries such as Indonesia and the Philippines would make little difference to those nations, overall cuts to aid to the Pacific (where Australia is a big donor and many countries in economic difficulty) would be keenly felt. Thirdly, the government appears to be genuinely committed to the region and the process of economic reform endorsed by every South Pacific Forum since Brisbane in 1994 and it believes that the time to act is now.
Despite little media attention being given to Australia’s relations with the South Pacific, this government has not been neglectful. Tim Fischer, who is deputy prime minister and trade minister, has been consistently interested in South Pacific issues. Downer has been deluged with departmental submissions, takes an active interest in them and has delivered a major policy statement introducing a new, less prescriptive tone into relations.
Downer is planning a major trip to the
region in December. If a new theme is emerging in Australia’s South Pacific thinking it is a sharper focus on economic reform and on Australia’s role in assisting with, but not driving, the process. John Howard, as a former treasurer and long time economic rationalist, has a personal interest in this area. Apart from his less well received attempt to water down the South Pacific Forum’s strong stand on the need to reduce Greenhouse gas emissions it was his main focus at the Forum in
Majuro.
With huge budget cuts being meted out domestically and more to come, it is sur prising that the Pacific was not harder hit.
The Howard government is, however, determined link its aid to evidence that Pacific Island nations are serious about reforming their economies.
The cynical observer might conclude that that rubric will be used to justify cuts to aid in the next budget, in which more belt tightening aimed at achieving Howard’s pledge to find a massive SAB billion (SUS 6.4 billion) worth of savings in two years has already been promised.
At this stage it appears that is not the intention.
The main unknown quantity is the major review of Australia’s aid pro gramme announced by Downer at the end of May. It is being conducted by former Woolworths executive chair Paul Simons and has been asked to find ways to give greater emphasis to poverty alleviation and humanitarian issues. The review, due to report in January, has made fact-finding visits to Papua New Guinea, Fiji and Kiribati but its three-member panel does not include anyone with experience in the
region.
As the region’s aid makes up such a high proportion of the total Australian aid budget it could be vulnerable to new directions. ■