Development Economies

Government Aid

Now that we have established that economic development is important, we must address the next question: What can the government do to try and promote economic development?  In this sense we will examine the actions of the Australian government to promote economic growth amongst developing countries, rather than each individual government.

There are many ways that a country can provide foreign aid.  While John Howard was the Prime Minister, he was very fond of saying that we should be providing opportunities for “trade, not aid”.  What he meant by this is that providing a country with money is really only a short term solution; ultimately if a country is going to move beyond its dependence on foreign aid it must be able to offer goods and services to the international community.  In this way, the country will ultimately be able to sustain itself.

In order to help in achieving this goal, the government of the day adopted a policy to try and promote economic development in these countries.  When products are imported into Australia they often attract a tariff, but under the Howard government these tariffs were removed for the majority of the world’s developing countries.  This policy was a positive step, but ultimately it can only have a large impact if the relevant countries actually hold products for export that people here in Australia are willing to buy.  For this to be made possible, an extensive program of infrastructure development will be required.

In 1969 the leaders of the world agreed that if we could get each developed country to contribute 1% of its gross national income (GNI) to foreign aid, it would be possible to end extreme poverty.  At the time it was argued that 0.3% of this amount should come from private individuals, and as a result 0.7% should come from the government.  Much has been written about the fact that Australia has regularly promised to live up to this agreement, but has consistently fallen short.  Despite some recent increases, by 2009 the Australian government was still giving less than 0.4% of our GNI in foreign aid.  In contrast, private citizens offer 0.69% of their income in charitable donations.  In terms of the percentage that is offered as foreign aid, Australian citizens rank second to the people of Ireland. This suggests that we are well aware of our place as part of the global community.

None of this should discount the extraordinary work that has been completed by the Australian government’s aid program.  Although many are keen to discuss the fact that the UN goal of 0.7% has not yet been achieved, there is also much that has been achieved.  AusAID programs are delivered all over the world, although there is certainly a focus on our own geographic region.  South East Asia and the Pacific Islands are regular recipients of money that is provided by the Australian government.  Some of the recent programs in which Australia has been involved include:

1.    Samoa: On the 30^th of September 2009, Samoa was struck by a tsunami.  The Australian government responded with an immediate aid package worth $2 million.  This included 108 medical personnel, and over 29 tonnes of food are other essential items.  Early in October an extra $10 million was announced, including $2.5 million to assist in the rebuilding of essential infrastructure.  As a direct result of this program, the Samoan government has been able to save lives, and guarantee the electricity supply to the country.

2.    Indonesia: Almost half of the people living in Indonesia live on less than US$2 per day.  During 2009/10 the Australian government committed to providing Indonesia with over $450 million in aid.  Poverty in that country is largely confined to those with very little formal education, and so the aid is partly used to provide schooling opportunities.  Tens of thousands of students currently attend schools that were built and resourced with help from the Australian government.

3.    North Korea: In 2008/09 the Australian government provided almost $7 million to assist in the development of North Korea. Despite this, the government of North Korea continued to pursue a policy of developing nuclear weapons, and ongoing unwillingness to engage with the international community.  As a result, the Australian government has made provisions for future aid, but this money will not flow into North Korea until the government of that country makes an effort to act in a way that is acceptable to the international community. 

These examples show that the Australian government has been able to make a difference, and that the money is used in a way that is beneficial to the international community. 

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