Aid

Aid

In 1970, The 0.7% ODA/GNI target was first agreed and has been repeatedly re-endorsed at the highest level at international aid and development conference

What on earth does this mean?

Well ODA is overseas development aid, the amount of money governments spend to support people in other countries through official agencies. Here is the agreed definition of ODA

  1. provided by official agencies, including state and local governments, or by their executive agencies; and
  2. each transaction of which a) is administered with the promotion of the economic development and welfare of developing countries as its main objective; and b) is concessional in character and conveys a grant element of at least 25 per cent (calculated at a rate of discount of 10 per cent).”

GNI is the acronym for gross national income, the total domestic and foreign output claimed by residents of a country. It’s a combination of gross domestic product discounted for overseas earnings and repatriations.

Australia has a GNI just shy of $47,000 per capita and with a population of 24.13 million, that’s a little over $1 trillion ($1,134 billion) per annum.

A tidy sum.

The ratio of ODA to GNI is an indicator of how much money is spent on overseas aid as a proportion of income available. Proportionality is important here because it encodes the notion that it’s not the absolute dollar amount that matters but the proportion of the dollars available that becomes a test of innate fairness.

And for a long time the global community has settled on 70c in every $100 as a reasonable target spend.

This graphic from An Australian Institute report Charity still ends at home found that in 1974 Australia allocated 0.45% of GNI to foreign aid, sliding to just 0.23% today, and projected to fall even further to 0.20% by 2021

0.23% of Australia’s GNI is about $5 billion per annum or 10% of the recently announced budget for new submarines

Official development assistance (ODA) and a proportion of gross national income (GNI)

The rich get richer, maybe

Australia’s GNI has doubled in the past 20 years. We are getting richer by the day despite what the media and various advocacy groups would tell us. Of course, those dollars don’t buy what they used to is very true. The cost of living goes up alongside income and not always proportionately. It depends very much on your situation. Home owning baby boomers who have paid off their mortgages are not seeing these numbers the same way as a hipster barista pouring double shot macchiatos at 7am on a chilly July morning.

However, the fact that the ratio has, on average, gone down and markedly in recent times, to around half the long term OECD average effort, and less than a third of the agreed 0.7% target ratio, is instructive.

It means that we have budgeted more for the absolute dollar spend than the proportion. If we allocated the OECD average there is close to $5 billion more in hard cash. A sum that buys tangible amounts of medicines, water purifiers, schools and the like. More than enough to make a real difference.

This is a choice. It is a hard one certainly for there are any number of local uses for that $5 billion in social welfare alone. We could easily justify that this money has gone to the local disadvantaged and underprivileged individuals all across Australia funding drug clinics, special education programs, social justice and support for mental health or any number of worthy causes that need help to help others.

If we are encouraged to buy local, why not spend local too?

Because there is a bigger picture to see here. Throughout human history, people have stuck to their tribe and found adversaries in others. Skirmishes between nomadic groups became conquering armies and global wars for resources and dominance of my tribe over yours. Society is always on the brink of this kind of conflict.

One of the very few ways we have to dampen this tendency is to be kind to those who are different to us. It is not innate. And so it is never an easy thing to do but supporting others, even if it can easily be corrupted into a play for influence, actually helps the global glue. An interdependency that reduces the risk of conflict. We see it in commerce and we should also seek it through aid.

That we are looking inward is a disturbing trend. It may seem logical as times get harder but it will not work. Spending less on others weakens us and them. It makes us more vulnerable and we know what happens then.