Why is there a growing divide between Australia's defence and foreign aid?

RNZ News

24-04-2025

Photo:
Australian High Commission in PNG
There are concerns in Australia that as more emphasis in paced on defence spending, foreign aid will suffer.
This comes amid the growing geopolitical tensions in the region, with the United States calling on its allies to spend more on their militaries.
Australia is already one of the
least generous aid donors among the Organisation for Economic Cooperation and Development (OECD) countries
, contributing just 0.18 percent of its Gross National Income (GNI) as foreign aid, with that figure set to continue falling in real terms.
A researcher with the Australian National University's Development Policy Centre, Cameron Hill, has been examining the comparison with defence spending.
He spoke with RNZ Pacific.
(The transcript has been edited for brevity and clarity.)
Cameron Hill:
We started tracking this about five years ago in 2020, and my colleague Stephen Howes looked at the aid and defence spend data going back to the early 1960s was the height of the Cold War, and we were engaged during that decade in the Vietnam War. During that period, the relativity between our spending on defence and foreign aid over the decades of the Cold War averaged around seven-to-one.
Then, from about 2015, we noticed that this ratio really started to widen to an unprecedented level. So, it seems as though that the priority that we have given to foreign aid in this era of geopolitical competition is a lot less than the priority we gave to foreign aid during that last big era of geopolitical competition, which was the Cold War.
The ratio currently is about 12-to-one on existing budget commitments, and forecasts it will widen further to about 13 to one by the end of this decade. Then, as some have called for, we increase defence spending to 2.5 percent of GDP by the end of the decade, that that ratio will be 16-to-one.
And if, as some in the US have hinted that they would like Australia to spend 3 percent of GDP on defence, it would widen to 19-to-one - almost three times. It is Cold War average.
Don Wiseman: And what's the impact?
CH:
The impact is that we are prioritising our elements of hard power, much more than our, what some people would call, our soft power. But when we look at Australia's region - most of the countries around us are developing countries and they are certainly worried about geopolitical competition - we are also predominantly worried domestically about their development prospects, growth and human development. For many of them, the potential impacts of climate change.
So looking at these figures, a lot of foreign policy commentators in Australia like to talk about integrated statecraft, combining development, diplomacy, [and] defence to ensure Australia can compete effectively. The problem here is that we are really undervaluing a critical element of that statecraft, when you look at these relativities.
DW: Australia's had some issues with its Pacific neighbors going back the last 10 or 15 years, and this could exacerbate that.
CH:
I think Pacific states rightly want Australia and New Zealand to be doing more on climate change, and much of that funding has to come from our development assistance budget, our climate finance. But with that budget remaining flat, our ability to respond to those calls from the Pacific is compromised.
Pacific states again are worried about geopolitical competition and some aspects of that. But I think, increasingly, they will see or be concerned that Australia is under prioritising that element of its foreign policy relative to these hard power priorities.
I think this is important also in the context of big cuts to aid, and including climate aid from the US, as well as cuts to aid from other donors. So that will just increase the pressure on very scarce climate finance, which is a key priority for Pacific states.
Australia committed more than US$20.6 billion in aid to Pacific Island nations between 2008 and 2022.
Photo:
Lowy Institute Pacific Aid Map
DW:
And an area that the region expects Australia to step up in.
CH:
Absolutely. I am not an expert on defence spending, but this gap in the relativities is quite stark. It just begs the question, what are the constraints to Australia doing more on development and climate internationally?
You could say perhaps that the foreign policy elite in Australia have just decided that aid is not very useful when it comes to geopolitical competition, and perhaps that is right. But I do think aid, including climate finance, can help meet other important policy objectives.
We can see that climate needs, humanitarian needs, are just increasing, and a big part of Australia's foreign policy should be showing up to help tackle those global problems. The domestic politics of aid have also been difficult in Australia, you could argue. But there is a danger that we pre-empt the difficulties domestically of increasing aid, and that cautious consensus - that some have talked about when it comes to aid spending in Australia - has turned into a pernicious paralysis whereby politicians are just too afraid to defend aid and to talk about why aid might need to be increased over time.
Also, it may be that the cost of defence is just very expensive now. But again, I would argue that aid has also become more expensive, including in the Pacific, where climate impacts do drive up the cost of aid.