Economic development a powerful aid

The Australian government will spend $4.8 billion this financial year on foreign aid, with the aim of reducing poverty and lifting living standards in developing countries.

In recent years the foreign aid budget has been subject to some controversy, with examples of questionable spending, highly-paid consultants and what appears to be outright waste.

This problem has been exacerbated by the Government’s campaign for a non-permanent seat on the United Nations Security Council, with blatant redirection of funds to Africa, the Caribbean and Latin America where there are a significant number of votes.

There is great need for development assistance in Africa but it should not be the major focus of Australia’s foreign aid program as the wealthy nations of Europe have an historical responsibility and a direct strategic interest in directing their considerable foreign aid programs to that continent.

It much more difficult to justify expenditure of Australian taxpayer funds in the Caribbean and Latin America, regions which are higher on the development index than the Pacific and much of Asia.

Australia has a clear strategic interest in focussing our aid program on our region, where our funds can be most effective and where we can make a significant difference.

The ongoing debates about foreign aid focus on how best to lift living standards and what form of aid delivery can have the greatest impact.

There have been two major events in recent history that have seen large numbers of people lifted out of poverty.

The first was the decision of the United States to support the reconstruction of Germany and Japan after the ravages of World War II, and other nations devastated by that conflict.

The Marshall Plan was a visionary and short-term investment to kick start economic development as a means of avoiding the economic depression that had led to World War II.

The Plan saw Germany, other parts of Europe and Japan attain some of the highest living standards in the world within a few decades, an extraordinary outcome that few in 1945 could have predicted would arise from the devastation of the War.

More recently, the greatest achievement in human history in terms of lifting people out of poverty has occurred in China, where hundreds of millions of people have found prosperity after reforms that underpinned economic growth and fostered development.