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AUSTRALIAN AID & THE PRIVATE SECTOR

“One problem that remote villages and regions in the Pacific face is getting access to essential medicines and I’ve visited places where these villages and health centres have been without fundamental supplies for weeks, they just can’t get it through. But it was observed that Coca-Cola is available everywhere throughout the Pacific. Any remote village, any hill top, Coca-Cola is there. So we’ve decided to partner with the private sector to use their distribution networks, their supply chains, to get essential medicines to where they are needed.”

Julie Bishop, 29th June 2015

Australia is the largest aid donor to the Pacific. Australian aid makes up over 50% of the total aid budget to Fiji, Vanuatu and the Solomon Islands, which represents between 5 and 15% of GDP respectively. The value of the Australian aid budget within Pacific The Pacific was largely quarantined from the cuts to the overall aid program announced in the May 2015 budget. While Indonesia saw cuts of 40% and Saharan African saw cuts of 70%, most Pacific countries maintained their levels of funding from the Australian government. Despite levels of overall funding to the Pacific remaining static, the new aid paradigm has troubling implications for how that funding is delivered. Announced in June 2014, the new paradigm is focused on growing the private sector in recipient countries, and on delivering development outcomes through private sector entities, at the expense of the NGO and not-for-profit sector. APHEDA is concerned about the emphasis on private sector agents in delivering the Australian aid program, particularly in the Pacific.

Pacific economies are marked by a small formal sector, with only 15 – 30% of working age adults employed solely within the cash economy. The remaining citizens are engaged in semi-subsistence livelihoods, and depend on small scale agriculture for their survival. While a proportion of those engaged in the formal economy represent an economic elite, this is not the case for the majority of workers in the formal sector. Despite greater access to cash resources, minimum wage workers tend to be significantly poorer in real terms than their rural counterparts, due to their limited or lack of access to land for food and materials for housing.

Secondly, the private sector is largely centred around logging, mining and cash crops – all sectors which have been associated with conflicts over the allocation of resources and profits, linked to disputes over land. The growth of these sectors over the last decades has seen an increase in GDP, however this has not translated to decreases in poverty or increased food security for the communities most affected.

Australian Aid and Political Leverage in the Region

The Australian aid budget has been used to increase the leverage of the Australian government in the region. This is most clearly evidenced in the offshore detention program, where increases to aid funding have followed agreements regarding the management of offshore detention centres. In exchange for accepting the Manus detention centre, the PNG government saw a significant increase in aid funding from the Australian government. This included $37 million of funding directed to Manus. (To put that in perspective, Fiji receives $35 million and Vanuatu $41 million per annum from Australia).

A strong and effective aid program must be focused on delivering outcomes for the region. It mustn’t privilege outcomes for Australian businesses or the Australian state, over local populations. The key to development in the Pacific is through the growth of a strong civil society that can address issues of corruption, land alienation, and climate change. It will not come through a focus on growing the private sector or through programs focused on delivering outcomes for Australian domestic policy.

 

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