How generous is Australia's foreign aid budget?

Jotham Gunn -

The Australian federal budget for 2018-2019 will be released next week, and there have been rumours of a further $400 million in cuts to our foreign aid expenditure. Most Australians approve of the government giving foreign aid, but at the same time around 75% believe our foreign aid expenditure is either about right or even too much.

So how much do we actually give?[1][2] And how generous are we compared to our peers around the globe?[3][4]

Just keep scrolling.

The 2017-2018 Australian federal budget estimates total government spending to be $464.3 billion.
Within that, some of the largest areas of expenditure include social security and welfare ($164.1 billion), health ($75.3 billion), education ($33.8 billion) and defence ($30.1 billion).
Foreign aid spending is estimated to be $3.9 billion.

So foreign aid comes in at just 0.84% of expenditure. It's a tiny slither of our total budget.

But what about other countries? How does our government spending compare?

Australia is one of 29 countries that are members of the OECD's Development Assistance Committee.
One measure that members report on is the total amount that a country's government spends on foreign aid.
According to OECD data, Australia spent $2.8 billion (USD) in 2017.
Countries differ a lot in the size of their populations and economies. So this makes it difficult to compare our generosity on raw totals alone.
For example, the United States spent the most at $34.6 billion. However, their population is more than 10 times larger than Australia's.
To account for these differences, countries are often compared on foreign aid as a percentage of the size of their economy, measured using Gross National Income (GNI).
When compared on this measure, the United States drops to 21st place while Sweden moves to the top of the chart as the most generous nation.
The internationally agreed target is 0.7%. So we're not quite a third of the way there.
We could aspire to be like Sweden, but, well, the Swedes are just the best. So let's try comparing ourselves to the UK instead.
Back in 1997, we weren't much more generous than we are now, but we were better than the UK.
But over the next 8 years, our foreign aid spending drifted downwards while the UK boosted theirs.
From 2006-2012 we started to turn things around. Following a bipartisan commitment to get to 0.5%, we began to close the gap between us.
But from 2013 until now we've slashed our foreign aid expenditure by 30%. Meanwhile, the UK has consistently hit the 0.7% target every year.
And so now here we are, sitting at an all-time low both in ranking and expenditure.

Comparing ourselves to other countries and international benchmarks can be helpful for gauging our generosity and thinking about what to aim for. But in the end it's real people's lives that are affected by cuts to foreign aid.

Sure, there will always be other needs in Australia the money could go towards, but a relatively small amount can have a much larger impact when spent amongst the world's poorest.

GiveWell estimates that it costs about US $2,000 to save a life when put to use by the most cost-effective charities. An amount like $400 million (US $302 million) could potentially avert 150,000 deaths when used in the most cost-effective way.

Our foreign aid goes to a variety of different causes and organisations doing good around the world, but it's under threat because our politicians don't believe it has much public support. And maybe they're right about that.

But if you'd like to see more done to help the world's poorest, let your member of parliament know or make a donation to some of the world's most cost-effective charities.

  1. When talking about foreign aid, we're referring to how much the government gives. This doesn't include people's private donations. ↩︎

  2. Budget data comes from the 2017-2018 budget papers, statement 6, table 3 - estimates of expenses by function. ↩︎

  3. I've compared Australia to the 29 countries that are members of the OECD's Development Assistance Committee, but there are also other non-members such as the United Arab Emirates and Turkey who have scaled up their foreign aid programs in recent years. ↩︎

  4. Foreign aid data comes from the OECD. ↩︎