Opinion & Commentary
Is Asia in need of Australian aid more than the Pacific?
Eyebrows were raised in the Pacific this month as Indonesia displaced Papua New Guinea as the largest recipient of Australian aid in this year's federal budget. East Asia, with its hundreds of millions of people, now receives more than 47 per cent of Australia's aid while the eight million people of the Pacific are for the first time only the second-largest recipients. Does this reflect the simple truth that Asia is far larger, has more people, and therefore needs Australian aid more than the Pacific? Or is Australia showing its disappointment at the lack of economic progress being made in the region and in PNG in particular? Probably a bit of both. Part of the increase in Indonesian aid reflects Australia's contribution to the rebuilding effort after the tsunami, but Foreign Minister Alexander Downer has also made it clear he doesn't think the Pacific has used its already substantial aid allotments well.
It is of great concern to the Government that despite receiving more than $70 billion of international aid since the 1970s, the South Pacific has grown only negligibly. PNG has actually become poorer. Samoa alone has broken with bad policy and achieved modest gross domestic product growth. Australian aid to the Pacific still totals more than $870 million annually, so on a per capita basis, the region remains a main recipient. Australia's aid to the Pacific this year amounts to more than $100 per person and is higher than any targets proposed by multilateral groups. If China and India received as much, they would absorb total current aid flows several times over. This year, like the last, 25 per cent of the aid budget will go towards ''governance'' programs. These are designed to strengthen institutions, improve the public sector and political accountability. All fine aspirations. But while aid can foster economic development if domestic policies are targeted to growth, there is no evidence that ''governance'' can be significantly affected by aid. While much effort goes into attempting to ensure that ''governance'' aid is used wisely, more often than not such programs enrich consultants rather than help the poor. For many of the 85per cent of Pacific islanders still dependent on subsistence agriculture, foreign aid makes no difference to their daily livelihoods. They never see see any of it. Australia has devoted about
$540million to governance programs in PNG since 1975 and in that time governance in PNG has deteriorated. Economic stagnation is a prime cause of corruption. Last year, PNG parliamentarians voted to double their housing allowance while teachers squatted in classrooms. Several politicians have been implicated in corruption cases and some arrested for violence or financial scandals. Surely it is time to take a more pragmatic approach to aid and be realistic about what it can achieve and what it can't. The past 50 years of development clearly indicate it is impossible for a foreign government to impose better political performance from another country. Only the demands of citizens can improve governance and international experience shows they are more likely to do so in a country with rising living standards. Democracy is a middle-class phenomenon. If not through aid, then how is improved governance to come about in the South Pacific? There are now many educated, technically capable people in the region.
Unfortunately they are often displaced from their work by ''governance'' funded expatriates, so indigenous experience is not being accumulated. Even more importantly, Pacific governments are not development-orientated because their power and privileges depend on maintaining the status quo. Australia would make a far more meaningful contribution to the region by encouraging rural development and its associated infrastructure than by continuing to pour funding into ''governance'' programs year after year. Opportunities for agricultural growth are enormous, particularly in PNG which has fertile soils, plenty of land for cultivation and where technologies such as fertilisers and crop rotation have yet to be introduced. Improved agricultural productivity would serve as a springboard for better lives for the majority of Papua New Guineans. The political class in the Pacific has squandered 30 years of aid flows by pursuing policies that stifle growth. But it is the people of the Pacific who have borne the burden of economic stagnation and it is they who must ultimately hold their leaders to account for their failure. No amount of ''governance'' aid will buy better policy from the Pacific.
Gaurav Sodhi is a researcher at The Centre for Independent Studies.
