Question Time - Foreign Aid

  • Transcript, E&OE
14 May 2015

Dr HENDY (Eden-Monaro) (14:29): My question is to the Minister for Foreign Affairs. Will the minister advise the House how the government is delivering a fair and sustainable aid budget? Is the minister aware of alternative approaches?

Ms JULIE BISHOP (Curtin–Minister for Foreign Affairs) (14:30): I thank the member for Eden-Monaro for his question. I note his longstanding interest in development issues in our region. Australia remains a generous and important supporter of development, particularly in our region for we have a primary responsibility to the Pacific to promote stability and prosperity for those island nations. Our aid program in the Pacific aims to reduce poverty and raise standards of living by promoting economic growth, including the empowerment of women and girls.

Strong economic growth is the most powerful driver for lifting people out of poverty and this has been proven in Asia, where nations recording strong economic growth have delivered higher living standards for hundreds of millions of people. China and South Korea, for example, once aid recipients are now major economies, major trading partners of ours, and now aid donors. This transformation from aid recipient to economic partner is also the aim of the fast-growing economies of South-East Asia. For example, in 2003 Thailand requested Australia no longer provide aid. Instead, we signed a free trade agreement, bilateral trade doubled to $18 billion a year and Thailand is now an aid donor. These countries want trade not aid.

Another example: in 2003, Australian aid to Indonesia was eight per cent of our aid budget. It grew to 13 per cent as a result of the tsunami in 2004. It will now be normalised to nine per cent and since 2004 Indonesia's economy has almost doubled, and GDP has grown by 70 per cent. Indonesia is now the 16th largest economy. It is a member of the G20. So these examples demonstrate why we can reduce our foreign aid in some countries in recognition of their growth trajectory, the percentage that Australian aid makes to their economies and to total aid. For example, Australian aid as a percentage of Indonesian GDP was 0.1 per cent but for Tuvalu, for example, it is about 24 per cent.

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