Aid is supposed to address the root causes of poverty by supporting community-led development and promoting local leadership. The ultimate goal is to remove the need for aid. However, aid has often been used for other purposes. Our research shows that the Australian aid program is now evolving in worrying new directions.
As of 2020, the government has cut the aid program for the seventh year in a row. In 2019, $500 million was taken from the aid program to support the establishment of the Australian Infrastructure Financing Facility for the Pacific (AIFFP).
This initiative has fundamentally changed Australia's aid program for several reasons :
- The program appears to be more of a geopolitical to counter the growing interest of China in the Pacific region than sound aid policy. The case for increasing Australia's investment in infrastructure versus other priorities such as improving health systems, assisting with the low carbon energy transition or on climate adaptation programs was not made at the time.
- The AIFFP is a concessional loans scheme which runs the risk of increasing debt in a region that is already suffering from severe debt distress.
- Statements made at the time suggest that the program could be used to push further fossil fuel expansion in the region. Assistant Trade Minister Mark Coulton specifically said in his second reading of the Bill in February 2019: 'In the energy sector, Efic's new power would enable it to finance the construction of LNG receivable terminals, leading to increased energy exports or engineering services.'
As outlined in our report 'Enter the Dragon', we strongly opposed the AIFFP initiative when it was proposed. Now that it is a reality, we will continue to monitor the AIFFP's impacts on fossil fuel infrastructure and sovereign debt specifically.
We will also continue to advocate for an aid program that focuses on a just and equitable energy economy, on climate adaptation and on strengthening health care systems in an era of global pandemics.