Mathias Cormann has called on developed countries such as Australia to increase foreign aid funding, despite his previous role in a government that shaved billions of dollars from such assistance.
Cormann, the former Australian finance minister who now leads the Paris-based OECD, said he wanted to deliver a “very strong message” to donor countries to increase official development assistance “and certainly not cut it”.
The aid sector welcomed the comments on Wednesday and called on Australia’s major political parties to commit during the federal election campaign to increasing the aid budget.
Australia ranks 21st out of 29 developed countries when foreign aid spending is measured as a share of gross national income, OECD figures released late on Tuesday showed.
Australia’s offical development assistance (ODA) rose 4.5% between 2020 and 2021 due to an increase in bilateral grants amid renewed Covid-related support, but this still represented just 0.22% of Australia’s gross national income.
The most generous countries analysed by the OECD were Luxembourg (0.99%), Norway and Sweden, while Australia was a few places behind New Zealand (0.28%) but slightly ahead of the US (0.18%).
The figures were released by Cormann, who successfully campaigned for the post of OECD secretary general with the Australian government’s strong backing.
In the Abbott government’s first budget, delivered in 2014 when Cormann was finance minister, the Coalition announced it would save $7.9bn from the aid budget over five years.
That was achieved by maintaining ODA at $5bn a year, with plans to resume indexation from 2016-17.
But the midyear update released by Joe Hockey and Cormann in December 2014 foreshadowed extra savings from the aid budget of $3.7bn over four years.
In then treasurer Scott Morrison’s 2018 budget, the government announced it would freeze ODA spending at $4bn per year, before resuming indexation in 2022-23.
Cormann was asked on Tuesday night whether he saw a danger that donor countries would cut development funds for poor countries in light of the war in Ukraine.
“I hope not,” he said. “And so far, the evidence is to the contrary. I mean, so far, the evidence is that ODA funding has been very resilient, has continued to grow, despite some very serious fiscal constraints that have been faced by governments in donor countries.”
Cormann said Russia’s “unprovoked war of aggression against the people of Ukraine” could lead to broader “negative consequences in terms of food security, food, affordability, and general impacts in terms of poverty across other parts of the world”.
“So the need is going to be higher, not less,” Cormann said.
Cormann said the latest OECD figures “give us a lot of hope that the trend is heading in the right direction, despite some of the challenges faced in recent times, and we would like to think that this will continue into the future”.
The Australian Council for International Development said New Zealand, Iceland, Spain and Hungary all ranked higher than Australia in their contributions as a percentage of gross national income.
The council’s chief executive officer, Marc Purcell, said Australia must put ODA increases on a long-term footing.
“We need to return to investing 0.5% of our income in development cooperation and humanitarian assistance. This was once a bipartisan commitment,” Purcell said.
“The Greens have committed to 0.7%, while Labor has vowed to reach 0.5%. While we have welcomed the Coalition government’s $1.5bn in extra investment in recent years, it has not set out where it wants to take the international development budget. We need all parties to agree to 0.5 and a timetable to get there.”
Purcell said developing countries were “bearing the brunt of Covid-19 and the knock-on effects of crises like Ukraine”. He said this year about 274 million people would need humanitarian assistance and protection, with needs escalating in the Sahel, Yemen, Afghanistan and Myanmar.
More broadly, the OECD data released by Cormann showed foreign aid from official donors rose to an all-time high of $US179bn in 2021, up 4.4% in real terms from 2020.
Cormann defended aid cuts in December 2014, saying the government was doing so “reluctantly” and would “rather if we didn’t have to” but he blamed the Labor opposition for opposing other savings. “Essentially we didn’t have much choice,” the then finance minister said.
In March 2015, Cormann said he thought the government had “done as much as we can” in making savings in foreign aid. However, the government continued to make further savings from this part of the budget.
In May 2018, Cormann defended the budget decision to freeze spending at $4bn a year, saying this level was “appropriate” until “we are back in a strong and sustainable surplus position”.
It is not the first pivot since Cormann assumed the OECD position.
Last year, Cormann said carbon pricing and equivalent measures “need to become significantly more stringent, and globally better coordinated, to properly reflect the cost of emissions to the planet and put us on the path to genuinely meet the Paris agreement climate goals”.
The Abbott government repealed Australia’s carbon pricing scheme.
