Trade and Aid

Foreign Aid

Trade is not the only way that the Australian people participate in other economies. We are also part of a world wide effort to provide targeted foreign aid to developing countries. Aid can be passed to people and organisations in other countries via aid organisations (such as Oxfam or Community Aid Abroad), or it can come from direct government assistance.

In May 2007, the federal Treasurer Mr Peter Costello committed $3.155 billion from the federal budget during 2007/08 to foreign aid. This is a significant increase on the $2.491 billion which was allocated in the previous budget. In addition, the government provides almost $100 million to international aid organisations. This represents around 14% of all money raised by these organisations in Australia. (By comparison, individuals contributed close to $500 million to non-government aid organisations during this period.)

Foreign aid from Australia is primarily used to assist countries in our region. Despite this, over 100 countries receive some form of foreign aid from Australia every year. According to the government website about foreign aid, Australia's aid program focuses on the four interlinked themes:

Accelerating economic growth by improving the policies, promoting trade, developing infrastructure, building skilled workforces and addressing the environmental challenges
Fostering functioning and effective states through governance and human rights
Investing in people through health and education
Promoting regional stability and cooperation (Source: www.ausaid.gov.au)

The main recipients of Australian foreign aid were countries in the Pacific region. We can see this clearly by looking at the countries which received the most aid from Australia in the 2005/06 financial year:

Country	Aid Received ($ millions)
Indonesia	$344.3
Papua New Guinea	$332.2
Solomon Islands	$223.0
Vietnam	$81.5
Philippines	$68.8
Cambodia	$48.5

The United Nations has established a goal that all developed countries should contribute 0.7% of gross national income as foreign aid. By 2005, only Norway, Sweden, The Netherlands, Denmark and Luxembourg had achieved this goal. By comparison, Australia contributes around 0.3% of gross national income. The largest single contributor to foreign aid in the world is the United States. The government in that country contributes close to $30 billion in foreign aid. Such is the size of their economy, however, that this represents only 0.22% of gross national income. (It is worth noting that the second largest contributor – Japan – offers around $13 billion in foreign aid. This is about 0.28% of their gross national income.)

The Australian government's position is that it is trade, not aid, that will enable countries to find their way out of poverty. You will be able to see this in the first of the goals which have been listed above. The government has stated on several occasions that they are keen to help poorer countries to gain access to international markets, and we remain a world leader in regards to opening our own economy.

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