Deciding how and where to deliver aid has always been a tricky business. In Australia, as in other rich countries, politics, national priorities and commercial objectives have frequently jockeyed for influence.
But against these competing objectives, the moral and humanitarian imperatives for aid have provided clear guidance: we give aid to fight poverty, and because it’s the right thing to do.
There has also been acceptance that aid should be targeted at those living in extreme poverty.
Aid is still vitally important in low-income countries. But economic growth in historically poor countries, combined with a failure to distribute that growth to the poorest, means that three-quarters of the world’s poor live in what are now classified as middle-income countries. This includes India, where 456 million people live on less than $US1.25 ($1.17) a day, Nigeria (88 million), and Indonesia (66 million).
This level of poverty in middle-income countries demands a rethink of how Australia – and other donor countries – can most effectively fight poverty. It also means we need to be smarter about how, and where, we deliver our aid.
With bipartisan support, the aid program will continue to grow in the coming years to reach 0.5 per cent of our national income by 2015. But Australian aid cannot be delivered effectively in all places where poverty exists. Decisions need to be made about which countries, or regions, our aid money is best spent.
Australian aid already plays an important role in some middle-income countries. In Indonesia, for instance, we are helping to improve food security, increase educational standards in Islamic schools and advance maternal and neo-natal health.
But in many cases, the role of aid is not so clear-cut. Aid often represents a tiny part of national income in middle-income countries: just 0.12 per cent in India, and 1.27 per cent in Nigeria. Increased aid is often not a priority, especially because of the large demands that donor countries can place on recipient countries for relatively small amounts of aid. Governments in middle-income countries have other, frequently more pressing challenges, including ensuring a responsible and productive private sector, or increasing domestic revenues, such as through improved tax systems.
There are other reasons why addressing poverty in middle-income countries is challenging. In India, the per capita share of national income is $US1220 and – in a sign of its growing economic power – it recently announced a $5 billion, three-year overseas aid program for Africa. Should Australia help India when it is itself sending aid to Africa?
If we believe we have a responsibility to help the world’s poorest, then the answer is yes. But if Australia wants to help the poor in middle-income countries, it needs to look beyond aid and add other strategies to its poverty reduction toolkit. There is much that we can do at the global and regional level. At the G20 and World Trade Organisation, Australia can promote a development and trade agenda that helps the world’s poorest people, and holds rich countries to account for their actions in the developing world.
Australia can also support regional and bilateral trade deals that benefit small-scale producers, and promote links with civil society groups in middle-income countries, to help them argue for pro-poor policies and accountable government.
We also need to remember that the story of the millions of poor people in middle-income countries is one of inequality. They have been left behind – and often forgotten – while conditions for large sections of the population have improved.
And it’s not only inequality in incomes that is entrenching poverty in middle-income countries: persistent inequality between men and women remains a curse. One of the creators of the Millennium Development Goals – which aim to halve global poverty by 2015 – has suggested that if we continue to ignore growing inequities within countries, the MDGs will become “mission impossible”.
This opinion editorial by was first published in The Australian on 21 June 2011