Australia is cutting its aid to Indonesia by 40%

Iraqi children displaced following attacks by Islamic State. Photo: Spencer Platt/Getty Images)

Indonesia will lose around $240 million in aid funding from Australia as the federal Budget cuts another $1 billion from foreign assistance.

The 40% drop will see support for Indonesia fall from $605.3 million to $366.4 million, although some of funding relates to the finalisation of programs delivered in the wake of the 2004 Boxing Day tsunami.

The government is seeking $3.7 billion in savings in the aid budget over the next four years on top of the $7.6 billion over five years outlined last year. The latest are not a surprise after being outlined in December’s MYEFO.

Last year foreign aid bore the brunt of Joe Hockey’s budget savings, contributing 20% of the total, despite being just 1.2% of expenditure. All up, foreign aid cuts amount to nearly $11 billion over the forward estimates, with the biggest savings coming in 2017-18.

Australia is also shifting focus from Africa to closer to home.

Foreign minister Julie Bishop says the aid program “will reflect the different development and economic trajectories across the region and will continue the Government’s commitment to development in the Pacific and building economic partnerships across Asia”.

Aid to Africa and the Middle East, are the hardest hit, dropping 70%, but the funding levels are much lower, falling from $143 million to $52.9 million. The money is mostly allocated to scholarships.

In contrast, Australia’s nearest neighbour, and biggest aid recipient, Papua New Guinea, faces a 5% cut, or $23.5M, to $553.6 million.

The Philippines and Vietnam have also had their aid slashed by 40%, but Nauru, home to Australia’s offshore asylum seeker processing centre, and Cambodia, which has agreed to take some of the refugees, are unscathed.

Aid organisations will also receive less, with Care Australia and World Vision both facing a 5% cut, while the money going to UN programs, including the Children’s Fund, is also substantially reduced.

Humanitarian and emergency funding is cut by 3%. International humanitarian assistance receives $329 million.

The foreign minister says Australia will provide an estimated $4 billion in Official Development Assistance in 2015-16, including a $50 million gender equality fund. Last year the figure was $5.042 billion.

Care Australia CEO Dr Julia Newton-Howes described the year-on-year reductions as “the biggest cuts ever to Australian aid”, reducing it to 25 cents of every $100 of Australia’s national economy.

“Prior to this budget, Australia’s international aid program – once one of our country’s proudest international achievements – had effectively become the government’s ATM; the place to withdraw funding on a whim,” she said.

“It will take many years for Australia’s aid program to recover from the damage that has been inflicted, and so we call on the Government to make good on its pre-election promise to, like many like-minded economies, bring international aid to 0.5% of Gross National Income.”

World Vision CEO, Tim Costello said almost $600 million in savings came from the Asia-Pacific bilateral program.

“The Abbott-Hockey Government has destroyed our aid program to Africa,” he said. “So many countries in Africa still have such massive and immediate needs in basic health and primary education – I don’t understand how we can decide that it is OK to shrink our aid to a tertiary scholarship program.”

Costello said he appreciated Bishop’s efforts to protect funding to Australia’s major NGOs, and along with Newton-Howes, praised the Gender Equality Fund.

Elsewhere in the foreign affairs budget, Australia is spending $98.3 million to open five new overseas missions in Qatar, PNG, Indonesia, Mongolia and Thailand, which Bishop says is “the single largest expansion of Australia’s diplomatic network in 40 years” in order to “advance trade and investment opportunities and provide consular assistance. The Budget also allocates $106 million towards the Australian Embassy in Baghdad.

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