Recorded the morning after the 2026–27 federal budget, this episode brings you the Development Policy Centre's fourteenth annual aid budget breakfast, hosted by Devpolicy Blog co-editor Amita Monterola with analysis from Cameron Hill and Robin Davies. Cameron unpacks how the government's 2.5% indexation measure is being applied alongside higher-than-expected inflation, producing a cumulative real fall in ODA of around 7% across the forward estimates, a declining ODA/GNI ratio, a widening defence-to-aid spending gap, and further concentration of the program on the Pacific. He also examines cuts to core multilateral funding, including the cessation of contributions to UNAIDS and the Pandemic Fund. Robin then situates these figures globally, noting a 23% fall in ODA from 2024 to 2025 — the steepest annual decline on record — and projects aid could sit roughly 40% below its 2023 peak by 2028. A wide-ranging Q&A covers multilateral effectiveness, ODA graduation, humanitarian adequacy and climate finance.
Recorded the morning after the 2026–27 federal budget, this first episode of the 2026 season brings you the Development Policy Centre's fourteenth annual aid budget breakfast, hosted by Devpolicy Blog editor Amita Monterola with analysis from Cameron Hill and Robin Davies. The session was held live from the Pacific Security College studio at the Crawford School, with questions from an online audience of aid practitioners, researchers, students and government officials.
Cameron and Robin both refer to slide presentations throughout; a video recording with the slides is available on the Development Policy Centre's YouTube channel.
Cameron unpacks how the government's 2.5% indexation measure — promised in the 2023 budget — is being applied for the first time. Combined with a 5% inflation estimate for the current financial year and slightly lower inflation thereafter, the result is a cumulative real fall in ODA of around 7% across the forward estimates. The ODA/GNI ratio falls from 0.18% to 0.16%, aid as a share of the federal budget drops from 0.65% to 0.58%, and the projected ratio of defence to aid spending widens from roughly 11:1 today to around 18:1 by the mid-2030s. The program also becomes more concentrated on the Pacific, which now receives 42% of Australian ODA, while spending on South and West Asia, Africa, the Middle East and global programs has fallen substantially over the past decade.
Within this year's budget, Cameron highlights a $111 million reduction in global and multilateral funding, including cuts to UNDP and Global Partnership for Education core funding and the cessation of Australia's contributions to UNAIDS and the Pandemic Fund. He notes a recurring tension: Australia continues to reprioritise away from multilateral core funding while simultaneously asking those agencies to direct more resources to the Pacific.
Robin then places the Australian figures in their global context. Global ODA fell by 23% — around $50 billion — from 2024 to 2025, the steepest single-year decline since records began in the 1960s. On current policy settings, he projects aid will be around 40% below its 2023 peak by 2028, with the cuts driven by a group of roughly ten donors led by the United States, but with Germany, France, the Netherlands and others still having most of their announced cuts ahead of them. The OECD's own projections are more optimistic, as they were a year ago. Contributions from non-DAC donors, including China, have drifted up to around $15–16 billion annually but come nowhere near offsetting the cuts.
A wide-ranging Q&A session then covers multilateral effectiveness in the Pacific, ODA graduation and Nauru's likely move to high-income status, the treatment of AIFFP loan grant equivalents, the adequacy of humanitarian funding amid escalating global needs, peacebuilding and conflict prevention, climate finance and the prospects for the Pacific COP, and whether private finance might fill the gap left by shrinking public aid budgets.
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"The big hit is the 5% inflation estimate for this financial year and the fact that you have slightly less than inflation over the forward estimates. That's a cumulative real fall in ODA of 7%. ODA/GNI also falls from 0.18% in 2025-26 to 0.16%… aid as a share of the federal budget falls from an estimated 0.65% to 0.58%, so below 60 cents in every $100 the government spends." — Cameron Hill
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"ODA fell by 23% from 2024 to 2025, which was around $50 billion, and that comes on top of a fall the previous year. When you put this together, the main message is this is the deepest fall in global aid by any measure since records began back in the sixties… it looks likely that aid will be around 40% below its 2023 peak by 2028." — Robin Davies
Acknowledgement of Country
We wish to acknowledge the Indigenous people of Australia, the wider Asia-Pacific region and other parts of the world, and express our respect for their traditional knowledge and practices, which stem from a deep connection to the lands and waters they have inhabited for millennia.
Podcast Welcome
Welcome to Devpolicy Talks, the podcast of the Development Policy Centre.
We’re part of the Crawford School of Public Policy at the Australian National University, on Ngunnawal and Ngambri country in Canberra.
I’m Robin Davies.
We’re bringing you a mix of interviews, event recordings, and in-depth features on topics central to our research — Australia’s overseas aid, development in Papua New Guinea and the Pacific, and other regional and global development issues.
This first episode of the 2026 season brings you the Development Policy Centre's fourteenth annual aid budget breakfast, recorded live from the Pacific Security College studio at the Crawford School on the morning after the 2026–27 federal budget.
From now on, we'll be releasing new episodes every fortnight until the end of the year.
On this occasion I'm appearing as one of the panellists — the session is hosted by my Devpolicy blog co-editor Amita Monterola, with analysis from my colleague Cameron Hill and me, and questions from an online audience of aid practitioners, researchers and students and government officials, including many overseas participants.
The headline this year is a story of slow erosion at home against a backdrop of dramatic upheaval abroad.
Cameron walks through what the budget actually does to the aid program: the 2.5% indexation measure promised back in 2023 finally kicks in, but the way it's being applied — combined with higher-than-expected inflation — means a real cumulative fall in ODA of around 7% by the end of the forward estimates.
Aid continues to shrink as a share of the federal budget and of GNI, the ratio of defence to aid spending keeps widening, and the program becomes ever more concentrated on the Pacific as funding to other regions falls away.
Cameron also unpacks the cuts to core multilateral funding, including the cessation of Australia's contributions to UNAIDS and the Pandemic Fund.
I then place these Australian numbers in their global context, and the picture is sobering.
Global ODA fell by 23% from 2024 to 2025 — the steepest single-year decline since records began in the 1960s — and on current policy settings, I estimate that aid is likely to be around 40% below its 2023 peak by 2028. The OECD, I should note, is more optimistic — but then they were last year too.
The cuts are being driven by a group of ten donors led by the United States, but with Germany, France, the Netherlands and others still having most of their announced cuts ahead of them. Amita then steers a wide-ranging Q&A covering multilateral effectiveness in the Pacific, ODA graduation and the AIFFP grant equivalents, humanitarian adequacy, climate finance and the prospects for the Pacific climate change COP.
A note for listeners: Cameron and I both refer to slide presentations throughout the session. A video recording, with the slides visible, is available on the Development Policy Centre's YouTube channel.
Event Transcript
Amita Monterola:
Good morning. Welcome to the 2026 aid budget breakfast hosted by the Development Policy Centre. I am Amita Monterola, editor of the Devpolicy Blog and co-host of the Devpolicy Talks podcast.
I'd like to acknowledge the traditional owners of the land on which we bring this event, the Ngunnawal and Ngambri people. From here in Canberra at the Australian National University, we welcome Indigenous leaders past, present and emerging who may be joining us. We'd also like to extend this acknowledgement to First Nations people who may be joining us from around the nation and around the world.
This year we're coming to you from the Pacific Security College in the Crawford School, so I'd like to give a big thank you to the team for lending us this wonderful facility — Megan, Jed, and a special shout out to Cooper.
The Devpolicy team has been up all night analysing the federal government's budget announcement to bring you this, our fourteenth aid budget breakfast.
I'd like to welcome our speakers for this morning. We have Dr Cameron Hill, our senior researcher, who has focused on Australian aid through his past roles at the Parliamentary Library and ACFID, and is now at the Development Policy Centre. He also organises the Australasian AID Conference, which will be held later this year in December here in the Crawford School. This morning, he'll give us a rundown on aid in the budget and longer term trends.
We also welcome back Robin Davies. He brings his extensive knowledge of Australia's development program and multilateral organisations to the Development Policy Centre, where he is now managing editor of the Devpolicy Blog and co-host of Devpolicy Talks. He is also a board director at the Burnet Institute and FemiliPNG Australia. Robin will look at global aid flows, including the latest 2025 data, which was released by the OECD in the last month.
The last person we have in the studio is actually behind the camera. Finn Clark is now the research officer maintaining the Australian Aid Tracker. He has taken over from Estelle Stambolie, who has recently started parental leave, and we'd like to thank him for all his work late last night to upload the latest data and for getting up early to support us again this morning.
Online, we have Stephen Howes, director of the Development Policy Centre, who has authored our first piece of analysis, which has already been published this morning at devpolicy.org. The data is available on the Australian Aid Tracker. You should be able to see those URLs on your screen.
We are recording this session, and it will be available to share with your colleagues later today on the Devpolicy YouTube channel. By the end of the week, we will launch our thirteenth season of Devpolicy Talks with a podcast of this session as well.
I'll now go through the event housekeeping while we display Devpolicy's events for the year. A reminder that you can use the chat function to send us questions during the presentation. Please state your name and your organisation.
Over the next few days, links to the slides, the YouTube recording, our global aid blog and our podcast will be promoted on our social media channels. We're on LinkedIn, Facebook, Instagram and X. The best way to ensure that you get all our information is to go to devpolicy.org and hit subscribe in the top right hand corner to receive our aid and development blogs and our fortnightly newsletter.
We have a keynote speaker announcement for AAC this Friday, so make sure that you sign up now. With that, I'll hand over to Cam.
Cameron Hill:
Thanks, Amita, and thanks everyone for joining us this morning. It's terrific to be in this studio for the first time.
I'm going to talk about aid in the federal budget after last night's announcements by the Treasurer. I'll start with a quick snapshot, as we do most years, with a look at the budget context. This budget was delivered in the context of an extreme amount of global uncertainty and was framed by two key messages from the Treasurer: ambition and restraint.
The ambition was on the revenue side with the tax changes that were announced last night. In terms of restraint, we saw a number of announcements before the budget about reducing growth in areas like the NDIS. You can see from this chart that those decisions are having an effect. You can see the gap between revenue and expenditure narrowing across the forward estimates. Although the budget doesn't balance, there is a marked shift in that gap.
On the aid side, this budget was framed by Labor's 2023 budget measure, which promised a 2.5% increase in total ODA from 2026-27 to 2036-37. You can see on the screen the details of that announcement from the 2023 budget papers.
The effect of that measure kicks in next financial year. When we compare the 2025-26 budget with the 2026-27 budget, we can see the impact of that 2.5% coming online.
Interestingly, when we compare the forward estimates — the nominal ODA spend across these forward estimates — we see a shift in the profile. The blue line is last year's budget, and the red line is this year's budget, and you'll see that change in profile. Overall, aid is going up in nominal terms, but it doesn't go up by 2.5% over the forward estimates. The average nominal increase over the forward estimates is lower, at 1.7%.
So what explains that variance? It requires a little bit of work to unpack, as we discovered yesterday and last night. The way DFAT is applying this measure is by calculating a base ODA figure. Next financial year, that will be $4.87 billion. DFAT is applying the 2.5% increase to that base, but not as a stand-alone 2.5, 2.5, 2.5. It's an annual increase: taking the value of that increase over the forward estimates and applying an average, which fluctuates.
DFAT is also applying the grant equivalents of its AIFFP loans, estimated at $79 million in 2026-27. It is then either adding or subtracting ODA-eligible budget measures and adjustments, which total $137 million in 2026-27. So it's quite a complex formula, and that's why you see that unevenness and adjustment in the forward estimates compared to last year.
The effect is that real ODA decreases, and as Stephen said in the blog this morning, we see a real decrease compared to 2024-25 out to the end of the forward estimates in 2029-30. The big hit is the 5% inflation estimate for this financial year and the fact that you have slightly less than inflation over the forward estimates. That's a cumulative real fall in ODA of 7%. ODA/GNI also falls from 0.18% in 2025-26 to 0.16%. Our projections are that it will continue to fall beyond 2029-30.
The other effect, which is fairly obvious, is that aid also falls as a share of the federal budget. We see aid as a share of the federal budget falling from an estimated 0.65% to 0.58%, so below 60 cents in every $100 the government spends. This is obviously moving away from the 1% share of the federal budget that many aid advocates have been calling on the government for. So we're moving further away from that target rather than closer to it.
As we talked about last year, the ratio of defence to ODA spending continues to widen. These are the projected estimates for defence spending from the recently released 2026 National Defence Strategy and Integrated Investment Plan, plus our estimates and projections currently on the Aid Tracker. You can see that defence spending is currently about 11 or 11 and a half times aid spending. Based on these projections, that ratio looks to grow to about 18 to one by the middle of the next decade. That's quite a stark picture.
Looking within the budget delivered last night, there were some reprioritisations flagged, mainly as a response to global uncertainty and the impacts of the Iran war on things such as fuel and food security. The budget includes a $111 million reduction in global and multilateral funding, including cuts to UNDP and Global Partnership for Education core funding, and the cessation of Australia's core funding for UNAIDS and the Pandemic Fund. There's also a small decrease in aid spending to the Middle East and Africa.
The main beneficiaries of these reprioritisations are country and regional programs within the Indo-Pacific. Australia's total ODA to the Pacific increases, as does Southeast and East Asia. South and Central Asia has a very small increase. There are also some increases to cross-regional and global programs, including the ANCP and the volunteers program, and some increases to Australia's central gender and disability funds.
In terms of sectors, there's not much change. Last night's budget did include updated sector estimates, so we can see that governance is still the largest sector by far. The government is predicting that next financial year it will spend about $1.2 billion on governance programs. That's about one and a half times the next biggest sector, economic infrastructure and services, which is around $820 million estimated for next financial year. Not much change on the sectoral front at all, or on the geographic front for that matter.
I want to turn now briefly to a quick ten-year snapshot, looking at a few of the longer term trends in the context of the 2014-15 financial year. That was the final year before the Coalition commenced its very large aid cuts, including the $1 billion aid cut it made in 2015-16. Looking at these trends, we can see some of the structural changes in the budget that have taken place over the last ten or so years.
In terms of destinations, we can see that over the last ten or so years the aid program has become more Pacific and less Indo. Even though over the last decade we've been talking more and more about the Indo-Pacific, our aid program has actually become less Indo-Pacific — more Pacific and less Indo, to put it that way. The Pacific and Timor-Leste, in real inflation-adjusted dollars, have increased by about 30%. Southeast and East Asia have decreased by about the same amount. We see large falls in regions outside that: South and West Asia down by 50%, Africa and the Middle East down by 75%, and global programs down by 50%. That gives you a picture of the big structural changes that have occurred over the last decade in the wake of those big aid cuts from the Coalition.
Looking at a couple of sectors, I'll focus on gender equality and climate. This is from the data that Australia submits to the OECD DAC. We can see that we have basically gotten back to what we were spending on gender equality in inflation-adjusted terms as we were in 2014. Some of the reduction in between was a result of both reductions in the size of the aid program and changes in the way that Australia was applying the gender marker. The significant category — aid programs that have a significant but not a principal focus on gender equality — still constitutes the overwhelming majority of our spend. Over 90% of our gender spending is on programs rated significant rather than principal. There's been no real change in the level of principal spending on gender equality.
We think this number, particularly on the significant side, will continue to increase as the government's 2023 target on programming for gender equality takes effect. That applies to all new bilateral and regional programs above $3 million.
When we turn to climate, we see a more marked change. Between 2014 and 2024, aid targeting both climate change mitigation and adaptation has doubled since 2014. Again, like gender, significant funding outweighs principal funding. Over 85% of our spending in both categories has been on programs rated or described as significant rather than principal in terms of their climate change objectives. We're likely to see this increase as the new targets come online.
Looking at partners, we can see some change here. The multilaterals remain our biggest delivery partner for the aid program. In 2024-25, they comprised about 35%. We do see an increase in the share delivered by managing contractors — up by about 11% from a decade ago. It's important to recognise that with contractor spending, some of that funding flows to other kinds of partners: non-government organisations, universities, even Australian public sector organisations. So that commercial suppliers category does include large facility-type programs where funding flows through to other categories of delivery partners.
Finally, we can look at the change in how Australia ranks compared to other OECD DAC donors. We see a fall here in Australia's share of DAC aid. We have fallen from 2.65% of DAC aid in 2015 to about 1.9%. That's ticked up a bit largely as a result of the aid cuts that Robin will talk about shortly. In terms of our ranking, there are currently 33 DAC donors, and we have fallen in that ranking over the last decade from fourteenth to twenty-fourth. We've moved up a few places in the 2025 ranking, largely because of cuts by other donors.
That's probably the best segue I have to throw to Robin, who's going to talk about some of the recent shifts in global aid. Thanks, Robin.
Robin Davies:
Alright, thanks Cam. I want to fairly quickly put the Australian aid budget in its global context, so I'll go through five charts quite quickly.
The overall message — everyone is aware that aid fell by 23% from 2024 to 2025, which was around $50 billion, and that comes on top of a fall the previous year. When you put this together, the main message is this is the deepest fall in global aid by any measure since records began back in the sixties.
The second general message is that if you do some projections based on the policy announcements made by some of the donors who are cutting aid, these reductions are likely to continue. If you go out to about 2028 — three years out — it looks likely that aid will be around 40% below its 2023 peak by 2028. This is all being done by a group of around 10 donors, of whom four or five are significant. So that's the general picture.
This first slide gives you the historical perspective, the fifty-year perspective. ODA has been around a bit longer than this, but the numbers pre-1970 are not particularly reliable. Visually, it is striking. You see that huge cliff after 2023. There was a $20 billion fall to 2024 and then another $50 billion fall to 2025. All up, around 30% from its peak in 2023, and there has been nothing like that in the prior history of ODA volume fluctuations. In the early nineties after the Cold War, we saw a fall over a few years of about 18%, but nothing like what we see here.
It's true that some of this is undoing an unusually steep climb in ODA in the early 2020s, and that had to do with the counting of in-country refugee costs and aid to Ukraine in particular. Those were a couple of the big factors, as well as counting of some COVID vaccine costs in the wake of the pandemic. So there's a little bit of unwinding of unusual things going on, but the majority of the fall is very much driven by deliberate budget cuts beyond those things.
This slide represents some projections I've done. I went through this exercise a year ago and have repeated it this year. In brief, I've looked at the policy statements of all of the 30 — now 34 — countries that report to the OECD and aggregated that to come up with a range of possible scenarios for future aid out to 2028.
The OECD itself does this too. They do it in a different way. Instead of looking at everything that has been said, they just ask official donor agencies through a survey for information on future aid levels. Interestingly, the top green dotted line, the one that becomes horizontal on the top right, was the OECD projection a year ago for what would happen this year and beyond. As you can see, it's absurdly optimistic.
If you go down one, the blue dotted line that becomes horizontal, that's the OECD projection from April. Again, they're feeling more optimistic than I am. The red line just below that was my projection last year, which was a bit closer to reality, and the red line that extends out to 2028 is my projection for the next three years, which leads to a central cut of 40% relative to 2023. That's just based on what donors actually say rather than what their officials report to the OECD through the survey, and it's peculiar that there's such a difference.
So we're looking at very significant cuts continuing rather than a stabilisation. At least, that's a clear point of difference between my projections and the OECD ones.
This slide shows how the realised cuts compare to the cuts that are still to come for the major donors. As you can see, the United States has done most of its cutting work, but still it has cut $38 billion so far. It still has another $8 or 9 billion to go by 2028 based on our best guess. The same is true of others in varying degrees, but Germany still has quite a bit to come — another $5.6 billion on top of $12 billion already cut. As you go down, you see that some donors like France and the Netherlands actually have the majority of their cutting still to come.
This shows the same data in a different way, but as you can see, the US share of the realised cuts, in the column on the left, is about 60%. If you take a three-year view looking out to 2028, the US share of the cuts falls to about 48%, and Germany, France, Canada and others become more significant.
And the final slide. This is, again, the view from 2023 out to 2028, segmenting the donors into those who have announced cuts as a matter of policy — the donors I'm calling the programmatic ODA cutters. That's the dark blue lines. That group accounted for about 75% of ODA in 2023 before the cuts really began. When they're done, their ODA will be about half of what it was in 2023. The rest of the DAC remains quite flat. They don't do any further damage, but nor do they offset the cuts from the programmatic cutters.
I've displayed Japan separately because it's in an odd position. It has not announced policy cuts, but it is declining for reasons to do with the composition of its program — the split between loans and grants over time.
So that's the overall picture. I have more behind that, but I'll stop there, and we'll go to questions.
Amita Monterola:
Thanks, Robin. We have a generous amount of time this year — about half an hour for questions. I'm looking forward to seeing questions come through on the chat. We have a chat session open, and I can see we are just now getting a few questions in.
I did want to indulge the panellists on just one detail that I picked up on — obviously a topic very close to my heart. I wanted to talk about some of the drops in funding for the multilateral organisations. I think it was UNAIDS and the Pandemic Fund that were listed along with the education fund. I was wondering if, Cam, you could explain exactly what's happening there.
Cameron Hill:
Sure. In the case of UNDP, it is getting a $3 million cut to its core funding. That funding was suspended last year, and next year will resume, but at $3 million less. Usually, Australia provides $13 million to UNDP core funding, and that will go down to $10 million from next year.
There's no amount specified for the reduction for the Global Partnership for Education. I think that might still be an ongoing replenishment discussion, but there is a flagged reduction in that core funding.
In the case of UNAIDS and the Pandemic Fund, yes, the government has said it will cease core funding to both those multilateral organisations. The future of UNAIDS is uncertain with the restructuring going on, and it looks like UNAIDS's functions will be absorbed into other parts of the UN. The government has also said this doesn't signal it is stepping away from responding to HIV/AIDS in our region; it is just doing it through its bilateral and regional programs.
The Pandemic Fund was a quite recent initiative, set up in the wake of COVID, and Australia made an initial contribution to that. It has said it will honour that existing contribution but not provide a new contribution in the next replenishment.
Amita Monterola:
Okay. Obviously, with the AIDS crisis in Fiji, that's the big thing on our mind here in our region. Australia has obviously started a response package in Fiji, but perhaps we'll have more details on that that might come to light.
I'm going to go to a question that follows up on those points from Lauren Elise Luckhurst from the British High Commission. She's interested in the data on how much of these multilateral contributions are earmarked to the Pacific and Southeast Asia in these larger funds.
Cameron Hill:
I know that for the banks in particular — and DFAT makes a point of this in its budget document — the banks have increased both their funding and their presence in the Pacific Islands, and some of that has obviously been at the urging of Australia.
Australia provides most of its multilateral funding as earmarked funding, and much of that is for the Pacific or Southeast Asia. We're relatively low in terms of our ranking of core funding. When you look at the share of the Australian aid program that's delivered through multilateral agencies, a portion of that is core, but a bigger portion of it is earmarked.
I think the bigger question for Australia is this: this happened last year in the wake of the global aid cuts — we reprioritised. Where we always seem to reprioritise from is multilateral core funding. But at the same time, we're saying to those multilateral agencies and the other governments that contribute to them that we want more of this money to come to our region. There's a tension there. If our core funding is going down, our ability to persuade or influence these agencies to spend more of their core funding in our region will also be lessened. So that's a dilemma the Australian government faces in continually reprioritising away from multilateral core funding.
Amita Monterola:
A follow-up question from Sadhana on that topic: do multilaterals go through rigorous evaluations to ascertain the effectiveness of their aid delivery in the Pacific? And is there also a conversation going on about priorities and aid effectiveness between Australia and the multilaterals?
Cameron Hill:
Australia subjects multilateral agencies to strategic assessments once every two years. Most recently in its Performance of Australian Development Cooperation report, there is quite some detail on those assessments, with some good summaries.
Those multilateral agencies, like all development organisations, have their strengths and weaknesses. There has been a lot of work, particularly from Australia, to enhance their effectiveness in the Pacific, enhance their presence and enhance their oversight. But it does come down to that question: if we're decreasing our core contributions, it's going to be harder for us to make those kinds of demands on them.
Amita Monterola:
We'll move on to a question from Nathan Hansford from IDCC, the contractor community. Do you have a view on the path of ODA funding to the Pacific with development playing its role as one of the arms of statecraft? I think this is definitely a question for you.
Cameron Hill:
Australia's aid program has always focused on its region, although its definition of its region has become narrower over time. The government talks about 75% of its aid going to the Indo-Pacific. That's basically been the same for the past few years; this year, it might have gotten up to 76%. But of that 76%, 42% of Australia's aid goes to the Pacific. So well over half of that Indo-Pacific aid goes to the Pacific. About 25% goes to Southeast and East Asia, and it's now down to about 7% or 8% that goes to South Asia and Central Asia. So we're definitely seeing more concentration on the Pacific.
We see, year to year, particularly from about 2017 or 2018, more and more Australian aid going to the Pacific. That has been the only region that has seen real growth in spending over the last decade or so — the Pacific by about 30%. Whether that continues or whether it has peaked is an open question. Some would argue that the marginal effectiveness of increasing more and more aid to the Pacific — and the Pacific's absorptive capacity — is probably questionable.
In terms of other arms of statecraft, yes — there are things like policing, work in areas like banking, and work around Pacific labour mobility and migration. A number of those are really important, and they have been happening for a long time. We've had a big policing presence in the Pacific for a while now. It has grown, but it has always been there. It was a feature even during the Howard government.
So that will continue. But I would ask the question: if we're saying that this other work has a development impact, it's one thing to say that — it's another thing to demonstrate it. It's easy to say that our security work has a development impact, but it would be great to see an evaluation of the development impact of some of these programs that looked at them through the lens of development rather than through a narrow definition of national interest.
Amita Monterola:
We might stick with a little more on core aid and the Pacific. I have two questions here — one from Sophie Hardefeldt from ActionAid and another from Jocelyn Condon, who is now the CEO of FemiliPNG Australia.
Sophie is asking, what are your reflections on the indexation calculations, and about the Australian Infrastructure Fund for the Pacific not being included? Jocelyn is also very keen to understand what DFAT's approach is about accounting for the grants component of the loans.
Cameron Hill:
The 2.5% was more complicated than we thought it would be. We and others in the sector kind of thought of it as a year-on-year 2.5% increase on total ODA the year before, but that's not the way it's working. My understanding is that it's not considered good budgetary practice to apply these things to grant equivalents, probably because those grant equivalents are quite lumpy. They can shift around from year to year. It makes the application of that 2.5% more complex if you're trying to do it on top of a lumpy spend on grant equivalents as those loans from AIFFP are disbursed.
So my understanding is that it's not seen as good practice, but it does take some of the sheen off the 2.5% indexation. The other thing to note is that it doesn't keep up with inflation, particularly this year. We can question whether the Treasury's forecasts for future inflation are a bit optimistic, given this crisis doesn't seem to be ending anytime soon.
On the grant equivalents, these loans are now an established part of Australia's engagement in the Pacific. Most of those loans are in PNG at the moment; that accounts for the lion's share of AIFFP loans. We are likely to see variation in the disbursement patterns of those loans because they are for very complex infrastructure projects in countries like PNG, which are more difficult to deliver infrastructure projects in.
I think it's entirely legitimate for the government to count the grant equivalent of these loans under DAC rules. The formula for doing so is quite complicated, but it is allowed under OECD DAC rules, and other donors like Japan and France also count them.
Amita Monterola:
I should note that Cam has done a number of blogs on the infrastructure fund on Devpolicy. If you want some more background on that, please look up those blogs.
I think we'll just go to one more question around ODA eligibility and ODA rules since we're on that topic. Grace Stanhope from the Lowy Institute, thanks for your comments. She's interested in your thoughts on ODA graduation and how it's affecting our spend, especially in the Pacific, and how you see that trend playing out in coming years. Either Cam or Robin can take that question.
Cameron Hill:
I might say a couple of things, and then Robin can jump in. The one that's raised in the context of the budget is Nauru, which is expected to graduate to high-income status next year and graduate from ODA eligibility. That will affect how we count our spend in Nauru. It will probably move into the non-ODA category, which is currently in the budget in a small amount. Other countries like the Cook Islands have graduated. Australia has a different view from many other DAC donors about the treatment of SIDS in their ODA eligibility. I'm sure it will continue to have those discussions with other donors in the DAC.
It does raise the question of what a broader non-ODA partnership with small island countries would look like. What other examples are out there that Australia could look at? There's New Zealand's arrangement with the Cook Islands, but there may also be other examples around the world of what those partnerships look like. Did you want to chime in there, Robin?
Robin Davies:
Not a lot to add. This is very much a small island state issue. There's no wave of countries that are about to graduate globally. It's a very high bar to achieve high-income status, as we see from the case of Ukraine, for example, which is still ODA eligible.
Cameron Hill:
One other thing to note is that Nauru's graduation, as Stephen and our colleague Rubayat have written, is partly based on the income it receives from fishing licences, which have been quite positive. But also Australia's… another arm of Australian statecraft, if you like, is providing very large amounts of money to Nauru for taking out asylum seekers. That is part of the reason its income has shot up.
Amita Monterola:
We had a very interesting analysis of that in a different context with Maholopa Laveil writing about PNG and the Manus economy — money also from asylum seekers.
Robin, I might move to you and look at the OECD donor trends. We have a question from Bill Walker. He's interested in how the aid that China gives fits into your picture.
Robin Davies:
If you look at the aid from non-DAC donors generally, it's becoming more significant, but it's still quite small. It has drifted up from about $8 or 9 billion in 2015 to around $15 or 16 billion per annum these days.
The numbers are very rubbery, particularly for China and some of the others. Some non-DAC donors report to the OECD, and in other cases, including China, the OECD publishes estimates. It's made very difficult by the fact that you can't always tell how much of the flows in question are truly ODA-like as opposed to commercial. But the OECD's best guess is still that the aggregate is pretty small, at around $15-16 billion a year.
So it helps, but it certainly does not offset the recent cuts, and it does not appear to be growing at any great rate. Its rate of growth has been quite low.
Amita Monterola:
Just a technical question from Mark Rice at RESULTS on the US figures you've used. The US Congress has voted to reinstate some of the aid funding that the Trump administration had originally proposed cutting. Do your projections allow for that Congress potentially blunting those cuts, or how did you deal with that?
Robin Davies:
Yes. We saw last year that the desired cuts from the Trump administration were not fully enacted. Congress pushed back quite hard on some things, including some global health funding. The actual outcome turned out somewhere between what the Trump administration wanted and what Congress wanted, because the Trump administration was able to go very slow. The Office of Management and Budget can basically keep the tap off for quite long periods.
I think we'll see that tussle every year for at least the next couple of years where Congress does push back, but the amount that is finally delivered is somewhere between what Congress wanted and what the administration wanted. That's how the projections have been calculated.
Amita Monterola:
We might try to cover a few more types of aid within the budget. We have a question from Ashlee Betteridge, a past employee of the centre, and we should give due credit to Ashlee for setting up the Australian Aid Tracker. She has a huge amount of experience in this field, and she is surprised that there's no increase over the forward estimates for some areas such as humanitarian aid, which has barely shifted from the $500 million or so for as long as she can remember. Cam, did you want to make any comments on that? Robin, I'm not sure if you've been able to have a look into those figures yet.
Cameron Hill:
DFAT is estimating a total humanitarian flow of around $700 million. There's a figure in the PBS, which is always around $500 million, which might be the one Ashlee is referring to — that's a core humanitarian budget. I think it also includes refugees and so on.
There are a number of different programs that contribute to DFAT's humanitarian estimate and humanitarian spend. As Stephen raised in the blog this morning, there's an open question around the length of this crisis and the scale of Australia's response, including in humanitarian.
The World Food Programme is estimating that 45 million additional people could be facing acute hunger very soon. Beyond our region, there is a question about whether our humanitarian funding really is fit for what's happening now and what could be coming. There were already massive humanitarian needs built up in the system and declining funding, as Robin talked about, and now this crisis is adding to it.
We haven't seen big shifts in Australia's global humanitarian funding for quite a while, including the Humanitarian Emergency Fund, which is still at $150 million. It has been that way for quite a while and certainly has not increased in nominal or real terms — it has declined in real terms.
So there's a question of adequacy around that funding, particularly the global humanitarian funding. I would note that on page one of DFAT's budget summary, it talks about profound transformation of the global development landscape. As Stephen said in his blog today, there's a question of whether this budget has really changed much from what the government was thinking about before the war, but it does acknowledge this profound transformation. The question is whether the numbers reflect some of the language in this document.
Amita Monterola:
On that theme of crisis and conflict, we have a question from Elly Torres. She notes that the international development policy DFAT put out in the last few years does recognise the importance of peace, stability and conflict prevention. There's currently a joint parliamentary committee inquiry into this subject. At the centre, we've had Cameron, Nematullah Bizhan and Terence Wood contributing to that inquiry. You can look at their contributions either on the inquiry website or our publications directory on devpolicy.org.
Elly is asking whether the current aid budget looks like it's supporting long-term investments in peacebuilding, social cohesion and conflict prevention.
Cameron Hill:
There is an increase in one of the budget lines around that. My understanding is that it's the result of a contribution to a peacebuilding fund. Global peace and security contributions go up from $92 million to $111 million next financial year.
More broadly, there's a question around the overall coherence of Australia's approach to this issue — this was raised in the OECD DAC review. Where should Australia focus? That was one of the issues we discussed with the joint standing committee.
One concern is that we are continuing to ask the aid program to do more and more — some quite big things: stability, prosperity, alongside climate, gender equality, all these important things the aid program is trying to do. The question I would have is, what's the strategy that might sit around that, and where would we focus? The risk is that we continue to pull the aid program in many directions and don't really make choices about focus. If we were to take up this agenda in a serious way, we would need to focus it, and I would suggest that focus should be on countries of Melanesia and Timor-Leste.
Amita Monterola:
I think you may have answered one of the other questions we've got online, from Heidi Winder from Tetra Tech, looking at Australia's role in the region and where we could choose to put our priorities.
Another point is climate change and climate resilience. Nic Maclellan has asked whether there are any details on whether Australia is putting in a specific package, perhaps for the pre-COP and COP meetings. In past budgets, they had built that in, but I'm not sure if it's explicit in the documents you've seen so far.
Cameron Hill:
From memory, Nic, there are some new measures around Australia's hosting of COP. That's a mix of ODA and non-ODA funding for the support of the Pacific element, which Fiji will be involved in. More broadly, the government has packaged its $550 million contribution — the grant capitalisation of the infrastructure fund — as a climate measure to the extent that the facility includes a focus on renewable energy and climate-proofing infrastructure. That's part of its packaging of its approach to COP.
There was also a budget measure last year around Australia's $100 million contribution to the Pacific Resilience Facility and rejoining the Green Climate Fund. Australia is going to be the biggest donor to the PRF, the Pacific Resilience Facility, and has flagged that its focus with the Pacific will be attracting other donors into that fund through this call.
Again, this raises a tension between Australia's declining core multilateral funding and asking other donors to provide more funding to our region at the same time. The big focus will be trying to increase the capitalisation of the PRF through the COP process.
Amita Monterola:
I'm just going to touch on a couple more things before we wrap up. We've had Sue Ahern online — good morning, Sue. I think we'll just note that there has been some increased funding for the Indo-Pacific Broadcasting Strategy and media development work in the Pacific. I'm not sure that any of us have yet had time to have a look at that particular topic. Sue has put down that it's the Australia Asia Pacific Media Initiative that has gained more funding, as well as the ABC overall.
Hopefully the ABC general funding — core funding — will flow into supporting Pacific reporting, which is a very big part of our job here at Devpolicy as well. Robin and I co-edit the blog, and we publish blogs whose text and images not only go to our own website but are also distributed to partners around the Pacific by our coordinator, Sadhana. We have a very big interest in this area, and hopefully we can get some more information on this spending in the future.
I just wanted to finish off with a few more questions that might bring us to a conclusion and perhaps prompt some action on the part of some people. Jessica Morrison from Quakers Australia is asking: given that the global and local trends of ODA spending are deeply concerning, particularly in comparison to military funding — which we've written about and published, particularly Cameron on the blog — do you have views about opportunities for challenging these trends? I also wanted to note that David Bailey was asking whether there could be possible sources of funding from the private sector.
Cameron Hill:
I might have a go. The aid industrial complex is certainly dwarfed by its military counterpart and, as we've seen from those forward projections, will continue to be. I'm no defence spending expert. Many people have commented on the adequacy or otherwise of Australia's defence spending over the next period, and many defence experts say we're not spending enough, but we also need to be spending it better. One issue around defence spending is whether it is being used as effectively as it can be, and that's a debate the community will have.
There has been a lot of talk about the end of aid, particularly over the last year, and about new paradigms, including potential roles for the private sector. My basic view is that the use of public finance to solve shared problems is not going to go away. Whatever we call it, whatever paradigms we say it is or isn't, this question of countries pooling funding and pooling technical expertise is just going to keep coming up — and probably more so in the world we're facing.
Even though it has been a really challenging year for aid over the last couple of years, that basic question of public resources for shared transnational and global regional problems is always going to be there. It's not going to go away. Robin, did you want to add anything?
Robin Davies:
Just that in the end, aid is always driven by — and always has been driven by — circumstances we could never foresee. While money is being drawn away from aid budgets toward defence budgets at the moment, if we see an acceleration of conflict, inevitably the pendulum will swing back the other way. The same would be true of other global threats — pandemics, environmental disasters, and so forth. Eventually, the pendulum swings back.
Amita Monterola:
Thanks, Robin, and thanks, Cam. We are going to continue this conversation. Every day, we are publishing blogs. Well, I was going to say every day, but that's not completely true — there's one day in the week where we now don't publish a blog, and that day is Sunday. We are publishing from Monday to Saturday.
Please keep your eye on our social media channels and subscribe on our website. We will be continuing the discussion at the Australasian Aid and International Development Conference later this year in December. We will have all the details about the call for papers in another month's time, and we are looking forward to everyone joining us here at the Crawford School again this year.
Thanks to everyone who has tuned in today and those watching back on YouTube or listening via our podcast. You can follow our social media channels — LinkedIn, Facebook, Instagram and X — for links to slides and recordings. Don't forget to subscribe to our fortnightly newsletter for all the latest Devpolicy news.
This is the fourteenth budget breakfast since the centre's first event in 2013. In that time, the Devpolicy team has built a massive resource called the Australian Aid Tracker. I can see there have been some other questions in the chat, and many of those can actually be answered by that great resource.
We need to acknowledge the work that past employees such as Ashlee Betteridge and our academics Terence Wood have put into that, along with our current staff, Sharon Liu, Estelle Stambolie and Finn Clark. An extra thank you again to Finn Clark for organising this morning's webinar. We'll see you at the next Devpolicy event.
Cameron Hill:
Thanks, everyone.
Outro / Credits
Devpolicy Talks is the podcast of the Australian National University’s Development Policy Centre. Our producers are Robin Davies, Amita Monterola and Finn Clark. You can read and subscribe to our blog on aid, international development and the Pacific at devpolicy.org, and find the transcript and show notes for this episode on Simplecast. Follow us on Facebook, LinkedIn, Instagram, and Twitter. Send us feedback or ideas for episodes to devpolicy@anu.edu.au. Join us in a fortnight for the next episode of Devpolicy Talks.