Overseas Aid: a leg-up to struggling states, or corrosive deadweight?

To illustrate, imagine the Australian government wanted to improve literacy in children in certain areas of Australia. The government would commit resources and set targets. If, in three or five years, literacy in the relevant groups had dropped or stayed the same, it is inconceivable that the government would not cut the program or at least dramatically change it. In aid however, this is exactly what has happened.

Similarly in the Solomon Islands, Australia has been a longstanding major aid donor, contributing a substantial part of its US$110 per capita in aid. The return on the investment is a government so corrupt and depleted that Australia is considering sending in troops to bring stability.

Mountains of aid money have been spent assisting poor countries. They haven't improved, and the money has kept flowing. Understanding this peculiar enthusiasm to waste money is challenging, until you look at the multiple roles that aid serves. Most aid bureaucracies claim to serve primarily the interests of the poor. If they did, they would have been overhauled when their failure became apparent … perhaps in the 1960s.

Aid is altruistic help. But aid is also a foreign policy tool, a paternalistic subsidy for the development industry, a missionary's tool, a beach-head of national pride, and a salve for the wealthy's conscience. Aid is many things but its continuation in the face of failure alludes to its multiple "non-development" roles.

We can afford to allow aid to fail because it succeeds in its other role of buying influence, making us feel altruistic, spreading Australia's vision of democracy abroad and building up Australian industry.

This situation has been acceptable for Australia in the recent past. The winners from this situation: Australia's foreign policy, Australia's conscience, Australian prestige and pride, the development industries (NGOs, AusAID, development firms and contractors), are busy and prosperous in the belief that they are on the whole contributing to Australian and global betterment. The problem is that these gains have been short term. In the longer term, aid failure is unsustainable because of the costs it imposes down the track. A quick glance at the Solomons and our neighbourhood "arc of instability" confirms that development failure threatens Australia on many fronts in the future. Aid efforts of the past 20 years have maintained short-term stability and influence at the cost of long-term stability and development. Our willingness to accept aid failure in terms of development has contributed substantially to the "arc of instability".

The route to achieving the MDGs therefore is not more aid, but making aid actually work. Aid failure should be the big issue in aid.

Assisting poor nations to develop is an infinitely complex task, especially in the nations that can't seem to make a start towards development. There are no easy solutions and development aid is only one of several assistance tools. Any partial solutions we could devise would undoubtedly bring a new set of problems. But aid does have a role in nurturing development, as well as a profound responsibility. Aid can be effective.

Aid can be a leg up but until we face up to the duplicitous flaws of development assistance it is more likely to be a corrosive deadweight to poor countries. We must come to terms with these flaws before we can hope to really help with development.

We need to open our eyes and sharpen up our act.