The Government has budgeted to spend $3.6 billion in 2018-19 on Foreign Aid, and $15 billion over the forward estimates. It is the twenty-fifth largest category of expenditure.
Foreign Aid represents 0.7% of all Commonwealth expenditure, and 0.2% of GDP in 2018-19.
Foreign Aid is one of the more contentious areas of the Commonwealth Budget, and the contention covers policy objectives, the size of the aid effort, and how the aid effort is funded, counted and reported. For the purposes of the Budget Test Foreign Aid is based on the expenses reported in Budget Paper No 1, Statement 6. This differs from official reporting of Australia’s Official Development Assistance which is calculated and reported in cash terms, based on internationally agreed criteria.
Regardless of the measure used spending on foreign aid has declined significantly in real terms over the last ten years, and is budgeted at just under $4 billion per annum on average over the forward estimates.
Foreign aid involves a mix of shorter and longer term projects and activities, and significant shifts in activity take time to implement. You can increase or decrease planned spending on foreign aid by selecting target growth options expressed as increments of 10% of the average foreign aid spend in real terms of $4.9 billion between 2009-10 and 2017-18. The model enables options as low as eliminating foreign aid altogether, or more than doubling it in real terms. A ‘maximum’ option of increasing the foreign aid spend to the internationally agreed target of 0.7% of gross national income can also be selected, but this increase would take longer than four years to implement.